digital customer growth: engaging customers in digital channels
DESCRIPTION
Digital customer growth - a framework A business model based on customer experience How to build a strong customer experience Using digital transformation to build a customer centric organisation Creating a roadmap for digital customer growthTRANSCRIPT
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organisation without prior written approval from Avaus.
TOM NICKELS WWW.AVAUS.FI
LEADING ENGAGING CUSTOMERS DIGITAL CHANNELS IN
- GROWING VALUE THROUGH PERSONALIZED EXPERIENCES
IMAGE BY CHERRYGARCIA / FLICKR
AND
TOM NICKELS WWW.AVAUS.FI
Sales or revenue is the foundation upon which every business is built. All sales come from your customers. All companies face challenges of growing and retaining customers as interactions and relationships move to the digital space. The only way to differentiate and create value for your customers is by delivering a better customer experience than the competition. To do this, you must listen to customers and interact with them as individuals. Digitally. This requires many changes within the company: new services and distribution channels, new ways of organizing, better data management, new flexible technologies and new metrics.
digital customer
growth
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Digital customer growth - a framework A business model based on customer experience How to build a strong customer experience Using digital transformation to build a customer centric organisation Creating a roadmap for digital customer growth
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DRIVING BUSINESS
We combine strategy, analytics and design with technology and outsourcing services.
Focus areas: • Digital transformation • Customer growth • Digital sales and B2B Lead
management • Business model & service innovation • Business process efficiency
100 SPECIALISTS
OFFICES IN HELSINKI, FINLAND AND WROCLAW, POLAND
REVENUE 10+ MILLION € (2012)
SOME GREAT COMPANIES WE WORK WITH:
Digital customer growth – a framework
1
FOUNDATION
Customers have changed forever
Google, Amazon,
Apple and Facebook set
new standards
for what consumers
expect from companies
But most old companies are stuck with
their legacy
Slow decision making Legacy IT systems
Old distribution channels Wrong competencies
Company politics Fear of cannibalization
UNIQUE PRODUCT
COST ADVANTAGE
CUSTOMER INTIMACY
BASES FOR DIFFERENTIATION
COMPETITIVE
CREATING A
ADVANTAGE
It’s difficult to differentiate based on price or product characteristics. It might work for a while, but usually competition catches up. However REALLY KNOWING YOUR CUSTOMERS and serving them based on their individual needs will set you apart.
Without a good product companies are not in the game. But the core product has already some time ago become just a hygiene factor for producing a great customer experience.
In the beginning - companies created the product
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organisation without prior written approval from Avaus.
LIFESTYLE THEN COMPANIES
STARTED TO ATTACH A
TO THEIR PRODUCTS BY INVESTING IN BRANDING.
What does it say about me if I wear Nike or drink Coke?
Now there was a context for the product, a context that
added some value to customers.
”We have these products, where do we find customers for them?”
“We have these customers, how can we serve them while making a profit?”
It becomes easier. Educational. Fun. Something to share with friends. It multiplies the value of the product.
PRODUCT
SERVICE
CONTENT
COMMUNITY
Shoes Clothes Sensors Apps Devices
Set goals Find routes Track activities
Sharing Events Challenge friends
Workouts Music Voice prompts Training tips
services & content
NOW COMPANIES ARE ADDING MORE CONTEXT THROUGH
Customer needs are fragmenting. At an increasing pace. No company alone in any product category can produce solutions that satisfy the range of needs now on the market. The ultimate way to add context to products is by opening up and allowing others to build upon your product and make it suitable for a whole range of users and needs. In most businesses this war is just starting.
The next battle-field for context - is the battle between ecosystems
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organisation without prior written approval from Avaus.
ANY BUSINESS
IF YOU CAN ADD SERVICES AND CONTENT TO LIGHT BULBS YOU CAN DO IT IN
CONTEXT
NEEDS AND MOTIVATIONS
PREFERENCES HABITS
LIFESTAGE ATTITUDE
TIME PREVIOUS BEHAVIOR LOCATION CUSTOMER LIFECYCLE
= RELEVANCE
THE HEART OF CUSTOMER INTIMACY IS
BUSINESS MODEL
RELEVANT CUSTOMER ENGAGEMENT
ORGANISATIONAL CAPABILITIES
Customer experience Loyalty Sales
Identify Listen Customize Interact
Data & information
Experience design
Organisation & processes
Technology
RELEVANCE
Grow sales and profitability per customer
Treat each customer as an individual
Move from product centric to customer centric organisation
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2
3
A business model based on customer experience
2
BUSINESS
The business logic of customer growth
Customer growth
Customer experience
Customer loyalty
Sales
Customers Revenue per customer
Retention
Recommends Buys more
Will not switch
Useful Easy
Pleasant
Aktiivisten asiakkaiden
määrä
Keskiostos Ostouseus
X X = 1 000 000 20€ 6 120 mil. € Purchases per year
Customers Average purchase
Segmenting customers based on purchase frequency
1. Sporadic customers 2. Regulars
4. Passive
3. Best customers
1 5 18 0 Purchase
frequency per year
1. Sporadic 2. Regulars 4. Passives 3. Best
1 5 18 0 Frequency
Customers
Avg purchase
Sales
400k 400k 200k 600k
20€ 20€ 20€ 20€
8 m€ 40 m€ 72 m€ -
120 m€ Total revenue from all customer segments
How much revenue and profits do different segments bring?
1. Sporadic 2. Regulars 4. Passives 3. Best
1 5 18 0 Frequency
132 m€ Total
1 5,5 20 0 Growth in frequency
Sales growth 12 m€ = 10%
What is the best way to grow sales?
All Store Telesales Internet
… Customers Purchases Loyalty
CUSTOMER BASE - FEBRUARY 2012
• Total number of customers: 852030 • Marketing permissions: 754044 (88%) • New customers this month: 5713 • Average purchases per customer: 2,3
Existing customers New customers
Share-of-wallet
12 MONTH TREND
Products per customer
Revenue per customer
Customer life time value
How to build a strong customer experience
ENGAGEMENT
3
Step 1
Identifying customers
UNIDENTIFIED
IDENTIFIED
HOW DO WE IDENTIFY THE CUSTOMER?
CHALLENGE:
THE
THIS IS WHAT YOU SEE, BUT IT IS NOT REALLY ME A LOT OF THE CUSTOMER INFORMATION COMPANIES CURRENTLY USE ISN’T REALLY FOCUSED ON GETTING TO KNOW WHO THEY ARE AND WHAT THEY NEED.
AND ABOVE ALL IT DOESN’T TELL MUCH ABOUT WHAT THE SITUATION – THE CONTEXT – OF THE CUSTOMER IS RIGHT NOW.
RELEVANCE THE HEART OF CUSTOMER INTIMACY IS
IS THIS IMPORTANT TO ME IN LIFE?
IS HELP FROM THIS COMPANY RELEVANT IN THE NEAR FUTURE?
IS THIS SOMETHING I NEED RIGHT NOW?
PERSONAL CONTEXT
IMMEDIATE CONTEXT
RELATIONSHIP CONTEXT
Web searches
Location
Weather
Call to CC
Expressed needs
Attitudes
Social connections
Lifestage
Area of residence
Visit to webpage
Products/ services in use
Purchase history
Customer lifecycle
Contact history
Purchase
REAL-TIME
DAYS TO MONTHS
YEARS Preferences
REAL-TIME BEHAVIORAL DATA
CUSTOMER PROFILE DATA +
Contextual marketing is about understanding not just who someone is but where they are, what they are doing, and what they are likely to do next. It’s about combining the right information about a customer and the context to deliver the right services and communication at the precise moment it offers the most value.
understanding context
011001010010011001010011101001100100011001100111001100011001 01100101001001100101001110100110010001100110011100110001 01100101001001100101001110100110010001100110011100110001 01100101001001100101001110100110010001100110011100110001
Good data is like the ears of a sales man. Without it you
have no clue what the customer needs.
Integrate traditional customer profile data with real-time behavioral data from all channels in order to
UNDERSTAND the need and REACT to the context .
DATA INVEST IN
Step 2
Deepen customer insight
MARKET NEED CONTEXT
IN WHICH MARKET SHOULD WE INVEST? SEGMENTING ON A MARKET LEVEL. FOR INSTANCE CORPORATE CUSTOMERS VS CONSUMERS.
WHAT SHOULD WE OFFER? SEGMENTING BASED ON DIFFERING ATTITUDES AND NEEDS. FOR INSTANCE TASTE, CONVENIENCE, OR COST.
HOW SHOULD WE TREAT A SPECIFIC CUSTOMER? SEGMENTING BASED ON THE SITUATION OF THE CUSTOMER. FOR INSTANCE VISITED WEB-SITE, ORDERED SPECIFIC PRODUCT OR IS AT LOCATION X.
VALUE
HOW CAN WE GROW LIFETIME VALUE? SEGMENTING BASED ON CUSTOMER VALUE. FOR INSTANCE HIGH-VALUE, CHURN-RISK VS UNPROFITABLE CUSTOMERS.
Different approaches customer insight
RECOMMENDATION ENGINE
TRANSACTIONAL / VALUE
BEHAVIORAL PROPENSITIES
ATTITUDINAL NEEDS
DEMOGRAPHICS / GEOGRAPHY
LIFECYCLE
Personalisation / Targeting
Value management
Proposition development
Useful Sometimes useful Not useful on its own
THERE ARE MANY WAYS TO IDENTIFY CUSTOMER CONTEXTS – USING ONLY ONE IS NOT ENOUGH
CO
NTE
XTU
AL
IND
ICA
TOR
BUSINESS NEED
Most valuable customers: Retain Most growable
customers: Grow
Marginal customers: Business as usual
Unprofitable customers: Dismiss or lower cost
Cost to serve
Image: Peppers & Rogers group
Customer value segments
Current value Potential value
value Segmenting customers based on
behavior Segmenting customers based on
PROPENSITY WHICH CUSTOMERS ARE LIKELY TO BUY SOMETHING, LEAVE OR DO OTHER SIGNIFICANT THINGS?
THROUGH PREDICTIVE MODELLING TARGETING CAN BE MADE MORE EFFICIENT. THIS HAS A POSITIVE EFFECT ON BOTH THE BOTTOM LINE AND ON THE CUSTOMER EXPERIENCE.
Developing customer
STRATEGIES
Retain high value customers
Broaden the relationship
Acquire the right customer
Improve margin of unprofitable custmers
Understand me and provide me with reasons to stay
(e.g. Loyalty recognition, Next best action)
Provide me compelling reason to purchase more
(e.g. Next best action, Behavioral triggers, Remarketing)
Understand me and make relevant, competitive offers
(e.g. Exclude high defectors, Debt risk, Matching customer type)
Can I be satisfied with less (e.g. Identify, Communicate, Steer to self-service, Raise prices)
BUSINESS CHALLENGE CUSTOMER ISSUE
€
ENGAGEMENT Interactions
CUSTOMER VALUE Money spent
€ €
€
PERSPECTIVE ANOTHER
ON CUSTOMER VALUE
Step 3
Customize your offering and
communication
Different needs and motives drive the development of customer offerings
AtoB ”I need a car to get from one place to another”
Status ”I have money and power, and I want to show it to others. Everybody admires my car.”
Convenience ”I need to be able to trust my car. It always functions the way I wish.”
Lifestyle ”The car goes along with my lifestyle. I have my own personality and I want to experience it through my car.”
Green values ”I appreciate ecological values. My car does not pollute the nature.”
Prospect > New customer > Developing customer >
Stabilized customer >
Good customer > Recommending customer >
Customer acquisition > Welcome >
Up-sell and cross-sell >
Strengthening the service
experience> Strengthening
loyalty > Customer
recommends >
Abandoning shopping basket
Resigning Passivity…
Passivity Churn…
Recognizing interested customers
Welcome program
Analytics based actions
Targeted campaigns
Triggered added sales
Guidelines on how to use products and services
Rewarding, consideration Activation of service
use
Potential customer
Saving the customer relationship
Recommending program Ensuring satisfaction
Renewing contracts
Communication
triggered
manual
automatic
scenario
Service messages
Newsletters
Tempting the customer back
Managing lifecycle
Knowing when a product or service is relevant to the customer is one of the hardest things to
do. But one that potentially pays of big time.
Identifying the right customer behavior that SIGNALS THE MOST PRESSING
CUSTOMER NEEDS and triggering communication based on that may increase
relevance and sales SIGNIFICANTLY.
WHEN?
TIMING HAS A BIG EFFECT ON RELEVANCE
Image: www.smallbizwithkids.com
READY TO BUY
The different situations of customers and prospects should be recognized. Some are just doing initial browsing, while others are seriously thinking about buying. To optimize sales results we need to distinguish between customers in different phases of the buying cycle. Automated lead nurturing programs can be used for customers that are not quite ready yet. That allows us to focus scarce sales resources on customers most likely to buy.
FOCUS SALES EFFORTS ON THOSE THAT ARE
Image: Marketo – The definitive guide to lead scoring
”Lead scoring is a sales and marketing methodology for ranking leads in order to determine their sales-readiness. You score leads based on the interest they show in your business, their current place in the buying cycle and their fit in regards to your business.”
Scoring leads in order to find customers that are ready to buy
SIMPLE REACTIONS TO CUSTOMER ACTION WILL MAKE THE CUSTOMER FEEL THAT YOU RECOGNIZE HIM – IT HAS A CLEAR FEEL-GOOD FACTOR TO IT.
(and it affects sales)
Example of Dialogue Model: New members
Business goals / aim • Activate customer • Ensure customer satisfaction
Customer experience • ”I get benefits from” • ”Great offers and benefits” • ”Let´s check out the newest products”
Description: • After joining the customer is encouraged to utilize her membership
• Also strive to gain more customer knowledge through updated profile
• Updating or changing profile information is a added sales trigger
Rules: • Trigger valid for all new members that have not yet used their card
• Once the card is used, the goal of the communication flow is met and this flow is ended
• Communication will also be stopped if the customer does not activate within 360 days
• Product offerings should include only products that are not often updated
MAKE COMMUNICATION MORE RELEVANT BY
ADAPTING IT TO THE NEEDS AND CONTEXT OF
THE INDIVIDUAL CUSTOMER.
PERSONALIZE
NEW SERVICES NEW PLAYERS FOCUSING ON ADDING VALUE TO THE
CUSTOMER CONTEXT ENTER OLD MARKETS.
+
”runtastic Roadbike is your comprehensive bike app for your smartphone. The integration of heart rate, cadence, and speed sensors lets you get more precise tracking and analysis of your biking”
my network THIS IS
What value can it bring to products and services I use?
How can companies facilitate that value?
REMARKETING RELEVANCE TAKING REALTIME RELEVANCE ONE STEP FURTHER - KEEPING UP
WITH THE CUSTOMER CONTEXT ONLINE
Web user
CLICK
Company website
User leaves
Popular sites
User returns
”Remarketing is a feature that lets you reach people who have previously visited your site, and show them relevant ads when they visit other sites.”
MOBILIZE.
”The world’s finest department store
brings the greatest international brands to
iPhone.
In-store, navigate your way around 4,000 of
the world’s most premium brands over 1 million square feet and
7 floors.”
Using digital transformation to build a
customer centric organisation
4
CHANGE MANAGEMENT
Capability 1
Customer centric leadership
”Newsweek has announced that it is going bringing an end to the magazine’s 79 year history in print.”
DIGITAL ONLY
After iPhone changed the game Samsung was able to convert its
portfolio to smartphones while Nokia failed to do so.
Market demand can steer you in any number of directions, but a vision of a future should provide the compass
for making the big bets.
What is at stake? Successful vs
unsuccessful change
Probably the most important strategic change in Nokia's history was made in 1992, when the new CEO Jorma Ollila made a crucial strategic decision to concentrate solely on telecommunications.
Nokia’s first bold move
Will Nokia’s next move ever pay off?
"If we did not act, we faced a draconian future where one man, one phone, one carrier was the
future," he said. "That's a future we don't want.”
Google: we created Android to stop an
Apple-dominated future
Four dimensions of managing digital customer growth
1. Managing Customer Experience
2. Managing Customer Insight
3. Managing Customer Lifetime Value
4. Managing Customer Centric Culture
Are you actively developing and delivering consistent positive customer experiennces in all channels?
Do you have an accurate view of customer needs and behaviour that is based on data and facts?
Do you know the value individual customers bring and are there systematic programs in place to increase that value?
Are all employees committed and motivated to create value to customers and serve them based on their individual needs?
Capability 2
Data quality
In 2002 digital data surpassed non-digital for the first time. By 2007 94% of all information on the planet was digital.
The volume of information
is growing exponentially
All companies are now in the information business Make existing products and services more valuable to your customers by building in more data and information. In B2B this is obvious. Sharing data is a key way for adding value to products and services. But it applies to B2C as well. Apps for smart phones. GPS for cars. Smart TVs. Recipies on food packages.
*Source: Temkin Group Q1 2011 Consumer Experience Survey
customer experience
Amazon is the grand master
of using customer insight to improve the customer
experience.
And results are impressive.
Amazon is the most recommended company*
with 82% of customers saying they would
recommend it.
Information drives a superior
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organisation without prior written approval from Avaus.
LIGHT BULB
IF SOMEONE CAN REINVENT THE CUSTOMER EXPERIUENCE OF A
THE ANYTHING CAN BE REINVENTED
GENERIC LED BULB 5,95 €
PHILIPS HUE 59,95 €
Philips Hue is a great example of a product where information information adds context to product usage. Contexts adds customer value. By increasing customer value Philips can charge a price premium for a product that otherwise would be generic. Information thus has become a key driver for profitability.
Information drives value
VS.
10-fold
price
premium
Geckoboard
Real-time information has become one of the most valuable management tools around. We need to know what is happening right now – are customer buying, are competitors responding, are we making profits – in order to make smart decisions.
Demographics Inbound contacts
Campaigns and responses Web history External
datasources
Marketing database
Purchase history
360 degree view of
customer
Data collection Data cleansing Data enrichment Data security Data usage
Dat
a so
urce
s D
ata
man
agem
ent
Dat
a re
posi
tory
Using data to drive insight and interactions
Managing data
Capability 3
Customer experience design
avaus.fi website 76
“ I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel. ”
BIG EMOTIONS
Maya Angelou, american poet
CREATE
Apple. Zappos. Net-a-Porter.
simplicity drives convenience convenience drives value
value drives profits
THE HOME BUTTON
”Being simple isn’t as simple as it used to be. IKEA is growing, and growing fast. Today, it takes strategy to be
simple, but it must be that way. It can be hard to find simple in a complicated world but it is the IKEA way.”
Hansi, Ikea employee on Ikea.com
Nowadays, customers don’t want just function. They want pleasure — good products that are aesthetically appealing.
Starbucks is to the age of
aesthetics what McDonald’s was
to the age of convenience.
Image: homedsgn.com
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organisation without prior written approval from Avaus.
PHYSICAL PRODUCTS
AESTETHICS DRIVES DESIGN OF
DIGITAL SERVICES
BUT AESTETHICS IS AS IMPORTANT IN
MAPPING THE CUSTOMER JOURNEY WILL HELP TO DEVELOP THE SERVICE EXPERIENCE IN MORE DETAIL
Capability 4
Customer centric organisation and processes
continuous
process
Introducing digital activities should not be seen as an individual project
Digital is a continuous process…
…bringing new ways of working, communicating and marketing, serving customers
Digital first Change your mindset for marketing to ”digital first”. Calculate
the ROI for marketing. Digital channels are (almost) always more efficient than traditional channels.
” Give people a purpose, give them big exciting things to do.”
Inspire people Terry Leahy set an inspiring vision for Tesco’s entire staff: 1) Become the leader in grocery retail 2) Create a new concept for consumer goods retail 3) Go international. All of them came true.
Sir Terry Leahy, former CEO of Tesco
All marketing activities should be connected to sales. Sales data tells you what your customers value. It will show you what works and what doesn’t, and which marketing investments are worth making.
Marketing & sales as one
All N
ames
Pros
pect
&
Re
cycl
ed
Lead
AWAR
ENES
S
Enga
ged
Opportunity Customer
Sale
sLe
adMarketing Sales
Collaboration with sales
Becoming a digitally transformed organization or function does not happen over night. Change happens step by step. Start with the basics, like managing data and communicating in digital channels. Connecting web data from the customer interface with your own data assets, and using that insight for business decisions comes after a year or two.
crawl – walk – run
Capability 5
Flexible technology platform
REACT IN REAL-TIME RELEVANT TIMELY INTERACTIONS ARE POSSIBLE ON A GRAND SCALE ONLY THROUGH AUTOMATING PROCESSES.
Example: technical architecture
Capability 6
Customer centric culture
Change is fundamentally about people
CULTURE DRIVES THE MOST INNOVATIVE COMPANIES FORWARD NOT STRATEGY
“I think there is a world market for
maybe five computers.”
Thomas J. Watson Sr., then-president of IBM, made an apparent misjudgment of the PC market’s potential. Under Watson’s leadership, IBM — which invented the PC — didn’t have a vision as to how big the market could become and let others, especially Microsoft, get the lion’s share of the value creation.
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organisation without prior written approval from Avaus.
VOLUME AND DISTRIBUTION
OF INFORMATION driven by digitalisation
SPEED OF CHANGE
SPEED OF CHANGE
ACCELERATE
THE
MORE INFORMATION = FASTER CHANGE
DIGITALISATION CAUSES
TO
industry dynamics
may change almost
over night
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organisation without prior written approval from Avaus.
game changers Are you ready for
being introduced in your industry?
Make mistakes - success comes from learning, learning comes from trial and error Mistakes are a requirement for learning. They will point you in the right direction. Organizations where people are punished for mistakes will lead to fightened organizations. Fear makes people passive. The biggest success stories include a lot of sidesteps that later proved to be mistakes. But which all had their part in pointing those companies in the right direction.
The path towards customer centric culture
Creating a roadmap for digital customer growth
5
ROADMAP
Strategy and hands-on execution in parallell
CUSTOMER STRATEGY INSIGHT
AUDIT CONCEPT DESIGN
CHANGE MANAGE- MENT
CREATIVE DESIGN
DATA STRATEGY
REPOR- TING &
ANALYSIS
CUSTOMER MANAGEMENT
PLAN PILOT
EXECUTE AND EVALUATE
PILOT
IT ARCHI- TECTURE
EMPLOYEE ENGAGEMENT &
TRAINING
CAMPAIGN MANAGE-
MENT
TECHNICAL DEPLOYMENT
CONTENT PRODUC- TION
TECHNOLOGY SERVICES
DATA MANAGE-
MENT
Strategic design
Hands-on execution
Vision Roll-out Optimize
STRATEGY DESIGN TECHNOLOGY ANALYTICS
CROSS COMPETENCE TEAMS
PROCESS MGMT
Piloting and implementation
Customer insight
Defining customer strategy
Customer definitions and selections, Customer
lifecycle
Moments of truth, Offering, Service channels
Culture, Business processes, Development
areas and roadmap
Vision and objectives, KPI’s
Why? Who?
What? How?
avaus.fi website 109
Example: Digital transformation program
2012 2013 2014
Three year roadmap for Digital Customer Growth
1. Data and technology
2. Customer dialogue
3. Customer processes
4. Service innovations
5. Organisation and culture
New website
Resource and channel optimization
Development of new digital services
Key data management
Mobile services
Online customer service As is analysis
Production of digital contents
Online sales development
Direct customer dialog
Knowledge management
New working methods New job descriptions and
organization
Process automatisation
The winners are those organisations that can learn new things and unlearn old things at an ever increasing speed.