4 questions to enable you to extract maximum leverage from your marketing investment

4 questions to enable you to extract maximum leverage from your marketing investment

May 28, 2018 | Marketing, Small business, Strategy

Imagine you are faced with the task of joining two pieces of wood.

What information are you likely to need before deciding how to go about the task?

How big and important are the pieces? Are they structural weight bearing? Is the joint going to be seen? And so on.

So: you have the information; you can then decide how you go about the joining.  Do you nail? Screw? Glue? Combine rebate glue and screw? Countersink the screw? And so on. You have many options, but without the contextual information, you cannot make an informed decision that will give you the best outcome.

Sometimes this is easy, instantaneous, other times it will require more time and research to get the right answer.

Figuring out your marketing programs is no different.

How are you going to allocate your limited resources across all the possibilities that face you?

Marketing has only one purpose, to generate revenue. Sometimes it is revenue today. Sometimes tomorrow, next month, next year, next decade. If you cannot see a connection between the marketing activity and future revenue, stop now!

 The challenge is to know enough to ask informed and intelligent questions, and be able to separate the bullshit from the good answers.

This ‘marketing game’ is full of sellers of new shiny toys that are ‘guaranteed’ to be the answer to all your commercial problems, delivering you rivers of cash.

In order to help you separate the bullshit from the reality, there are four tools you can use to do the separation, which will assist you too see the connections to revenue.

They all are interdependent, none by themselves is of great value, and together they are a powerful way of thinking about your business.

The 4 seem simple at first glance, but in reality very complex questions, that in combination will give you the beginnings of an answer. The rest will come with experience and domain knowledge.

  • What problem can I solve for a potential customer, or put another way, how do I add value?
  • Who is my ideal customer?
  • How do I apply maximum marketing leverage?
  • How do I make a profit?

 

When you have the answer to these four questions, you are ready to spend some money.

Not before.

However, once answered, it is never enough to stand still and think the answers tomorrow will be the same as today, and that the answer today is the ideal one. Business is iterative, you learn from doing, experimenting, doing it better next time. It is an evolutionary process, so long as you are careful not to bet the farm on a dud horse. These are all connected to each other, one without the other is of less value, and the impact of answering them all well is not just cumulative, it is compounding.

There is never one right answer, the interdependencies are huge, as are the options, it is all incremental, a process of improvement and no good answer remains the best one forever.

These four factors, and all the lesser things that hang off them, are compounding.

The twist is that they also compound in reverse, so you have to be prepared to try things, but get them off the table quickly when they do not work.

 

A little detail on the 4 questions.

What problem can I solve?

Unless you can solve a problem for someone why would they buy from you?

Albert Einstein, my senior marketing guru, said, amongst other things, “If I had an hour to solve a life defining problem, I would spend the first 50 minutes defining the problem, the rest is just maths’

So, do your research before you jump in.

The definition of how you solve the problem becomes your value proposition. In other words, how does what you do add value to the lives of those ideal customers?

If you cannot articulate that, you have nothing except price, and nobody wins a price war.

The solutions to problems come from being able to ask the right questions.

Seeing things others do not see, solving problems better than others, and sometimes seeing a potential problem before it is an acknowledged problem, highlighting it, and then solving it.

The classic case is the iPod. It was not the first MP3 player, and arguably it was not the best technically, but it did something no other mP3 player did. It put ‘1000 songs in your pocket’.  It articulated the problem that the product solved.

While others all talked about their technical superiority, the stuff the geeks thought was important, Apple just told us what consumer problem they solved.

Who is my ideal customer?

Who is your ideal customer, the one who will not haggle the price, who loves the product you sell, and proselytises for you? Knowing that person in great detail would be marketing and commercial gold.

Like all gold, it is hard to find, subject to all sorts of distractions and false starts, but immensely valuable when discovered, and discovery is usually incremental, rather than a ‘eureka’ moment. This means it is also a demanding challenge.

What is often also forgotten in the effort to define that ideal customer is that every customer also has an ideal supplier, one who meets all their needs, delivering value in excess of the cost to them. It is a two way street, and a relationship only prospers where there is value being delivered to both parties.

Defining your ideal customer is an iterative process, deceptively demanding, as it requires choices about who is not an ideal customer, and therefore excluded from primary consideration. Choices like this are challenging, but necessary, particularly for small and medium businesses which do not have the luxury of a big pot of marketing money, you have to get it right or waste limited resources.

Following is a list of 6 parameters you can use. Not all will be equally applicable in every situation, but it will pay to give each deep consideration.

Who: Is the demographics they may exhibit. Where they live, age, gender, education, job, and all the other quantitative characteristics that are available. These parameters are pretty much all that was easily available in any detail until digital tools came along.

What: are their behaviours. Do they go to the opera or rock concerts, perhaps both, do  they travel overseas for holidays, what sort of causes, if any, do they support, are they likely to demonstrate their beliefs publicly, or are they just internal. All the sorts of things that offer a picture of how they think, feel, and behave in all sorts of situations.

Where: will you find them digitally, as well as in the analogue (perhaps real) world, and what means can you use to make a connection. Are they likely to be avid users of Facebook, LinkedIn or other social platforms, are they comfortable buying on line, do they ‘showroom’ digitally then visit the physical retailer, do they get their news from Facebook and Reddit, or more focused news sites, or even, surprise, surprise, newspapers, radio and magazines.

When: will they be ready to buy? Customers are rarely ready to buy when you are ready to sell. Understanding the customer buying cycles, particularly in B2B and a larger purchase is critical.

Why: should they respond to your entreaties, to do whatever it is you are asking of them. What is your value proposition to them? What promise of a new and better tomorrow can you deliver? What can you deliver that is different and more valuable to them than any alternative? If you cannot answer these questions, it will come down to price, and winning a price war is a great way to go broke.

How: will you service the transaction, and the subsequent relationship that may emerge? This is usually down to questions about your business model and the ‘fit’ that has with the customer.

 

How do I make a profit?

Just as a successful young single male professional might opt for a red sports car, when 10 years later, with a family, kids, soccer practise, he might opt for a brick on wheels, you can have different business models to suit different circumstances and conditions.

Most small and medium businesses with which I have been associated give little if any thought to the business model, but it is of critical importance.

Are you retail, wholesale, franchised, subscription, digital, or some combination? All are different, working in differing ways, to allocate and absorb the costs and benefits that accrue. Being very clear about your business model, and being able to anticipate if a potential customer will fit is in some circumstances, a vital component of making a profit.

 

How and where do I apply Maximum Marketing Leverage?

Identifying the point at which you can apply Maximum Marketing Leverage (MML), or in other words, get the most productivity from your marketing investment is the point at which the previous three questions intersect.

Answering the three questions well requires a combination of introspection on your business, in combination with exospection, the examination of your business from an external perspective. The point where these two perspectives intersect is the best spot to apply marketing leverage.

Most will be familiar with the SWOT model of business analysis; this is one of many, and perhaps simplest of the many ‘Mental Models’ you can use to do the examination.  Porters 5 forces, Balanced Scorecard, BC matrix, Business Model Canvas, and many others are alternatives. All have their pros and cons, but the key point is that you give due consideration to them, as they will identify and clarify your point of MML.

The ‘maths’

All that has gone before, in Albert’s language, is the definition of the problem. Now we get to the maths, the way in which you apply the leverage.

Most small businesses rush straight to the tools of leverage without due consideration of the nature of the problem they want the tools to solve. However, once defined, pick a tool, or most often a combination of tools that best fits your point of leverage and apply them, recognising that there is no formula to give you thee exactly right answer, so you need to experiment  to find the best outcomes. The process of experimenting, will also give greater clarity to the 4 questions, which will in turn clarify the point of MML.

The choices you face are multitudinous.

Digital, analogue, which social platform, how much should be spent on Adwords, does Facebook work, how to use the automation tools available, what about email, letterbox drops, and so on, and on, and on. 20 years ago, life was much simpler, there were few choices, but there was also very few of the tools available that enabled the identification of the point of MML, so experimenting was far more costly and risky than it is now, to  the point where small businesses had very few options. Now you have plenty, the challenge is to use them in the best possible manner.

However, there are three things you should always remember, and apply.

  • Customers and potential customers move through a decision making process every time before they put their hands in their pockets. Sometimes this is almost instantaneous, as it would be in a supermarket doing the weekly shop, much of it is on ‘auto-pilot’. By contrast when buying a new car, house, or even considering a restaurant, the decision is usually much more considered, research is done, options considered, a short list compiled before a decision is make. This process happens in many ways, and can be influenced by the marketer using different tools, and combinations of tools at different times in the process.
  • The tools themselves are only as good as the message that is delivered. Whether you are writing an ad for the local newspaper or sending a series of emails to your prospect list, you need to be able to write and design a piece of communication that will engage the reader, give them the information they are looking for at that specific time, and lead them to the next point in the purchase process. In other words, in the vernacular, you need to be able to produce a variety of ‘content’
  • The one tool that should be in every toolbox is your own website. This is your digital home, the spot you own, from which you can communicate with your ideal customer under your terms. The trick of course is to have a website that accurately reflects the answers to the four questions and directs the tools to the point of MML. Most SME’s recognise the need for a website, and either lack the skills to do it themselves, or get a contractor to do it, usually without reference to the 4 questions. Then you end up with a nice looking but not revenue effective website. It is a vital but challenging tool to get right.

A few final but general points about running a successful SME, that are nevertheless vital but rarely  get enough attention.

  • Referrals are the best and cheapest form of marketing; it just takes time and effort to get to the point where current customers will refer you to others. Get this right, and many of your marketing problems will be solved, so it makes sense to have a formal referral process in place.
  • You must understand your ‘numbers’. The accounts, Cash flow forecasts, revenue, cost and customer analysis and forecasts. The Pareto principal, well known as the 80/20 rule applies in every circumstance. Sometimes it is 90/10, rarely is it 70/30.
  • Marketing cannot be left to the last minute, it is absolutely essential you identify your MML before you start spending your limited resources.
  • Social media is not free, despite the rumours, it costs not only in time and effort, as well as design costs to be effective, the quid pro quo is that you give over a heap of personal information that the social platforms then use to market to advertisers. There are no silver bullets in the quest for success.

 

 

 

 

 

How much do I need to spend on marketing my new business?

How much do I need to spend on marketing my new business?

May 22, 2018 | Branding, Marketing, Small business

This ‘How much’ question was posed to me recently in a networking group by a young professional who had just left the comfort of a large corporate firm to strike out on her own with a business partner. My answer: ‘Depends’. There is never a right answer to  this question, every situation is different, but there are a few foundation things that should be considered, and they all involve some sort of trade-off.

Time.

Time is our only truly non-renewable resource, so it makes sense to use it as productively as possible, depending on your definition of productive. For this new firm, while they have clients, they also have more time than they had working as corporate ‘slaves’ in a bigger firm, so they can choose to use it for marketing, developing their professional competence, which is after all an investment in their future, or they may even go to the pub. Early on it makes sense to invest some of the excess time in building their marketing and sales processes so that they can ‘feed’  the pipeline of potential clients.

Money.

Nobody, no matter how big, has sufficient money in the marketing budget to do all they would like. Therefore it is a matter of priorities and choices. Never easy. It is also true that the way you see marketing makes a potentially huge difference. Seen as nothing more than a necessary expense, it is just a chunk of money going out the door. Seen as an investment, marketing becomes something different, by definition. While it costs money now, it is an investment in future prosperity. By gaining clients that will continue to deliver revenue over a longer period, without having to spend on getting them through the door again in the first place, the initial investment will deliver great returns. My answer is also always tied up  in the need to use available money as productively as possible, which means that before you spend a zac on the communication end of the marketing spectrum, make sure you have the definition of  the ideal customer and your value proposition in place, so you can accurately target both the potential clients and your messages.

Expertise.

Expertise you can buy in, but it is dangerous to buy in expertise in a situation where you do  not know enough to adequately make the choice between alternatives.  This applies  perhaps more than anything else the strategic/marketing end of  the service continuum, simply because there is rarely one right answer, and  there are no external professional standards to be met. This means that a  marketing professional may just be highly professional about marketing their  business, but hopeless at marketing yours. If you buy in expertise before you know what expertise you really need, you risk getting a plumber when you need a carpenter. Alternatively, you can buy in the expertise to assist define just what it is you do need before you make the investment in marketing activity. The instinct these days is to talk to a so called ‘digital marketer’ whose business it is to sell you digital marketing services, whether or not that is the best use for your money. It pays to be sure, do some serious introspection before you jump. This is not usually an instinctive thing for most, in this case they are lawyers, not marketers, and marketing remains a ‘dark art’ outside their experience and expertise. Marketing has to be at the front of your mind, not just during the start-up phase, but for ever more. While the specific activity that drives client engagement can be turned up or down according to the capacity available to service the business, marketing is a key part of the DNA of every successful business.

Create processes.

Everything in business is a part of a process, no matter how big or small it may be. Therefore the things that are repetitive should be ‘routinised’ as much as possible so they happen with minimum resources, and optimum performance. In other words, they are a productive use of the time and money allocated. Just as providing a professional service requires a process to be followed, so it is with marketing activity. You can automate just about everything these days, which is where a mistake is often made, as automating a rubbish process just leaves you with automated rubbish. There is  no substitute for mapping out what you want to achieve, and the best way to achieve it, piloting and refining, before you automate. Remember also  that automation by definition, removes the ability to be agile in the face of something not considered in the automation phase.

Prioritise ruthlessly.

We only have so much capacity, spreading it thinly just ensures nothing gets done properly. Far better to do less things, well. Therefore, I absolutely subscribe to, and work with clients to prioritise their investment of time money and expertise. You can do this in any number of ways, two of which I like and use. The first is the well known urgent/not important matrix,

 

 

 

 

 

The second is an aggressively culled priority list. Record the top 20 priorities you have in front of you. Prioritise 1 to 20. Draw a line under number 4, or 5, and discard the rest into a ‘carpark’ of some sort, not to be considered at the moment, but too be kept aside, as being in your top 20, there is some importance to be attributed. Ensure that as a part of  the process you have performance measures built in so that you know which parts of your marketing are working, in which case you double down, and which are not in which case you stop, and either save the investment or use it in the doubling down.

Finally.

Find activities you are happy to do, that you can feel proud of, and do  them. You are in business for yourself, being happy is often hard as the pressures can be substantial, so make the effort to find the elements  of the wider role you have taken on, and do those that you enjoy, are good at, and which add value to your business, and outsource the rest, having done sufficient research to ask good questions of potential suppliers.

Four strategic questions raised by Manufacturing Week and CeBIT

Four strategic questions raised by Manufacturing Week and CeBIT

May 16, 2018 | Collaboration, Governance, Marketing, Strategy

 

The juxtaposition of two trade shows, Manufacturing week last week, and the current CeBIT, have raised some questions in my mind about the road on which we are travelling.

I spent the best part of two days at Manufacturing week, and yesterday at CeBIT, talking, observing, getting caffeinated, and  generally trying to question the preconceptions that seem to be driving the activity I saw. I arrived at a small number of questions that I think  need to be addressed.

How do we overcome the myth of Silicon valley?

Simply put, it seems that the general view is that an ‘App’ or digitisation of something will be the panacea. The VC’s will emerge from their caves and fund the next big thing that will solve all the problems, despite much of the stuff I saw looking a bit like an App in search of a problem to solve, particularly at CeBIT.

There needs to be, in my humble view, more focus and understanding that the improvements in manufacturing will come more from the improvements in material science and engineering than from a  VC funded miracle cure.

The developments that make a real difference are long term ones, basic science that bounces around often for decades before a commercial application is found, a timeframe that requires public funding, as the VC’s will not be interested. A case in point is the development by CSIRO scientists of the wireless LAN technology we all now use every day.

Where do we find the skills to compete?

We are a small country, so graduate numbers in STEM subjects are low by international comparisons, but apparently dropping as a proportion of graduations. Numbers vary, as do definitions, but to be globally competitive we need to increase the number of quality graduates, ensure their funding, and focus their activities on areas where Australia has some sort of competitive advantage. Logically the first two should be an outcome of government policy, sadly lacking, and the latter an outcome of commercial forces over time. Currently we import a substantial percentage of STEM employees and entrepreneurs, a fact demonstrated clearly, albeit qualitatively, at the two trade shows.

How do we build genuine collaboration between Government, Academia and Industry?

This collaboration gets a lot of air time and ‘polly-speak’ but seems lacking. There are a lot of government programs around to assist industry, but most are not well understood, are hard to access, and have demanding guidelines that alienate time poor manufacturing management. To be fair, we all want to see out taxes spent sensibly, but sometimes you have to take a leap of faith, and make the funding more accessible, and not so risk sensitive to the bureaucratic, risk averse funding bodies. This requires additional expert, non  bureaucratic resources at the early stages of project development and assessment.

The problem with academia holding IP remains a huge stumbling block. I delivered a session at a University recently, for free, on the understanding that I would be given a recording of the session. I put a lot of work into the session, the Professor concerned assured me that the recording would be forthcoming, but it is tangled up in the Universities IP policy, and I have not got it. Next time they ask for help the answer may be different, and this was just a simple exercise of me passing on the wisdom of my experience, not leveraging the IP of some advanced research project in which the University had a hand.

How do we participate meaningfully in the next wave?

Forget today, it is already too late. However, the next wave of development, artificial intelligence, IOT, human/machine interfaces, in short, industry 4.0, the combination of advanced manufacturing and digital technology, is just around the corner.  Australian of the year Professor Michelle Simmons leads a world class quantum physics team,  but I wonder if there is the supporting infrastructure and political longevity of will to leverage the break-throughs that appear to be coming. In addition, there is really only the one team, competing against the world, as well as collaborating with it, and I suspect both are insufficient.

 

As a final observation, and this is a ‘groan’ from a marketing bloke. The quality of thought that has gone into the leveraging of the investment made by the organisations of all sizes with stands at both exhibitions is rubbish.  After Fine Foods last year I penned this post that outlined 18 strategies to leverage the substantial investment required to be present at a trade show. I was astonished, particularly at CEBIT yesterday, the digital tech show,  at the number of times I was allowed to move on after a conversation without the stand staff getting any of my details, even in instances where there was obvious genuine interest, and therefore some potential value in a follow up.

Photo credit: CeBIT via Flikr

 

 

 

Three critical success factors of a newsletter.

Three critical success factors of a newsletter.

May 10, 2018 | Branding, Communication, Strategy

A colleague has a newsletter, he emails it to his list on an irregular basis as he has something he  thinks of interest to say. When I unsubscribed, he rang me, angry that I had done so, after all I am known personally, and have an interest in  the topic.

Compiling a newsletter can be a hugely valuable tool in the marketing armoury, I subscribe to several that are on my ‘must read’ list. However, my time is limited, and my inbox stuffed with rubbish, the unintended consequence of being curious in this digital age.

Apart from some basic errors, like an absolute lack of any visual attraction, and questionable editing, I pointed out he has ignored some of the marketing basics that simply have to be covered in this day of competitive tsunamis of information coming at us from all angles. So I gave him some gratuitous advice based on what makes me wait for those few newsletters I value.

Respect my Time.  Time is the only totally none renewable resource we have, I do not want to waste any of it, and the demands on it have multiplied geometrically over the last decade. Therefore, I prune from the bottom. If you want a ‘sticky’ audience for your newsletter, treat your audiences time as being way more valuable than your own, and they might stick around.

Create Value. The corollary to not wasting peoples time, is to deliver great value. If all you are doing is regurgitating other people’s stuff, how does that add value? It is also true that people value different things, so your newsletter has to be a source of value across a few domains in which your readers live, and not all of it will have a commercial value. Considering the sources of value to your primary potential reader, and being sure you can consistently deliver,  should be a foundation step before you contemplate allocating the resources necessary to build a newsletter.

Create a community.  The advice of all the pundits is to ‘Build your list’. Rubbish. If all you have are email addresses, you are no different to every other hopeful spammer out there. The value of the list you have is not in the  numbers, but in what the receivers do with the information you send them. I would rather have a community of 100, that waits for the next newsletter, consumes the content, comments, shares, and feels like their time has been well spent, than a list of a million, 90% of which get caught up in the spam folder.

None of these three are easy, in fact, they will consume considerable resources, way  more than their short term value would indicate is sensible. However, if you are in for the long term, great, a newsletter can be constructed and encouraged to evolve that will be ‘sticky’ in a sea of mundane crap.

Newsletters such as the John Deere publication  ‘The Furrow’ survive because the follow these unspoken rules. ‘The Furrow’ have been serving a their readers since the 1895, the Michelin Guide since 1900, just two examples of newsletters that have become synonymous with content  marketing success delivering brand longevity.

 

Is Facebooks ‘moat’ the best ever built?

Is Facebooks ‘moat’ the best ever built?

Apr 16, 2018 | Change, Marketing, Strategy

 

Building a moat seems an odd metaphor in a strategy and marketing post. Some explanation of moats may help.

My personal definition of marketing has been ‘The identification, development, protection and leveraging of competitive advantage’. Not a textbook definition, but one that has worked for me. In other words, build a ‘moat’ as a foundation block of your strategy.

Warren Buffet, who deserves to be listened to any time he chooses to speak, coined the term ‘economic moat‘ to describe his investment philosophy. Find an asset that has a ‘wide moat’, the wider the better, but is undervalued, and get  inside where the power of the moat can be employed to extract what economists call ‘economic rent’ or to us simple people, returns better than the average return on capital in that  industry.

Theory is that when such a valuable asset is identified, competitors will come in, and by the nature of competition  bring the return on capital back to the average. The game therefore is to be in front of the pack.

Moats are built in many ways. They can be wider, deeper, more turbulent, on the other side of a desert, be inside a ring of outer-moats, and so on. Point is, when there is gold in the castle, the barbarians will try and find a way to bridge the moat, and be prepared to spend proportionally to the size of the pile of gold in the castle.

Once you have a great moat built, which takes time, effort, and a lot of resources, defence becomes easier. However, defence is also static, the initiative is ceded to the opposition, so a wise moat owner busily uses some of the gold to build another moat somewhere out of the eye line of the barbarians. Unfortunately, most moat owners are so focused on the defence of  their current pot of gold that they hoard it, instead of leveraging it out of sight.

Kodak had a moat, a great one, deep, wide, incredibly well defended, but they left the side door to  their lab open so that the barbarians knocked off their own weapon, the digital camera, and used it against them. Better for Kodak to have taken the digital camera they developed down the road a bit and built another castle with a moat.

Same with Blockbuster. They even had the opportunity to buy Netflix, for what amounted to pocket money, but declined. Their moat got drained, and the barbarians came in the front gate.

All the noise around Facebook over the last month since the Cambridge Analytica fiasco surfaced was focussed last week on the sight of Mark Zuckerberg in the early stages of moat defence. Facebooks moat is perhaps  the best thought out, strongest, and best defended moat ever built. Not only are  the defences of Facebook itself daunting, but the pot of gold has been used to build a series of moats around Facebooks castle that are themselves defended with a series of interlocking moats.  66 of them since 2005, when Facebook itself was a start-up. Many we have never heard of, but all added to the Facebook moat system in some strategic way. A few however, have huge  moats themselves, still being built, and offering interlocking fields of defensive fire to the kings castle.  Instagram, WhatsApp, Oculus, were large acquisitions, on top of the impressive list of offensive and defensive tools developed in the Facebook labs and deployed strategically.

The US senate has been questioning Zuckerberg for a couple of days, and with some exceptions, making turkeys of themselves.  Senator Hatch has been a prime turkey, demonstrating breathtaking ignorance by asking how the business model worked,(1.30 into the video) and being unaware of the presence of ads as the revenue generator. The comparison between the questioners and Zuckerberg was so great the share price of Facebook went back up, delivering Zuckerberg a cool $3 billion for a few hours ‘work’

While you can build a deeper moat with that sort of loot, the real point is that the barbarians will now keep on attacking, using the regulators as their weapons of choice, and I suspect in time, as Zuckerberg himself acknowledged, they will be successful in getting a few across the moat. I suspect the barbarian scouts will look at the rules coming into force in the EU in May, the ‘General Data Protection Regulation’ (GDPR) which will mandate the manner in which consumer data is managed. It requires that consumer consent to the collection of data be explicit, that they have the right to be ‘forgotten’ and have the right to manage their own data portability.

Money and history is on the side of the  Zuck, he does not seem likely to make the mistakes Blockbuster and Kodak amongst many, made, despite the barbarians finding some potentially potent weapons. I cannot help but wonder if the turkeys are up to standard for the game that will be played.

 

Photo credit: Malcolm Gardner via flikr. Bodium Castle Cornwall

 

6 customer service clichés deconstructed.

6 customer service clichés deconstructed.

Apr 11, 2018 | Customers, Marketing

It seems that every time I pony up for another insurance bill, I get one of those customer satisfaction surveys emailed within 24 hours, asking a few inane questions about my ‘experience’ and the level of service I received.

There is no room to say it was at best nondescript, often crap, that insurance is a cost I resent, am  suspicious of, and just hope that I never have to find out (again) if the after the disaster facts are actually as the advertising blurb promises.

Customer satisfaction indeed.

Normally I just ignore them, as responding only seems to encourage. (a bit like voting)

However, a recent emailed questionnaire got me thinking about what customer satisfaction really is, and how we go about creating and retaining such an ephemeral and personal idea.

Is it enough that we ‘satisfy’ our customers, and if so, what does that actually mean?

‘Delight our customers’ is a phrase that seems to have made it onto a few mission statements over the recent past. Is that one better than ‘satisfy’ or just more hyperbole?

Jeff Bezos famously demands that there be an empty chair in every meeting, a reminder that everything Amazon does is aimed at customer satisfaction. Reed Hastings has built Netflix from a minor irritation to Blockbuster into a digital entertainment behemoth by being ‘customer obsessed.’

If we are to be truly customer focussed, what should all  the common clichés really mean?

‘We listen to what our customers tell us’

Really? I listen to what my aging mother tells me, but do I follow the advice? Rarely these days. It should mean that we understand not just the words, but  the intent, and we use the information to test, and retest the delivery of our value proposition.

‘We obsess about customer satisfaction’

Most obsessions I have seen are all about the obsessor, rather than the obsessee. (are they really words?). It makes some feel better to tell ourselves we are obsessed with customer satisfaction, it justifies those long workshop sessions in a nice location. Most times when I go out and ask customers what they think of the level of service they receive, it falls short of satisfactory, let alone obsessional, and is markedly lower than the score businesses give themselves when asked the same question. It is easy to pass this off as delusional, but the reality is that customers rarely think about service until they experience it, and then only when it fails them. By contrast, companies are genuinely thinking about service consistently because it is important to them, but in an abstract way.

‘We understand what the customer expects of us’.

That is great, but also a bit unusual, as different customers almost always are looking for different things. In B2B businesses, it is essential that you understand the detail of a customer, and potential customers business processes so that you can really tailor your offering. A bit harder in B2C, but it is still true that individuals are seeking a range of different things that add up to ‘satisfaction’ in their minds. The real task is to create a situation where the customer sticks with you through thick and thin, simply because they believe you are better than any alternative.

‘We put customers in front of profits’

This gets trotted out regularly, without any understanding of the implications. The reason we have customers is ultimately, to make profits, and without profits, there will be no customer service at all. There has to be a balance, but it is true that satisfied customers lead to higher profits, it is a hard balance to get right.

‘The customer is always right’

The old perennial, and it has always been nonsense. However, treating customers with respect, humility and giving them the opportunity to be right is a great strategy. The most common example used is the retail  chain Nordstroms in the US. As the story goes, take a car tyre into Nordstroms and demand your money back because it was not up to expectations, and they will give it to you, despite not selling tyres. Perhaps it should be ‘The right customer is always right,’ to reflect the reality that there are some customers who are more trouble than they are worth, and you hope they go to your opposition.

‘The quality of our products speaks for itself’

No it does not! You need to speak for it. The base expectation of any customer is that the product you provide will deliver the outcome you promise. That is quality. A Hyundai will get you reliably from point A to Point B, does that mean it is the same quality as a Bentley, which will also get you reliably from A to B?. The answer to that question will most often be ‘No’  but then defining the ‘Value’ delivered by the extra few hundred grand to buy the Bentley becomes a different conversation entirely, with different customers.

Creating great experiences for customers brings them back for more, delivering revenue at much a reduced cost  than if you had to find a new customer. Share of Wallet and Lifetime Customer Value are the most undervalued measures of sales effectiveness, and also the most effective.