Saturday, December 12, 2009

From Customer Orientation to Customer Centricity

Much has been said about the importance of customer orientation. Satisfy your customer : Do as customer says, never say no, the customer is always right. Don't stop at customer satisfaction: Endeavor to create customer delight. Deliver benefits, not just features. Be close to your customers : Meet them personally, talk frequently. Relationships matter: It is all about people. Listen to customer suggestions. Customer is king: As Gandhi famously wrote, he is the very purpose of our existence.

I argue that Customer Orientation, as expressed in the lines above, is a necessary but not sufficient condition for winning in today's highly connected markets. What we need is Customer Centricity, and that is what I am about to describe in this post.

To define Customer Centricity, we need to look beyond the obvious factors of customer orientation. Let us do this in seven steps.

1. Identify with customer goals
First you need to understand customer's goals. This will help you perceive true customer pain points. Not just the pain points the customer expresses explicitly, but the latent ones that remain beneath the surface.

2. Understand customer aspirations
Customers are human - they aspire. Do they aspire to be associated with your product or your service or your brand? Think of a developer trying to get into an Apple conference, or an online user wanting to experience Google wave - which is currently by invitation only!

How do you create this desire for associating in your customer's mind? You need to recruit the customers who are already on board as trust agents. Get them to present on your behalf at conferences, write about your products and services in magazines, write reviews on sites such as yelp or e.pinions, give quotes, create podcasts and build youtube videos. Collaborate with your customers to build case studies to celebrate joint achievement.

One key purpose of branding then is to create an aspiration in customer's mind to associated with you, and to be seen with you.

3. Co-create value with customers
Involve customers in creating value through your business. Get ideas from customers in a focus group or a user meet. Have them test your products, as many SaaS companies do. Take their help in merchandising: an online user community is a great place where you can do this. Observe customer buying preferences and create attractive bundles. Groupon is a great example of how customers can be involved in marketing and selling. Referral programs involve customers in the selling process. Online community MVP programs encourage customers to get involved in supporting other users.

4. Build great customer experiences
Say goodbye to one-time transactions with your customers, and say hello to continued engagements. Move from deal / transaction thinking to continuous engagement thinking. Consider the Apple App Store. You get an account, buy something today and you get an ongoing relationship where you receive new offers, latest arrivals, specials and so forth. Your buying experience is hassle-free. You get all your account information in one place. Same with the Amazon Kindle store, or even a brick-and-mortar bookstore such as Borders .

The idea of a customer experience is to convey a consistent net impression through all customer touchpoints. Consider visiting a Nordstrom outlet and a Nordstrom site, and compare that with the Costco experience. In each case the core value proposition (class or variety and cost-savings) is conveyed across both touch points consistently. A Toyota Prius iphone advertisement conveys the experience of the interior of the car - you simply move the iphone to pan across the view of the interior. AAA combines the phone service, texting and technician visit touchpoints into a unified customer experience suggesting friendly and prompt help from a knowledgeable professional.

5. Provide thought leadership
In some markets, thought leadership provides the foundation of trust, which is critical to customer relationships. Thought leaders identify and express latent needs of a large number of users. They envision a better future. They take uniquely refreshing positions on key topics. For example, a presentation software vendor may write a thought leadership article on the use of Twitter for setting up backchannels during presentations for audience collaboration. An e-learning software vendor may write about how to design ad-hoc social agile learning.

6. Narrate success stories together
It is your customer's success, not yours, that we are talking about here. Describe your achievement in terms of customer goal fulfillment. Describe the business context of the challenge you overcame. Preferably state measurable results. For example, instead of saying :'Created 70 hours of e-learning in 90 days' say: 'helped UNO train 9000 volunteers in Africa in 90 days thru elearning'. Share the stage with your customer. Identify the various elements of value that you created for your customer.

7. Get on the customer's social graph
People use social media for self-actualization. Recognize and harness the power of interest groups. Get on the social graph, spread your message, use them as online trust agents. Imagine three options: Post to Yelp / Share on Facebook / Email a Friend. Which one has the highest trust factor? Which one has the widest reach? You will need to make decisions of this kind in utilizing social networks. You can also use social graphs to monitor your brand. Use dialog between your customers to learn about your brand and reputation. Understand why people are not buying your products. Listen to these non-customers.

From the foregoing, it should be easy to see that Customer Centricity is a leap forward from Customer Orientation. The chart below summarizes the differences.

Customer Orientation Customer Centricity
Do as the customer says Identify with the customer's goal (anticipate customer needs)
Create events of customer delight Captivate customer through engagement
Deliver benefits Deliver experiences
Be close to customer Get on social graph
Build a relationship through service Strengthen relationship through thought leadership
Listen to customer Also listen to non-customer
Customer is king Customer is a strategic resource


In today's always-connected, over-communicated and trust-hungry markets, I believe customer orientation is not enough. Indeed, customer centricity, as described above, shows the way to win those markets.

Saturday, December 5, 2009

Eight Things to Look out for in a Plan

Some time back I had read somewhere an article on how to assess the health of a factory during a site visit, based on 8 factors. In this post, I propose to help assess how good a plan is, based on 8 salient features of a good business plan.

1. The Idea
What is the idea? What is different? A simple, un-obvious, easy-to-describe idea which a large number of people can repeat back without changing. That to me is the #1 requirement. Twitter's microblog and Subway's Foot-Long Sub are good examples.

2. The Opportunity
Does your idea solve a big problem? What is the market opportunity? What is the addressable market? It must be right-size and -more importantly- with a growth potential. That growth potential should be deduced from observable trends in the environment. The opportunity is at the core of external analysis. Nokia in the 1990s and Google in the 2000's identified such big and growing opportunities in mobile communication and online advertising respectively.

3. Why Us?
Why on earth should we be the best people to pursue the opportunity and the idea? What are our core competencies? Why can't someone else do it better? What's so special about us? This is the core of internal analysis. When Apple went after reorganizing the music industry with iPod, and Wolfram Alpha decided to be the #1 search engine for computable information, they leveraged their core strengths in consumer software/hardware and mathematical software respectively.

4. What Will it Take?
What resources will this take and where to get them from - what to give up, what to do less in order to do more of this. When Nokia decided to focus on Telecom in the early 1990's they gave up a bunch of other businesses. When ICICI decided to become a bank around the same time, they invested in a bunch of new capabilities related to retail banking.

5. Business Model
Who pays? How do we make money? That defines the business model. A musician may distribute the music absolutely free online and leverage the popularity to organize live concerts for a fee. A site like LinkedIn may provide free membership to a large number of professionals and essentially sell the use of their data to a select number of paid subscribers interested in recruiting. Zynga may choose to money on several small transactions, each involving buying of a virtual trinket meant as a gift. Tap2Talk is free for the user, but its customization requires subscription, and it is tempting to customize it to suit the voice of your kid.

6. Sustainability
How do we protect our business from competition? What barriers for competitor entry do we erect? Are these on supply side (patents, exclusive sourcing) or on demand side (customer captivity, channel exclusivity)? Or are their systemic barriers arising out of economies of scale, making it hard for competitors to produce for less? Microsoft, Garmin, Research in Motion all created barriers that allowed them some measure of sustainability.

7. Timeline
Okay, so what is the plan? What are the milestones? What is time critical? What are the dependencies? Companies like Electronic Arts -the game maker- and Intuit -the personal finance software maker- must take into account external factors (holiday season, tax year-end) to determine their timelines.

8. Cash Flows
It does, initially outward and then hopefully inward. A plan needs to visualize the flow of cash and figure out investments needed, RoI and other metrics.

In summary then the first 4 factors answer the "what" questions. What is the big idea? What is the big opportunity? What's special about us? What will it take? The next four factors answer the "how" questions. How do we make money? How do we sustain? How do we plan the timeline? How do we finance and get a return?

A good planner should pay sufficient attention to both types of questions and put together a winning plan.