How do we define our business Posted by Tomi Heikkinen , Friday, August 21, 2009 at 10:45, in Labels: business strategy, customer overdrive, marketing myopia, segmentation, tomi heikkinen

In order to pursue profitable growth, companies need to define what exactly is their business. Levitt's Marketing Myopia turned heads and revolutionized executives' viewpoints in this regard alrady back in 1960. Others, Clayton M. Christensen and Michael E. Raynor for example, have given other, similar perspectives for executives. Christensen and Raynor in particular have an interesting viewpoint on segmentation, which they describe in their book The Innovators Solution (2003). According to them, customers hire products [incl. services] to do specific "jobs". These jobs are as numerous as customers have needs. This is in other words a demand-based perspective that directs companies to align their businesses according to specific, select needs their customers have.

All in all, I think Christensen and Raynor have a solid perspective that deserves further observation. All businesses have long been seeking to become customer-oriented or customer-driven - many have succeeded while others have failed. But if companies adopt their perspective, do they face the risks of innovative stagnation and hampered business development caused by customer-overdrive? In many industries, small subcontractors and suppliers who chose to specialize in serving certain customers have hit rock bottom after these customers no longer continued business with them for varying reasons. They were customer-overdriven, and went bust because of it. These businesses had been entangled in processing and handling the current needs of their customers and had dismissed their own business development and innovation work.

Considering the different perspectives and these risks, I came up with this diagram, four perspectives to defining your business.



The diagram shows the classic perspective (aka "we're in the oil business and supply our customer with petroleum"), Levitt's marketing myopic (if you may) perspective, Christensen and Raynor's perspective and a fourth, Proactive customer-oriented perspective.

The fourth perspective is an attempt to fuse the best sides of myopic and demand-based perspectives. The myopic perspective's one groundbreaking advantage is that it expands the innovative horizon of the company - by defining business this way, new growth options become visible for innovative executives. Demand-based perspective's advantage is naturally customer-orientation. Combining these we achieve a viewpoint where we are customer-driven, grow as our customers grow, but also consider the larger horizon of business opportunities. Being customer-driven should not translate to being too focused in day-to-day customer demand satisfaction and to dismissing real out-of-the-box thinking and proactive satisfaction of hidden demands. While explicit and tacit information from customer and their ever-changing needs are essential for companies, they should not rely on them only, but keep a myopic perspective on their own business aswell. By doing so, they can enjoy being customer-oriented but evade risks mentioned above - and escape the danger of customer overdrive.

When does being human mean bad business? Posted by Tomi Heikkinen , Thursday, August 13, 2009 at 19:59, in Labels: account management, customer service, seth godin, tomi heikkinen

Seth Godin delivers a delicious line of wisdom while he gives lessons from very tiny businesses. In his ending statement regarding customer service, he reminds that don't pretend you have a policy. Just be human.

In a world of big company customer service processes and irritating service policies, this statement is a breeze of welcomed air. Dissappointed customers want personal, understanding, friendly service. Customer service processes deliver impersonal, bureaucratic, cold service. But these "inhumane" processes haven't been created out of spite. They've been created to manage costs and to upkeep sound business.

Regarding both the obvious benefits of humane service and the reality of cost management, I wondered: Is there a tipping point where being too human leads to closing up the shop in the longer run?

I worked in a business sales organization where different account managers treated their customers differently. Our unofficial policy was be human - to a point. Some account managers were critized for how they overcared for their customers - execs felt resources were overspent on micromanaging and worrying about the whims of some customers. I'd like to point out that we never received feedback about bad service though. The execs couldn't however statistically prove that overcaring was unprofitable, as this type of account managers were among the better salespersons. Micromanagement was evident, but the management simply lacked the metrics for proving its negative impact. But clearly our organization wasn't close to the tipping point as business was good nevermind some overzealous account managers.

Customer service is about sales too. It's about managing the expectations of the customer. When the customer is unsatisfied, it is the customer service person's task to "sell" the customer a reimbursement or another reassuring action that returns the customer to a satisfied level, and hopefully even increases overall satisfaction to your brand. If the service person is successful, he customer modifies her expectations and "buys" the reassuring action.

Measuring customer service as a sales operation, could we measure the tipping point of when being too human is no longer good business? I think this is especially important to companies which have grown to a point where managing a single customer relationship requires the effort of more than two employees. At this stage, when one person, e.g. the account manager, is "being human" to the customer it no longer concerns the account manager only but will affect the workload of another employee. For example serving the extra demands of a certain customer might seem inconsequential to the account manager but put excessive pressure to a sales engineer who has to realize the (unprofitable) demands of the customer.

In the future, I'd love to hear actual experiences from businessmen about when being human meant bad business. Is there a tipping point? Or is there a best practice how being human can always or often enough be good business?

Thoughts on branding Posted by Tomi Heikkinen , Wednesday, August 12, 2009 at 19:39, in Labels: branding, Kevin Roberts, marketing, tomi heikkinen

The bottomline of your brand should be about trust: earning and keeping it. Your customer trusts you to offer the best value to her money everytime she does business with you. Consistency - maintaining this trustworthiness - creates loyalty beyond reason as Kevin Roberts tells us.

Let's use my trusted brands as examples: Google, Nokia, Amazon, Battery energy drink, Marabou chocolate. Before making a buying and using decision that relate to web searches, mobile phones, music & literature etc. I always consider them first. In a world of stupendously numerous options my relationship with is defined by their primacy. And many, many times I settle for their offering as I trust it has the best value to my money.

Trust is illogical to its core. A purely logical being would always compare all possible offerings before making any decision. But trust makes buying and thus problem-solving easier. A trusted brand is the preferred one and the foundation of any long-term customer relationship.

Thoughts about relevant CRM metrics Posted by Tomi Heikkinen , Tuesday, August 11, 2009 at 10:09, in Labels: CRM, WOM

Best A-customers are not necessarily the ones who bring in most cash directly, but those who create most word-of-mouth and thus bring cash in indirectly. They are that way most profitable if new customers are profitable aswell. But how can we measure the amount of WOM generated by each customer? How can we compare the amount of WOM to acquired new business and its profitability thus identifying the indirect value of WOM? Can any causality be assessed easily? If yes, how will we help and encourage our customers to talk about us?

Godfather marketing Posted by Tomi Heikkinen , Wednesday, August 5, 2009 at 18:39, in Labels: godfather marketing, marketing, mindset, seth godin, tomi heikkinen

Seth Godin does what he does best, makes the light bulb go on in his readers' heads that is, by writing about operating and marketing under the circumstances. Mark Pocock then writes about avoiding pushy sales person syndrome, brushing Godin's issue. Reading these followed by some thinking brought forth a painful realization. You know, those realizations you didn't want to have - when you realize what you had been thinking and doing for the past years was awfully dumb. Like finding out your fly had been open for the whole day (or worse!) and recollecting the smirks and funny looks of people who had been around you. Worst is that the thing you realized is bloody obvious.

My realization concerned my marketing mindset. Godin tells us as marketers we can change the circumstances of our customers in order to help them realize our offering is the best for them (and it is!). He uses an analogy from a famous scene in the Godfather, which I think is fantastic. Maybe because I simply love the first two Godfather movies. Pocock uses the words demonstration and showing not telling and urges the marketer to let the customer make her own conclusions before reaching a decision. Which the customer does, according to her circumstances. You don't win over the customer by pressuring her, you win her over by adjusting her perception and helping her think by herself. Pocock reminds us that everyone as a customer wants to feel in control during the sales process, and he's right.

I might just call my marketing mindset Godfather marketing henceforth. Respect your customers, adjust their perception by your communication. Is not the best marketing something that time and time again makes the customer herself realize matters that are important or relevant to her and that demonstrates that the best way to move forward is with the help of the marketer? Isn't this what pull is really about?

Why is a mindset important then? It helps to have consistent thinking, action and communication. On my office wall, next to my business mantra, I'm sticking Godfather marketing. Also what Godin and Pocock are telling fits perfectly with Kevin "Lovemarks" Roberts' ideas of Mystery in succesful marketing - don't tell everything, leave room for imagination and realizations.. or in Godfather's case, pure fear!