Blast from the past Posted by Tomi Heikkinen , Tuesday, January 19, 2010 at 20:27, in Labels: CRM, dissertation, growth companies, tomi heikkinen

I've always forgotten until now about this. With my year in Cranfield moving into a stage where I need to start really thinking about my Master's dissertation, I was again reminded of a thing I was supposed to do: post the abstract of my Bachelor's dissertation for online reference and storage. The 112-page, 24 500 words of a brick was titled "Strategic Customer Relationship Management of Growth Companies", and I was really happy with the end result. Though with the benefit of hindsight, I'd do a lot differently.

But here's the abstract at last. I have also a 1000-word executive summary available.

Customer relationship management, or CRM, is often understood narrowly as a technology or a utility. In a more recent theoretical discussion it is however understood from a strategic perspective or as a fully-fledged business strategy that requires implementing CRM from a strategic point-of-view and combining it into the company’s other business strategies cross-functionally. From this perspective, the focus is on what CRM offers to growth businesses that are mostly thought to gain their growth by acquiring new customers.

This thesis understands CRM and customer management from a process-based, holistic and innovative point-of-view. The core of its theoretical basis is a framework of CRM that determines its five most crucial processes. Another important element of the theory used in this thesis involves literature that describes and studies rapid-growth companies, especially in the field of information technology.

The purpose of the thesis was, with the help of a theoretical framework and a thorough study, to establish what is “growth-oriented” CRM of growth companies and how the theoretical framework suits their needs. The qualitative study, conducted by themed interviews in the summer of 2007, involved five Finnish ICT growth companies.

The study revealed that typical to growth companies’ CRM is a project-based, short time-perspective method of managing and examining their customer relationships. Taking into account this and their demand for growth, it is concluded that these companies have a challenge in forecasting their business accurately, as one interviewed company told. Perhaps one of the most important observations was that these companies have grown profitably via their old customer relationships. Additionally, this involves that how companies manage their older relationships and the success of their acquiring new business are very closely interconnected.

This thesis describes and gives a justified opinion on CRM of growth companies, basing it on leading literature and observations acquired with the study. The thesis also views literature from the viewpoint of the reality of these companies and thus makes new suggestions and findings to it. Furthermore this thesis gives concrete development suggestions so these could develop the profitability of their customer relationships.

Keywords: CRM, customer relationship management, customer management, rapid growth, growth company

Thesis mentor: Dr. Seppo Leminen

PS. The conceptual framework of CRM I used was the model of Dr. Adrian Payne and Penny Frow.

Why everybody in a company is a marketer? (Really) Posted by Tomi Heikkinen , Tuesday, December 8, 2009 at 00:54, in Labels: competitive advantage, copypaste economy, marketing, tomi heikkinen

Why everybody in a company is a marketer, service-dominant logic makes sense and people/competence is a key generator of competitive advantage.

Seth Godin delivers another online gem.

"So, how to protect your ideas in a world where ideas spread?

Don't.

Instead, spread them. Build a reputation as someone who creates great ideas, sometimes on demand. Or as someone who can manipulate or build on your ideas better than a copycat can. Or use your ideas to earn a permission asset so you can build a relationship with people who are interested. Focus on being the best tailor with the sharpest scissors, not the litigant who sues any tailor who deigns to use a pair of scissors."

Godin writes about how to protect your ideas in the online world. His insightful words however touch another interesting topic of how companies should approach marketing from a relational, competence based perspective.

Gary Hamel and CK Prahalad (1996 2nd ed.) talk about core competences and how they drive company’s competitive advantages. In their words, core competencies translate into substantial competitive advantages and are particularly relevant in the current economy. Companies pool these competencies by skilled recruitment and stakeholder network management.

We all know the old wisdom that everybody should be a marketer in a company. But this is especially true for knowledge intensive service organizations. Consider briefly the recruitment criteria of such a company. These organizations hire people of talent and potential, or in other words, for their competence. They are idea developers and results providers. Deriving from Godin’s logic, they have a basis to attract interested people (customers and other stakeholders) and thus create mutually beneficial relationships. If they these recruits are market oriented and capable of two-way communication, by hiring them the companies have just saved a lion’s share of their marketing budget. These organizations don’t have to worry about push sales tactics or brand awareness. They have word-of-mouth and natural pull on their side.

Robert Vargo and Stephen Lusch (JoM 2004) talk about a paradigm change for marketing from a goods-based business logic to a service-dominant logic, where services based on competencies are transacted with goods as mere vehicles for service delivery. I think they are after something right. In an online, hyperfast copypaste economy it is increasingly difficult to succeed with a product leadership strategy. So knowledge becomes an asset, and how you deliver your offering the advantage.

A organization where everybody who creates ideas is a marketer must truly focus on employee retention. These kind of companies adamantly consider their employees and customer relationships as their most important assets, even though as assets they are ungrateful and expensive. But investments in these assets pay off. Benefits diffuse to improve shareholder value through happy, ambitious employees, improved brand value, competitive advantages, enhanced customer experiences and longer, more profitable customer relationships. Take a company like Reaktor Innovations, a growing IT service success story that is constantly awarded as a Great Place to Work.

I’ve researched knowledge-intensive Finnish companies and SMEs like these have the best potential to become such organizations. A few are already and enjoy profitable double digit annual revenue growth rates year after year. So, are you recruiting people who have great ideas and helping them share and spread theirs and yours?

Should environment be a stakeholder in your company? Posted by Tomi Heikkinen , Thursday, December 3, 2009 at 21:29, in Labels: business strategy, shareholder value, sustainability, tomi heikkinen

Companies around the world but particularly in the West are driven to develop their sustainability and their contribution to social and environmental issues. The aim is to create a closed loop of consumption that enables us to stop overusing the finite resource base we currently can capitalize. This is because we're permanently damaging the environment and it's ability to regenerate resources. The result is that in the long-term the environment cannot meet our current needs nor the needs of future generations.

In order for companies to systematically and concretely drive a focus and mentality of sustainability some suggest that environment should be considered to be a stakeholder of (all) companies. This way, the "voice" of the environment would be heard in companies, effectively establishing its presence in decision-making processes. It is a noble idea, but a flawed one.

The question, is environment a stakeholder in a company, boils down to how you consider environment from a means-end perspective. Is environment a mean for humanity's well-being or a end in itself? In a gut feeling, one might think the former represents a purely capitalist and liberalist point of view where environment is just a tool for humanity to be used as we wish, while the latter is a predominantly "green" position where environment itself has a value comparable to human life. These two views are extremes and are mutually exclusive, but there is a grey area in between.

The environment cannot speak for itself. We can't talk to a cow or a river and ask their opinion on matters. Who should then represent environment in a stakeholder conference? A person? But how can a person or a group of persons effectively and sensibly represent the needs of an awesomely complicated eco-system? If a person is doing the talking, isn't the person representing herself and other people who share certain ideals (like clean air for our children)? Doesn't it mean then that a certain way of utilising and treating the environment serves as a mean to reach their ends, their ideals? In the end, is it just humans discussing and advancing their own interests, how moral or immoral they are?

What is suggested here is that you can address and pursue sustainability while leaving it out of the list of stakeholders. Not regarding it as a stakeholder shouldn't denote lack of consideration. Even though environment is a tool for humanity, it's importance for human well being and survival cannot be underestimated. Companies as citizens of societies should pursue to respect environment even if it is considered to be a mean rather than an end by including their impact on the environment in their corporate strategy planning processes. A sustainability plan is a good start - companies can discover means to cut costs and gain new, profitable competitive advantages that create shareholder value. We still live in a world fueled by money, so we're better off rationalizing sustainability and making a good buck while sustaining the world for tomorrow.

How does marketing contribute to shareholder value? Posted by Tomi Heikkinen , Wednesday, December 2, 2009 at 01:14, in Labels: job interview, marketing, marketing accountability, shareholder value, tomi heikkinen

A superb question to any marketer's job interview. Why?

By answering "correctly" (a vague term in real life I know), you..

1) show to the interviewer you understand the strategic, dual value purpose of marketing: Creating value both to the customer and the shareholder.

2) point out you fathom the importance of relationships in marketing and business as drivers of long-term value

3) can bring forth your understanding that marketing is not a one silo thing - but rather cross-functional, where the marketer (you) acts as a facilitator of customer orientation within the firm and an advocate of the customer to the other functions of the company

4) indicate that you are financially literate and understand the purpose of predicting and measuring financial, hard outputs - VERY important!

5) also show you grasp the role of marketing as the company's vanguard element whose task is to acquire critical market intelligence, both customer insight and external information about the environment around the company, and disseminate this intelligence across the firm and to the value chain participants.

6) prove you comprehend what brand equity is about and how brands create shareholder value

7) point out your appreciation of strategic marketing as a tool of resource allocation decision making

The list is hardly complete. But are you asking your prospective marketers this question?

Solving outside your box Posted by Tomi Heikkinen , Sunday, September 20, 2009 at 20:08, in Labels: personal selling, problem solving, tomi heikkinen

How much do you think your sales persons think outside and beyond your organization's current abilities and comfort zones when coming up with solutions to your customers?

How much idea power and effort do they employ when their customers directly or indirectly present a problem that they don't seem to be able to tackle with your current resources or offerings? Do you enable and help your sales people solve a customer's problem even if its not fully within the scope of your business? If yes, would it be profitable? Moveover, should you be bound by your current strategy or by your customers? Or both, or neither?

Something old, something new Posted by Tomi Heikkinen , Thursday, September 17, 2009 at 09:54, in Labels: clichés, marketing, rohit bhargava, tomi heikkinen

A couple of interesting entries from the blogosphere that deserve a mention in my "social learning diary".

Something old: 101 clichés of B2B marketing. This site has been online for a year now, and they show the 101 worst communication clichés a marketer can use. A terribly funny blog, it also serves as a valuable tool for creatives to measure the differentiation of their communication. It's useful for ad agency types but also for any marketing people who strive to make their message simpler, easier to understand, more attractive but above all recognizable from the mass.

Something new: Rohit Bhargava writes very perceptively about the end of mass broadcasting era. His post is about media convergence of the social media and broadcast television: the possible future role of television is to be a broadcaster specialized in live events, it has a potential point of integration with social media that revolves around real time interaction and collaboration. I agree with Rohit, this is an interesting possible trend that is worthy of further monitoring!

Segmentation based on our competitive advantages? Posted by Tomi Heikkinen , Friday, September 11, 2009 at 14:19, in Labels: chris fill, competitive advantage, kelly page, paul baines, segmentation, targeting, tomi heikkinen

Thanks to the upcoming Cranfield Experience(tm), I've been pre-reading Marketing by Paul Baines, Chris Fill and Kelly Page (2008). I'll possibly review the book later in depth, but many points have come to mind while reading their comprehensive, massive, but excellent textbook, and one in particular stirred some thinking.

The authors discuss the basics of segmentation and targeting. They go through both consumer and business market aspects of S&T, and while describing the business side of things, they mention some limitations of market segmentation. A particularly interesting point was that there is insufficient consideration how market segmentation is linked to competitive advantage. Moreover, market segmentation has not tended to stress the need to segment on the basis of differentiating the offering from competitors.

Why is this interesting? First we might consider what is competitive advantage. In rough layman's terms it means doing something critical to the customer so much better than the competitor OR having something critical to the customer that the competition has not. A sustainable competitive advantage furthermore is an edge that cannot be easily swayed from the supplier. However the competitive advantage is possibly two-fold: on one side, it's critical to the supplier because it enables it to differentiate from the competition. But on the other side, it might be critical to the customer - the supplier might have been selected because of the competitive advantage, ergo the offering should be vital to the customer's business. It is obvious not all businesses can have competitive advantages that are so remarkable. But shouldn't every business strive to develop advantages that become immensely important parts of the core businesses of their customers? Isn't it every CEO's dream?

Back to segmentation and targeting. A starting business, or even an established firm with a new business, should among other things consider their targeting according to their competitive advantages and their strengths. In other words, be both competition and customer-oriented. Key questions might be: What are our sustainable competitive advantages? For whom are we the most potent suppliers? Which advantage is most profitable? Who benefits most of our advantages, and are they profitable too? What kind of demands are we best suited to fulfill? Who are the customers to whom we could become a lifeline? A bit of blue ocean thinking too never hurts.

Maybe a well thought-out toolbox or a framework/mindset is in order? And maybe I just came up with a thesis project for myself?

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.

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!

Best-practice street hussle marketing Sunny Beach style Posted by Tomi Heikkinen , Wednesday, July 15, 2009 at 21:23, in Labels: bulgaria, case study, marketing, tomi heikkinen

During my vacation I recently visited Bulgaria, tourist-filled but cozy Sunny Beach to be exact. Sunny Beach is a vibrant resort sprawling with numerous albeit mostly homogenous bar&restaurants. And like in every other major tourist resort, the streets of Sunny Beach were riddled with stalls and over-eager people trying to get you to buy stuff/into their restaurant. It didn't take long before I readied my marketing eye and really started to consider their activities from a proper marketing perspective. What could be learned? How would I develop their marketing? Hence my shot on best-practice street hussle marketing.

A good businessperson knows that a quality offering is the basis of everything. Each restaurant more or less offered the same foods, even though their communication mostly loudly promoted the wide scope of their variety of foods. I realized after a day of walking through the congested boulevards of Sunny Beach that same stuff; pork, veal, chicken, pizza, was served everywhere. Thus we can deduce that the "product" was the same among all competitors.

It was not a surprise that differentiation in communication and promotion were the keys to success. My favourite bit of differentiated communication was "Michael Jackson is going to dance in two minutes", shouted to a group of tourists by a employee of a beach restaurant. A bit inappropriate, gross even, considering the recent passing of the King of Pop, but I laughed (and went to have a dinner the next day). The same employee also always managed to keep a (genuine?) smile and vigorously seached for eye-contact when approaching prospective customers in the street - winner traits were positivity and genuinity. In one hand I saw many tired and apathetic, and on the other hand happy, but irritantly unsurprising marketers, but their energetic and exertive competitors were easy to spot. Not surprising: the importance of empowered people doing right things was again proven.

Flyers were the other key marketing tactic of the beach restaurants. Almost all listed the same boring typical meals offered and were filled with flashy pictures of their spaces and meals. Some had maps to illustrate the location of the restaurant. Like with husslers, they were monotonous and easily forgettable. I wondered how could the best marketers stand out of the competition if they all had more or less similar flyers? Of the dozen or two of flyers I collected, just for this blog post, only two or so included actual example prices of their meals. This is hugely important for prospective customers to assess the price level of the restaurant when making a quick decision where to get a dinner or a lunch. Even billboards standing next to restaurant exits rarely had the prices of typical meals. Customers were not given a chance to measure and compare adjacent restaurants. Horribly inconvenient and time and effort consuming for the customer!

Location and the facade were other important marketing aspects for the restaurants, but where the restaurants eager to improve their marketing, I'd believe aforementioned communication would the easiest (and cheapest!) aspect to develop. Starting with a bit of innovation in flyer and billboard design and seeking out the best employees to work as husslers would help many restaurants stand out in a crowd. Maybe then there would be more than one restaurant, Djanny, in Sunny Beach with a queue in the rush hours of the evening. It was however word-of-mouth recommendation that led me to Djanny..

My sales and marketing mantra Posted by Tomi Heikkinen , Friday, July 3, 2009 at 15:07, in Labels: growth, mantra, marketing, sales, scottginsberg, tomi heikkinen

Grow by helping your partners and clients grow.

It's my new mantra. It's viciously obvious to anyone, but like Scott Ginsberg likes to say, one must remind him/herself continuously of the important values and matters that crystallize who and what you are and what you will become.

My mantra is about business with respect and collaboration. To business partners it means that I'm willing to give and I'm eager to help them become better. It's the same with my clients, in addition that I seek a bigger share of their wallet and heart and inseparably tie their growth potential to my own.

What's your business mantra?