How to lose customers – A case study.

How to lose customers – A case study.

 

 

We live in complicated times, none more disturbing than the now regular breaches of data privacy and subsequent risk to the financial and personal security of individuals.

The recent spate of data breaches is probably just the beginning, but we, the general populace in the absence of any deep technical knowledge about data security, assume that those who collect our data do so for good reason.

Silly us!

This should never, but it seems always does include, ongoing marketing, and selling of personalised data, even well after we cease to be customers.

I have been a customer of Optus since their first days. I switched the day there was a competitive market born in 1993. They have all my communications business, which may be chook feed to them, but is a substantial hole in the monthly household budget.

The best Optus can do in the face of the breach, presumably enabled by minimum level investment in security, is send a form letter, full of assurances that all will be well. However, if we want to phone them, here is a number, but there might be a wait.

While the letter was addressed to me, at my residential address, the header was ‘Dear Customer’. They know my name, email, and phone numbers, and certainly can aggressively ensure bills are paid, so no detail goes unnoticed.

Surely Dear Mr. Roberts instead of Dear Customer would have been easy?

It might have been sensible for them to also list the services I hold with them, and give a risk assessment of each? Perhaps I do not deserve such a level of transparency?

Then, the signoff:

‘Sincerely. Your Optus team’.

No names, not even a duplicated signature of the cleaner, let alone anyone on a huge salary who might be taking any responsibility for this marketing clusterfuck.

I guess I will have to bite the bullet and change, be a part of the great communications customer churn. These nignogs spend tens of millions tapping into this churn, rather than shoring up the customer base they already have and reducing the churn. As an advisor to SME’s my advice is to cherish your existing customers, particularly those who are unlikely to change, even if just for the avoiding of the inconvenience involved.

When your business faces a crisis brought about by external factors that will impact customers, rule number one is be up front, take responsibility, accept the shortcomings that led to the crisis, articulate a recovery plan, and most importantly, personalise it to those affected.

Optus has done none of those things.

I am glad my super fund that also hides behind barriers I struggle to breach, does not hold any Optus shares. Presumably it is unable to given Optus is 100% owned by a Singaporean billionaire. Is this ownership, and the key place Optus holds in the communication infrastructure of this country a part of the problem?

 

The changed 1/2 life of information

The changed 1/2 life of information

 

 

Following on from a previous post about the value of information, it seems relevant to ask how long any value created lasts.

We are all familiar with the notion of the ‘1/2 life’. The time it takes for radioactivity of an element to decay by 1/2. Uranium 238 has a 1/2 life of several billion years.

What about the 1/2 life of information?

The  1/2 life of a daily newspaper is arguably 1 day, today’s news is ‘tomorrows fish wrapper’, and for 99.9% of blog posts, and most other so called ‘content’, it is about 2 seconds.  This seems odd in what is supposedly the ‘Information age’. Why is the life so short, in most cases, and what make the difference for the 0.1%?.

The answer seems to be: It depends on the value of the information, and the ‘friction’ or resistance which is applied to its transmission.

Businesses, and most institutions are structured to be top down, in functional silos. This is a system that evolved before digitisation of information, which enabled the scaling of effort and the most efficient allocation of resources. A 20th century solution to the challenge of information transfer and leverage.

In the 21st century, with digitisation, the structures of the 20th century are redundant. They are simply too slow to be competitive in an environment where the action happens at digital speed on the ‘front lines’ of customer interaction. It takes too long for the siloed decision making processes to work, the customer has moved on to someone who is able to satisfy their need on the spot.

This change requires a wholesale change in the way our organisations are structured and the tactical actions that take place every day are managed.

What happens on the ‘front lines’ evolves quicker than the siloed information and instruction exchanges that worked well last century. We must turn our power structures upside down, and give the front lines the authority to make on the spot customer focussed decisions within a much broader remit than was previously the case. The risk if we do not is that customers will simply go down the road to someone more responsive.

This creates huge complications for organisations, as the status quo is upset. The power people at the top have worked for all their lives is diluted, and for those at the bottom, suddenly they are being tasked to take decisions that last week were being referred up the chain.

There is a driver of activity, always present, but to date well in the background for most, being the ‘operating rhythm’ of the market in which they compete. When their decision cycles are slower than the operating rhythm of the market, the market will go elsewhere, or at the very least, opportunities will be lost.

Getting ‘inside’ the operating rhythm of your competitors and the market more broadly, being able to respond quicker, is an emerging key to strategic success.

The 1/2 life of information is now in the hands of others, those who really count, by being customers.

 

 

 

 

The single ‘Must-have’ to start a successful business.

The single ‘Must-have’ to start a successful business.

 

There are many things needed to start and scale a business, the ones I bang on about all the time are cash and commitment.

There is however another.

Trial.

Without trial, there is no business.

Whether you are starting a business in a well understood and competitively supplied market, or a completely new product in a new field, the challenge is the same.

You must generate trial.

The strategies necessary are entirely different for every business, as the challenges are entirely different. However, the common feature is that you must make the value proposition attractive enough to bust the power of the status quo, and often the barriers to exit for the current customers of incumbent competitors, before you will generate trial.

Then, and only then, if the product performs, and the barriers to adoption post trial are breached in sufficient numbers, you have a chance at survival.

It seems pretty obvious, but we do not usually think about trial as the single and first essential barrier to success. Rather, we tend to think about it as just the first step in a process, not giving trial the weight it deserves.

 

 

 

Content is not king

Content is not king

 

 

‘Content is king’ is an expression that is widely accepted as a basic truth.

Pity it is wrong.

Creating content has become commoditised, everyone is doing it, you can now buy AI programs that will do it for you. (Let me know how that goes)

The value of any content is magnified geometrically when it comes to the receiver in the appropriate context. It is the context that connects first, before the content has a chance to make an impression.

Remember what happened when you were considering buying a new car?

Suddenly, you see the car you favour almost everywhere, even if they are relatively unusual.

It is the same with ‘content’.

When thinking about a new car purchase, you will rarely see content produced by an architect, no matter how good it may be. However, if you have decided your house needs a reno, will probably see an ad that highlights renovation architects.

Context.

Most search results have ads running down the RHS, which we mostly do not see. However, from time to time, we do ‘see’ an ad, and mostly it is because our subconscious has latched onto a photo or headline that reflects something that has been on our conscious mind.

In other words, the message intrudes on our brain because it hooked into a context, then if the content is any good, we may take it further.

This balance between context and content more than anything else is why you must understand the behavioural drivers of your ideal customer, to ensure not only does the right content get to them, but it does so in a context that it will be seen, and understood.

 

Header cartood credit: Tom Gauld from new Scientist magazine.

 

How to ensure your marketing plan delivers your strategic objectives

How to ensure your marketing plan delivers your strategic objectives

 

 

Marketing programs should always be driven by the combination of your current position and the agreed strategy. Your marketing objectives should be directly and overtly tied to the achievement of the longer-term strategy.

In the absence of an overall strategy, writing a marketing plan becomes an exercise with little meaning. The marketing plan is how you allocate external communication investment and align internal resource allocation priorities to the achievement of the strategic objective.

The marketing objectives should be designed to contribute to the achievement of the strategic objectives, along with other corporate plans such as the financial plan (budget) manufacturing plan, personnel plan. They work together to achieve the overall strategic objective. They represent the desired end points, the strategies and tactics employed are how you get there.

It is a simple formula: Objectives = Current situation X strategic choices.

A plan without an objective is not a plan.

Objectives have three functions:

  • They provide the target that every stakeholder understands is, or should be, the focus of their daily, weekly, monthly activity.
  • They provide the framework and means for the alignment of cascading contributing objectives, performance measures, milestones, accountabilities, and responsibilities, through the organisation, up, down, and across.
  • They provide a framework for measurement of progress.

The compounding of the effectiveness of effort when these three functions are present, and working together, is enormous.

These three functions of objectives are the same at the strategic level as they are at the coalface. The only difference is the time frame, the nature of the immediate objectives, and the activities to be undertaken by individuals.

At the coalface you are looking at the objectives for today, tomorrow, and next week.

At the strategic level you are looking at next quarter, year, and 3 years.

The means by which the gap between the levels is addressed is reflected in the 2-way flow of information, priority and feedback that occurs, which is a function of the culture and resulting ‘flow’ through the processes in the business.

It is easy for me to say, but very hard to get right, and it is not a task, it is a continuing journey.

Everyone, at every level should be aware of the strategic objectives, the strategy, and how their piece of the world fits into and contributes to the larger picture.

Think about the many wheels inside a mechanical clock, all are driven by the central objective of telling the time, then hours, minutes, date, day of the week. All are run off the central powered flywheel.

The strategy is the flywheel, delivering accurate information is the objective.

The strategic objectives should evolve out of the interrogation and questions that are asked in the assessment of the current situation, and the vision/mission, whatever you choose to call it, of the organisation.

A daily ‘toolbox’ or ‘stand-up’ is the coalface equivalent of a quarterly strategy review, just held at a different level. They are the catalyst for the difficult questions that need to be answered.

 

 

 

10 essential questions for a marketing ‘Pre-Mortem’.

10 essential questions for a marketing ‘Pre-Mortem’.

 

We all understand what a post-mortem is: an analysis of why something after the fact. It deals with history, then usually when something has failed. We review the drivers of success less often than examining the reasons for failure, then allocating responsibility.

Planning a marketing program is in effect a ‘pre-mortem’, a plan of action that will, with good management, robust analysis, and a bit of luck and timing, deliver the anticipated outcome.

Logically, it makes sense to ask the sorts of questions typically asked at a marketing post mortem, when a plan has failed, before the failure, as a means to anticipate and answer the questions, offering an opportunity to fix the problems before they happen.

Based on the many marketing pre and post-mortems I have done, following is a list of the 10 essential questions to ask yourself and your team before pushing that great big ‘Go’ button.

Where did the revenue come from? 

Growth is not possible in the absence of revenue, where did the revenue come from, and almost every marketing plan I have ever seen calls for growth. Less often do they articulate where it will come from., and the consequential reactions of those who might be losing out.

Current customers, new customers, channels, business models, products, technical achievements, geographies, and so on. However, do not just list them, articulate in some detail how it has happened. Again, that past perspective adds real ‘grunt’ to the conversations.

I used to refer to ‘Share of Throat’ when planning for FMCG. It implies that competition is not just the alternative products in the category, but everything that is competing at the consumption occasions. For example, a hugely successful new product was Ski Double-Up, launched in the late eighties. It brought new consumers, older men, into the market. It did not compete for a place on the breakfast menu, it was a healthy, convenient, and tasty snack product that filled a need in older men that frankly we did not fully recognise before launch. It opened up an additional avenue into men’s throats replacing pies and sandwiches.

Where did the capital come from? 

Growth is a veracious consumer of resources, particularly capital. How did you fund that growth? Reinvestment of retained earnings, capital raising from friends and family, or from the markets, public and private, debt finance considering the necessity for assets as collateral? What alternative uses for the capital consumed were considered, and why is the investment in marketing a superior choice?

What is the dominant business model?

Are you a middleman, retailer, on-line item sales, subscription sales, did you achieve a position to monetise arbitrage opportunities, and so on. Digital has delivered a host of new and emerging business models to us over the last decade, but one thing that has become clear, if it was not already, is that differing business models do not live comfortably in the same house. Therefore, if your revenue streams come from different business models, the structure of your resulting business needs to be decentralised by those differing business models.

What is the ideal corporate structure?

Have you remained private, are you publicly owned, a partnership, Joint venture, franchise system? There are many options, and as in the previous question, siblings rarely successfully live in the same house.

What capabilities were required to succeed, and where did you find them? 

This is a question in two parts. Firstly, what capabilities were required from individuals, technical, strategic, financial, and all the other factors that make human beings able to contribute? Secondly, what were the organisational, leadership and cultural factors that enabled the organization to leverage the capabilities the individuals brought in each morning as they turned up to work.

Which customers, markets, products, technologies, relationships, were critical to the success? The answers to these questions are at a ‘must know’ level. Why did those customers come to you, choosing not to go to a competitor? What is the factor that differentiated you from the others?

Which competitors proved to be the most potent?

Anticipating competitive action, and planning to accommodate the impact is a necessary part of every plan, as noted previously. This is perhaps the most common failure amongst marketing plans I have seen, and to be fair, written.

A long time ago I was with Cerebos, one of the brands I managed was Cerola muesli, at that time a successful brand, and I was keen to expand the brand footprint. I saw a gap in the market between muesli and corn flakes, this was 35 years ago, and there was not the wide choice we have now. We developed a half way product we called ‘Cerola Light and Crunchy’ and launched a test market in Adelaide.

At first, we did remarkably well. The logic we employed was well accepted, the retailer sell in easily achieved targets, and consumer off-take was strong after the initial burst of advertising.Then in came Kellogg’s with a look-a-like product, ‘Just Right,’ and their resources just blew us away, Light &Crunchy never had a chance in the face of the weight of the competitive reaction by Kellogg’s.

That is a lesson I did not forget. With the benefit of hindsight, it was obvious, poke a bear in the arse and he is going to turn around and give you a whack, and I did not anticipate the power of it, and I should have. Never made that mistake again.

Where did the new competitors come from?

New competition almost always comes from the fringes, and often outside the normal scope of most extrapolative planning. Looking widely at what is happening in other markets, and other technologies may offer insights to where new, and probably more potent competition may come from. Honda started in motor bikes with the Honda 50, selling it to students in California as cheap local transport. None of the incumbents, Triumph, Norton, Harley, saw them coming, they thought they were toys, being bought by people who would never buy a big bike. Blockbuster ‘owned’ video, and could have bought Netflix for $50 million, but thought them irrelevant, not even an irritation. 5 years later Blockbuster was broke.

What is the emerging source of customer value in the market?

Nothing new will be bought in the absence of a strong reason to switch from the incumbents, which always means new value has been created, somehow. How did your create yours?

What did we do wrong, and what did we learn?

You learn more from your mistakes than you do from the things you got right. Make sure ‘learning is part of the cultural DNA of your business.

When you have the answers to all these questions, found with the benefit of the virtual hindsight, you will be in a very powerful marketing position, able to write the plans that double-down on the things that will deliver the objectives and success

In other words, execute the plan.

Header credit: Talisa Chang via Medium