How to make better, value-based decisions about your customers



If ‘Customer Experience’ is in your job title, it’s time to reconsider your branding



October 8, 2019 |

This will sound like an odd proposal to hear from me given that I was acknowledging #CXDay2019 only last week, and I’m judging later this week at the #CustomerExperienceAwards. These awards offer a great opportunity to learn from and celebrate the hard work that leaders have put into raising awareness of CX as a vital business discipline – and delivering positive customer and business outcomes.

So why does #outwith invite CX leaders to adapt their language?

We regularly talk with C-level leaders who, at first glance, interpreted ‘customer experience’ as shorthand for improving the #NetPromoterScore (NPS), responding to customer feedback at face value, throwing money at ‘wow’ moments, or creating a transformation programme that runs parallel to business-as-usual. Too often, C-level leaders who are on the hook for financial performance see this all as ‘cost’. They just don’t believe the claimed cause-effect when it comes to prioritising their investments.

This should concern CX leaders greatly. Of course, this is in part a perception challenge – but as we all know from customer research, ‘perception is reality’. And don’t get me wrong – #weareoutwith don’t really have much time for talking about roles internal to Customer/ User Experience functions, as my recent post on UX reveals. I’m talking here about the external branding of what has become a focus of strategic investment for many organisations.

So, what works better? Well, we’re seeing a pattern emerging – Director of Customer Value… Head of Social Value and Customers… Journey Product Manager… Customer Value Strategist … Customer Outcomes… Customer and Commercial Excellence …Head of Value Proposition and Customer Journeys … to name a few.

Again, this is based on what C-level leaders share with us and what they respond positively to. These roles exist today too – they are strong contenders based on the people we know who are succeeding with customer (or digital) experience change.

You’ll spot the common factor: they are strictly customer value-based in their approach. The data points they are tracking for any component of the customer journey are “less NPS, more commercial” in outlook.

I’ll be looking out for this at the CX Awards – and we invite others to take a moment to think about how the brand of “CX” is evolving in their organisation.

There may be trouble ahead…



Customer experience: The power to transform your organisation



August 14, 2019 | Peter Hocknell

‘Digital’ and ‘customer experience’ transformation programmes are becoming synonymous – and for both, a shift towards customer centricity is a key enabler. When you strip it back to the bare bones of what these programmes are designed to achieve, it almost always comes down to attracting and retaining your customers for longer in the face of market disruption. Even when it’s positioned internally as being about productivity or operational efficiency, agility or scalability – the benefits ultimately depend upon fostering better customer relationships.

There’s a reason why their customers’ experience is such a preoccupation for businesses and that’s because very few of them are designing and delivering it effectively. You can’t blame every business – customers’ expectations are increasing all the time. When we can smoothly organise so much of our day-to-day activities online and receive deliveries to our door within a one-hour window, it feels like ‘life from a bygone age’ when we go on holiday and have to wait nearly an hour to collect a rental car like I did last week – the sort of experience which leads you to look for a better alternative.

So, if you are in the position of being responsible for digital or customer experience, you literally have the power to transform your business. The opportunity is that enormous. Nonetheless, I can’t pretend it will be easy – you’ll have already heard that over 80% of these programmes fail – and there are some big decisions to make right up front.  

Typically, one of the biggest is who you partner with (our clients tell us how it can feel lonely very quickly). In your organisation, it’s about finding those who share your vision of how the brand can thrive. And those who have the passion and resources to commit to your new agenda. Outside your organisation, it’s about finding the right strategic partner – someone who can help you see through the many agency/ vendor/ consultancy offerings (that are only skin deep), the promise of short-term fixes (that unravel at the first obstacle) and the multiple transformation approaches (that just add complexity and cost).

Without the right partnerships in place, transformation will be tough if not impossible. One global organisation we’ve helped recently had concluded they’d had enough of their ‘vanilla’ customer insights, delivered by a research-come-consultancy that wasn’t providing the strategic context of what the transformation was all in aid of. Just spinning the wheels. On a smaller scale, one charity we’re helping doesn’t have the budget to deploy what it sensed was best practice transformation – but didn’t realise that there were shortcuts to achieving that, without making the time/ resource commitments common to the global brands. 

In both instances, choosing the right strategic partner has helped the leaders of these organisations think, plan and do differently. Which is what transformation is all about, isn’t it?

Outwith is currently working with organisations similar to yours, giving them the tools and insights that they need to transform. We are trusted advisors to senior leaders with digital and customer experience responsibility in some of the world’s best-known companies. Please drop me a line if you think it could be helpful to compare notes.

 

Brave new worlds



Mission incomplete?



October 1, 2018 | Peter Hocknell

As a self-confessed Amazon Prime ‘junkie’, I’m watching the accelerated rollout of Amazon’s Prime Day event from the US to other regions globally with excitement. But also with a nagging question about whether this is a missed opportunity?

First, as to getting excited, I’m not alone it seems. McKinsey’s recent article looking at Prime Day 2018 reveals a host of winners from what was the largest shopping event in Amazon’s history (yes, over 100 million items sold): https://www.mckinsey.com/industries/retail/our-insights/amazon-prime-day-what-the-real-lessons-are?cid=other-eml-alt-mip-mck-oth-1809&hlkid=2d704f0cd5d84c2f89effb185161e7ad&hctky=10186936&hdpid=f3d5ee7e-c7d1-4a8a-b1e1-97824a0306c3

Evidently, it’s good business for Amazon in the short-term. Six of the top ten products sold on Prime Day this year were Amazon devices, notably the Fire TV Stick with Alexa Voice Remote (at 50% discount) and the Echo Dot (at 40% discount) – all of which lock customers into Amazon’s ‘fly-wheel’ ecosystem. In addition, these hardware deals were complemented by deals on media and content e.g. Audible (audiobooks) and Amazon Music.

Less successful was Amazon’s push of its portfolio of 80-plus private-label brands (e.g. AmazonBasics) and its Whole Foods Market, the latter which saw some attempts at integrated in-store deals to create more of an ‘omnichannel’ feel about things.

Looking away from Amazon for a moment, other brands that partnered with the Prime Day event also saw benefits, from the overall increase in Amazon traffic – so long as they invested in SEO (products on the first page of a product search got two-thirds of all clicks) and discounted heavily. And some other brands that bravely chose to go head-to-head with Amazon’s discounting and push for membership were rewarded for their effort, proving that the combined pull of Amazon’s brand and ‘big day event’ management created enough of a halo from which others could benefit.

So with all this success, what is the one question that Huang et al.’s article doesn’t answer – which Outwith regards as a potential missed opportunity? While we learnt about what Amazon’s customers did as an immediate response to the ‘shopping holiday’ experience, we believe customer-centric leaders should be just as interested in what these customers thought and felt about it? Particularly during the event and subsequently. Enough has been written about the negative impacts of short-term sales growth for businesses participating in Black Friday and Cyber Monday similarly, and Amazon is unlikely to be bullet-proof.

Why should this matter to customer-centric leaders so much? When Amazon.com launched in 1995, it was with the now well-quoted mission “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors [sic] to offer its customers the lowest possible prices.”Amazon’s Prime Day further helps customers find and discover anything (pretty much), and at the lowest possible prices (not always but often enough).  So, mission accomplished?

Not quite, because something has changed since 1995. Amazon has refined its mission statement to:

“We aim to be Earth’s most customer centric company. Our mission is to continually raise the bar of the customer experience by using the internet and technology to help consumers find, discover and buy anything, and empower businesses and content creators to maximise their success.”

So – how well did Prime Day bring to life Amazon’s intended customer experience?  Is it raising the bar?

Huang et al.’s article doesn’t answer this ‘outside-in’ question for us sufficiently.  But there is a clue to the answer if we consider how Amazon’s leaders possibly faced up to the Herculean task of making Prime Day such a commercial success in the short-term.  Amazon has declared (again, in the public domain) that it is guided by fourteen ‘leadership principles’. Yes, 14 of them. However, I don’t think it’s a coincidence that the first listed is ‘customer obsession’:“Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers”.

So if we assume that Amazon’s mission has continued to be one singularly focused on customer-centricity, and has since evolved to regard the customer experience as central to that – we should also judge Amazon’s Prime Day on how well its leaders obsessed about, and executed on, intended customer outcomes at each stage of their customers’ journey. The ‘shopping holiday’ experience encompasses what customers did, what they thought about it and how it made them feel. Both during the event and beyond. While there’s an absence of insight on this from McKinsey’s analysis, I’m left wondering if Amazon’s Prime Day is a missed opportunity for Amazon’s leadership to raise the bar – or worst still, a moment where they fell into the trap of short-term sales growth over long-term customer value?

Who’s the most Janus-faced?



May 1, 2018 | Peter Hocknell

This recent interview with Apple boss, Tim Cook, in the The Times sheds light on an escalating tension in Silicon Valley that’s relevant to any aspiring customer-centric leader.

https://www.thetimes.co.uk/magazine/the-times-magazine/apple-boss-tim-cook-on-data-privacy-screen-time-and-secrecy-in-silicon-valley-dpt3fzdxf

If we pause for a moment to digest Tim Cook’s view, we see someone who (to me at least) appears to be working very hard to maintain a customer-centric mindset – because he still sees competitive advantage from doing so:

“I think most companies in the technology industry are almost solely focused on technology. That’s fine. That’s not a criticism, but they’re solely focused on that. Apple has always fused humanity into technology.” The company was all about “providing the user [with products] that would empower them to express their passion or to change the world in some way … We’re fine with being the Lone Ranger there. We think it’s a special place.”

Combining your purpose with your product is nothing new, but doing it with the weight of expectation that Apple generates is no doubt daunting. Apple (like all of the big technology providers today) are sitting on a pedestal waiting to get knocked about.

So it doesn’t surprise me when, later in this article when it explores how easily everyday technology users are now being drawn into dangerous usage behaviour, the interviewer notes:

Cook told me that there “should be” serious concerns about the mental health impact on children in particular of spending too much time with their screens. But he said he was “not hearing” that Apple’s devices themselves were addictive. It’s the apps that other people make for them that he is “deeply worried about”. From there it wasn’t hard to skewer Twitter, Facebook and others without mentioning them by name. The real problem, Cook said, is the corrosive need to check “what the latest post is” or tally “how many likes have I had?”. “We’re in a sort of unique position there, because we don’t measure our success by how much time somebody’s using our product. We don’t want you using our product all the time,” he added. “You need to do other things in your life as well, right? “If you have a model that is based solely on digital advertising, that can lead you down a path where the user isn’t the user any more. The user is the product. The customer is the advertiser and the desire is as many clicks as you can get.” He frowned. “The user is lost in that. Humanity is lost in that.”

Outwith’s reading of this is that Cook’s fighting hard to distance Apple from “non” customer-centricity – the actions and behaviours of organisations that claim to be customer focused but deliver a different reality. In other words, an approach where the primary unit of analysis is not the customer, but some other variable – perhaps advertisers, click efficacy or product usage.

Aspiring customer-centric leaders don’t need to go the whole hog and claim that being customer-centric will save humanity (we can leave that for Tim Cook, up on the pedestal). We find that customer-centricity is best understood when it’s tightly defined: it’s when you focus on designing an end-to-end experience that embraces your products and is driven by the needs and behaviour of the most valuable customers in the market, with the aim to maximise their lifetime value.

But, leaders can learn from this small insight into Silicon Valley: the existential importance of being very clear about what a customer-centric strategy is – what it looks and feels like, both to your customers and internally with your employees – and what it is not. For me, that’s creating an opportunity out of what could otherwise be a crisis – as it is now, for some.

Get a perspective: where best to focus in your customers’ experience?



March 2, 2018 | Peter Hocknell

It might feel inconvenient for many organisations to hear that, if they want to become more successful brands, they should focus on the users of their products and services – not the actual buyers. Aren’t most buyers users? Or, if not, aren’t buyers typically buying with the ‘user’ in mind? And how do you get to better understand ‘users’ when they’re often at least one step removed from the purchase journey? And, how can I focus on users when I need buyers in the first place…?

This recent article in HBR argues just that however. https://hbr.org/2018/02/the-most-successful-brands-focus-on-users-not-buyers?utm_campaign=hbr&utm_source=twitter&utm_medium=social

It resurrects a long-standing debate about where best to put your money: in the pre-purchase or the post-purchase experience? When prospects are considering your brand (and you want to convert them into customers)? Or when customers are living with your brand (and you want to grow their lifetime value and turn them into advocates)?

The choice presented by Bonchek & Bapat is to be either a ‘purchase brand’ (focused on buyers) or a ‘usage brand’ (focused on users).  To paraphrase: Purchase brands worry about what they say to customers; usage brands worry about what customers say to each other(Airbnb is cited). Purchase brands try to shape what people think about the brand at the moments of truth along the path to purchase; usage brands influence how people experience the brand at every touchpoint (Apple Store is cited).

Does this matter? Choose to be a usage brand and the analysis claims you’ll benefit from a 7% price premium, 8% lower switch rate and twofold greater spontaneous advocacy versus purchase brands. This echoes other, well-known insights: Depending on what industry you’re in, acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. And increasing customer retention rates by 5% increases profits by 25% to 95%.

So – all’s well and good with that debate then?

Not quite. One concern is that, by inference, the argument’s made that “purchase = legacy brands” and “usage = digital brands”. That seems quite pessimistic for many well-established organisations out there – and it’s not clear what that means in today’s multichannel world. Plus, in 2018 plenty of digital brands remain rightly obsessed with acquisition. There are also lots of truisms in the argument: digital brands are discovered more in social media (surely that’s an outcome of buyers’/ users’ channel preference?); legacy brands are those that people more often ‘look up to’ (surely that’s an outcome of the brand’s longevity?).

But, even though the overall point made by Bonchek & Bapat is intuitively appealing, the Outwith team has a bigger concern with it. There’s an insight that’s been lost in the analysis that really should excite us most: only by focusing on the end-to-end experience (both pre- and post-purchase) can brands make truly considered choices and retain a full perspective on the best growth opportunities open to them.

Maintaining this wider focus helps leaders avoid two common mistakes:

1. The first mistake is to miss the relationship between ‘upstream’ and ‘downstream’ experiences that are crucial to diagnosing cause and effect. As previously noted in HBR (by Amy Gallo in a 2014 edition), one common example of this is failing to diagnose a high churn rate as the result of poor customer acquisition efforts. Attract the wrong kind of customers by leading on price for example, which will attract deal seekers with an inherent propensity to switch, and you’re locking in downstream problems (Groupon’s struggling business model is cited here). Similarly, one of our clients who was on the point of investing millions of dollars in adding contact centre agent seats realised that fixing a broken customer onboarding journey ‘upstream’ would deliver a much better return. This was only possible with an end-to-end perspective.

2. Second, and contrary to what Bonchek & Bapat recommend, what works best operationally to fuse this buyer/ user perspective is not a simple coming together of Marketing and Product, or an elevation of the Customer Service function’s importance. This risks reproducing a silo mentality based on functions wastefully competing over ‘who owns’ internal activity. Instead, what we see working better is something more fundamental: empower the organisation with an outside-in perspective that changes leaders’ frame of reference. Then design your operating model to best deliver what you’re promising buyers or users at the different stages of that journey, in service of your overall brand promise.

At Outwith, our learning (both in leading and consulting businesses) is that revealing an end-to-end perspective on your customers’ experience is critical to maximising your growth ambitions. Sometimes leaders need to somewhat myopically obsess about the sales funnel. At other times, it’s necessary to relentlessly nurture your customer base –especially if they start churning and defecting. But at no time can a successful brand afford to take its eye off both challenges: from when someone first becomes aware of you to when they choose to take away their custom, it’s virtually impossible not to find opportunities for improving the buyer/ user experience. Get a perspective so you don’t miss them.

Something very different…



February 16, 2018 | Peter Hocknell

Wonderful to see – amongst the Amazon, Apple, Netflix, Sky, Virgin, Vodafone etc of this world – one business picking up a host of awards last week. One who’s brand name means ‘mutually giving’ and who’s raison d’être is to do things very different to the norm. Well done giffgaff!

https://www.uswitch.com/mobiles/broadband-and-mobile-awards/

Marketing + Insight = a sufficient customer-centric partnership?



August 17, 2017 | Peter Hocknell

Knowing your customers is the best starting point for a business looking to grow. This is sound if not new advice. So why does this recent article in Marketing Week concern us at Outwith?

It asks to what extent should Marketing and Customer Insight functions partner to reveal and capitalise on customer knowledge.

The fact that this question is even being asked is alarming enough, and it won’t surprise you to hear that the answer is ‘more partnership required’. Encouraging progress is cited at online retailer Shop Direct, US publisher Forbes and the BBC.

But it’s the 4 commonly-held assumptions that underpin this answer that concern us most:

1.    First, the assumption that Marketing should partner with Insight primarily to design more effective media campaigns. This is of course a worthy tactical collaboration. But from our experience, it massively underplays what’s at stake here. Without customer insight, a business is going to market blind. Insight opens doors for marketers, and be it through definition of customer personas, running in-home consumer ethnography or undertaking conjoint analysis on different product features – there is virtually nothing Marketing needs to know about customers that an experienced researcher doesn’t have a proven methodology for finding out.

2.    So insight matters – ‘of course’ I hear you all cry! But the article’s second assumption puts that at risk: the implicit view that Insight = Customer = Marketing. I work in Finance, I don’t need to worry about customer insight then. I work in Product Development, not me either. I’m a third-party partner, definitely not me. The more that Insights teams limit their channel-to-influence to Marketing, the more they reproduce the growth-limiting silos that halt businesess’s progress towards true customer-centricity. We don’t know of any Insights team that wouldn’t rather be talking more about customers (outside-in) and less about function accountabilities and who they report to (inside-out).

3.    This leads me onto another major concern. It is proposed that the Insight function must partner better by either sitting within Marketing or at the CEO’s desk. We think that’s a binary way of approaching what is a more subtle change that Outwith witnesses (and promotes) in customer-centric businesses today. Customer knowledge must be hard-wired into every business function. That’s no small feat, not least when Insight functions have historically struggled to get a seat at the senior table. Yes, Marketing gives them that seat indirectly. But we know that customer-centricity is often the cultural outcome of a dialogue (we call it a ‘healthy tension’) between traditional business functions (let’s call them BAU) and change initiatives (let’s call them the future). One business we’re helping currently has brought their Insights team out from under the Marketing ‘bushel’ to such an extent that they’re now driving the entire Customer First strategy across central functions and 48 countries on a day-to-day basis. They’re up-skilling and recruiting new talent such that they’re now known less as the ‘insights’ team and more as the ‘customer strategy’ team. Now that’s influence.

4.    But this is not to absolve Marketing of greater responsibility here. In its BAU role, more often than not Marketing rightly remains a ‘first among equals’ (compared to its peer functions) when it comes to owning customer insight. As the default, we believe Marketing and Insight should not be split at all – marketing is not a process that excludes insight, instead ‘insight + action = marketing’. Never has it been more important for companies to heed the words of Peter Drucker: “the purpose of business is to create and keep a customer”. To this end, some people are there to provide insight/ diagnosis, and others to implement. Taken together, this is ‘marketing’. The challenge facing so many Marketing teams today is that they’re really ‘sales’ teams – short-termist and myopic about the ‘here and now’ of existing customers, products/ categories and KPIs. Marketing’s straightjacket is another reason why so many businesses are failing to become customer-centric and struggling to create strong growth.

So this is a double-edged sword – Insight needs Marketing and vice-versa. But that should now be a given. The bigger question is: how to partner more across the entire business? After all, customers assume we do the hard work behind the scenes, join the dots, iron out the wrinkles – so that they don’t have to, and just experience a seamless and consistent journey. At Outwith, we believe that experience can only be built off a singular focus on the ‘customer’, and a common ‘customer plan’ that cuts across the business’s entire ecosystem. It’s that complicated and that simple.

At Outwith, we understand the essentials for success and have refined a proven system for creating the strategy, plan and engagement that will spark customer-centric growth. Get in touch if you want to build the bigger partnerships that will really matter to your customers.