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Simply Better

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					SIMPLY BETTER
Winning and Keeping Customers By Delivering What Matters Most
PATRICK BARWISE and SEAN MEEHAN

PATRICK BARWISE is professor of management and marketing at London Business School. He is the author of six books including Accounting For Brands, Strategic Decisions and Predictions: Media. Dr. Barwise (a graduate of Oxford University and London Business School) specializes in strategic investment decisions and consumer behavior. SEAN MEEHAN is professor of marketing and change management at Switzerland’s International Institute for Management Development. He has previously worked at Arthur Andersen and Deloitte & Touche. Dr. Meehan (a graduate of Trinity College, the University of Manchester and London Business School) has designed a number of management development programs currently in use by many of the world’s largest corporations. The Web site for this book is at www.simply-better.biz.

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MAIN IDEA The benefits of differentiation have been overstated. Instead of wanting something unique or even a cutting edge product, most customers simply want a quality product at a fair price which does what it promises consistently well. Therefore, to prosper, don’t obsess over trivial points of difference, gimmicks, branding or outside-the-box thinking. Instead, do the basics well. Get close to your customers, understand what matters most to them and then deliver that better than your competition. In the real world, successful differentiation isn’t about unique selling propositions or “bells and whistles”. A good product will always stand out on the strength of attentive service, on-time delivery and consistently good levels of quality. Do the basics well. Attempting to be unique might be fun and even exciting, but it won’t automatically lead to business success. Only consistently exceeding the customer’s expectations will deliver long-term success. To achieve this in practice, there are six rules to keep in mind: The Six Rules For Becoming Simply Better 1 2 3 4 5 6 Obsess over the category benefits, not your own individual brand benefits Think simplicity, not sophistication – because that’s how customers think Look at how customers make buying decisions first and foremost Focus more on your opportunities and less on your competitive threats Use outside-the-box advertising only when your delivery systems are in place Regularly immerse yourself in the realities of the marketplace

Rule #1 – Obsess over the category benefits, not your own individual brand benefits . . . . . . . . . . . . . . . . Page 2 Customers really don’t buy a brand because it offers features others don’t. Instead, customers make a category purchase of whichever product fills their needs and offers the best combination of benefits. With this in mind, you should spend less time worrying about brand differentiation and more time unearthing the customer’s category needs. Then focus on meeting those category needs better than anyone else. Rule #2 – Think simplicity, not sophistication – because that’s how customers think . . . . . . . . . . . . . . . . Page 3 In reality, customers see your brand in very simple terms, in terms of their overall experience with your business. The challenge is to meet their expectations reliably and consistently. When that happens, they will buy again and again, and tell their friends. It doesn’t get any better than that. Rule #3 – Look at how customers make buying decisions first and foremost. . . . . . . . . . . . . . . . . . . . . Page 4 Think twice before you engage in some creative outside-the-box thinking. Be realistic rather than clever. Look at how customers genuinely make buying decisions and monitor your performance in delivering the generic category benefits by comparison with your competitors. Don’t take your eye off the ball – how to create value for your customers. Rule #4 – Focus more on your opportunities and less on your competitive threats . . . . . . . . . . . . . . . . . Page 5 Every industry is constantly evolving as new technologies arrive, different regulations take effect and changes in the customer base occur. Don’t become either too cautious or too complacent. Instead, keep evolving your business. Stay focused on doing whatever it takes to provide the benefits that customers are willing to pay for, even if that means cannibalizing your existing business to do it. This is the only way to look at change as an opportunity rather than a threat. Rule #5 – Use outside-the-box advertising only when your delivery systems are in place . . . . . . . . . . . . . . Page 6 To get noticed in the marketplace, you don’t advertise the fact that you deliver the generic category benefits better than everyone else. That will get lost in all the background noise and besides, consumers will expect every company in your industry to say that. Instead, you need some memorable, completely outside-the-box marketing communications. The only way to cut through the clutter is to be distinctive yet relevant – a hard combination to master. Your product doesn’t need to be distinctive but your advertising most certainly does. Rule #6 – Regularly immerse yourself in the realities of the marketplace. . . . . . . . . . . . . . . . . . . . . Pages 7 - 8 To stay customer-focused, insist that everyone in your organization gets out and talks with real live customers on a regular basis. This is too important a fact finding mission to be left just to the sales and marketing people, or to be outsourced to others. Instead, make it a priority to visit customers on their own turf and observe them buying and using your products and those of your competitors. The insights this will generate will energize you and keep you focused on what really matters rather than all of the peripheral issues.

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The Six Rules

1

Obsess over the category benefits, not your own individual brand benefits

Customers really don’t buy a brand because it offers features others don’t. Instead, customers make a category purchase of whichever product fills their needs and offers the best combination of benefits. With this in mind, you should spend less time worrying about brand differentiation and more time unearthing the customer’s category needs. Then focus on meeting those category needs better than anyone else. When customers want to buy anything, their purchase is usually motivated by a simple need. They need gasoline for their car, or they need a bag of cement to use around their house. They meet that need first and foremost by deciding to make a category purchase. This decision is then supplemented by a second decision to purchase whichever brand from within that category which offers the best overall combination of category benefits – and not necessarily the cheapest, the absolute best, the first they see or the first that comes to mind. In effect, this is the opposite of the usual marketing rhetoric. Marketers obsess over differentiation and a unique selling proposition or USP. The Holy Grail of marketing is to have strong unique benefits and consumer awareness of that uniqueness. Category benefits are never unique, but must be offered by every business which aspires to compete in the marketplace. For example, all automakers must offer safe, reliable on-demand transportation. Every Product or Service Category Benefits Unique Brand Benefits

2. Focus on customer needs – identify those needs that have already known but which have not yet been met by product offerings in your industry. Address those needs so customers aren’t expected to accept an inferior product or service. If you ask customers what they like and don’t like about the category, you’ll find out what sort of differentiation you can offer that will make a genuine difference rather than being superficial. The key here is to reengage with how customers actually make decisions in the real world. All too often, this big picture perspective is overlooked as executives look for a competitive edge. As a consequence, trivial, peripheral or marginal marketing ideas are introduced which will apply to only a small minority of customers. Category benefits are not just “table stakes” to enter the game of business but are, in fact, the whole reason your business exists. Find a way to more deliver those category benefits than acceptable substitutes and customers will love you for it. You won’t need any other distinguishing features. Innovate to deliver category benefits more reliably than your competitors. You can progressively broaden your brand by identifying important or unmet category needs and then designing ways to meet them. Customers are never as passionate about your brand as you will be. Their purchase is triggered by their actual product category needs first and foremost. Deliver the generic category benefits consistently well and everything else will take care of itself. “Executives care passionately about the unique features of their offer, hanging on to facts like ‘our fax machine has the smallest footprint in its class’. Customers rarely share this passion. The painful truth is that the differences between competing fax machines are far more important to those who make them than to all but the most geeky customers. The same is true in almost every category. To the supplier, the only thing that matters is the brand (how many sales? at what price?). To the customer, the only thing that matters is the category (does it meet my need? at what price?).” – Patrick Barwise and Sean Meehan “This view runs counter to much of the conventional wisdom about competitive positioning and differentiation, but it is certainly not a counsel of despair. It forces us to be realistic about what is feasible but leaves plenty of scope for beating the competition and creating shareholder value. Simply Better requires top management to rethink how to compete. Innovation is still crucial, but it’s directed more at improving the delivery of the generic category benefits and less at trying to develop unique brand benefits. And execution is usually more important than strategy.” – Patrick Barwise and Sean Meehan “We are not arguing for a one-size-fits-all strategy. We agree with those who say, ‘Well, it depends’. However, our observation is that the simply better idea resonates with executives in businesses serving relatively mature stable markets, such as Toyota, Cemex and Shell, as well as those in high-growth markets. It may be particularly important for small players, if they are to succeed, to have at least as good an understanding of the important category benefits as the market leader does. This will help those small players gain maximum leverage from their more limited resources and market presence.” – Patrick Barwise and Sean Meehan

Instead of obsessing over generating more unique brand benefits, it’s better to concentrate the energies of your organization on finding more ways to deliver the category benefits more consistently and more reliably. Customers value that certainty higher than they value uniqueness. This is how consumers develop purchase habits that stay with them for a lifetime. When the activities of daily life don’t go as smoothly as planned, there is a considerable amount of frustration, annoyance, cost and wasted time for consumers. Familiar brands blend an expectation of performance and reduce risks in a reliable, affordable and convenient way. Consumers expect their suppliers will act swiftly and decisively if anything goes wrong. To succeed, therefore, don’t worry excessively about your product’s uniqueness. Instead, innovate to find ways to deliver the category benefits more reliably than your competition. Find out the real customer needs – both realized and those which are not currently being met – and develop processes by which you can meet those needs. Make your innovation customer-focused by identifying and providing category benefits better than your competition. How can you actually achieve this in practice? Some ideas: 1. Take the Japanese concept of kaizen or continuous improvement to heart – and continuously look for ways to improve the service quality you deliver to customers on a regular basis. Close the gap between what you’d like to do and what actually happens when your customers buy.

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The Six Rules

2

Think simplicity, not sophistication – because that’s how customers think

In reality, customers see your brand in very simple terms, as a composite of their overall experience with your business. The challenge is to meet their expectations reliably and consistently. When that happens, they will buy again and again, and tell their friends. It doesn’t get any better than that. Buyers rarely, if ever, look for uniqueness in the products they purchase. Instead, customers want their needs to be met as quickly as possible at a fair price. The process usually works something like this: Customer Supplier

If this is true, why then do some brands sell more than others? Quite simply market share is a direct reflection of how many customers believe that one product delivers the main category benefits than all other competing products. The more people that believe a product does the basics well, the higher the market share. Customers care less about brands than marketers believe. All other things being equal, the key criteria most customers use is whether a product or service will do what they need. They want to simplify rather than over-complicate their lives, and therefore consumers will shop around a little and then settle on a favorite brand. They will then continue to buy this brand until they become aware of another competing product which performs better. In this area first impressions matter. Customers will often make a purchase decision quickly and then spend time trying to back up their preferred decision with factual information. To keep things simple, many consumers will consider only the brand they have previously purchased. They will only try something different if there appear to be compelling reasons to look at alternatives. They will assume there is little meaningful difference between the competing brands and stick with what has worked in the past. Occasionally they might scan the alternatives readily available at the point-of-purchase but generally speaking customers tend to stick with familiar brands until there is another product which obviously performs better. “Have you banned thinking outside the box? You should. It is not the same as innovation. It is too often an excuse for sloppy thinking. Have would-be rule breakers examine their own areas of responsibility. Are they delivering as they should? Quantum leaps are OK only if they’re in the right direction.” – Patrick Barwise and Sean Meehan “Given the opportunity, what would the market beg you and your competitors to change? Think through your business system, focus on everything between you and the consumer: distributors, agents, wholesalers, packaging, distribution – everything.” – Patrick Barwise and Sean Meehan “Your company does not belong in markets where it cannot be the best.” – Philip Kotler, professor of marketing, Northwestern University “Simply Better is about achieving differentiation that matters to customers. This is certainly not a new idea. In the guise of the ‘marketing concept’ – the idea that business success comes from meeting customers’ needs better than the competition – Peter Drucker put customer focus on the management map fifty years ago. The broad thrust of his argument – that it makes sense to put customer value creation at the center of all activities – has long been well accepted at some level by executives. Many examples have been reported to illustrate different aspects of market orientation. In spite of all the helpful frameworks, scholarly testimony, and inspiring examples, we characterize the marketing concept as being no better than well accepted at some level because customers themselves still report mediocre levels of satisfaction. Even the best companies continue to let their customers down far too often. All the change programs, the market research and the statements from CEOs throughout the 1990s appear to have had limited lasting impact. We need to think customer focus through again and, this time, make it happen.” – Patrick Barwise and Sean Meehan

Perceived Need Marketing Communications Category Knowledge Product / Service Price Availability Brand Usage

Experiences

Brand Purchase

Satisfaction

Companies normally attempt to build awareness of their products or services by advertising to build brand awareness and equity. Then, ideally, when a customer need arises, the consumer will know about the company’s products or services. The decision to purchase will also be dependent on the pricing and product availability decisions made by the vendor. The key element, however, isn’t marketing. From the customer perspective, the key element is the product or service itself. It determines whether the customer experience is positive or negative. If the product meets or exceeds the customer’s expectations, the equity of the brand is enhanced in the customer’s mind and they are likely to buy again and to tell their friends to do the same. Put another way, customers aren’t interested in uniqueness for its own sake. Instead, they want a product or service which is: • Competitively priced. • Available for use when needed. • Well distributed and supported with reliable service. • Functional enough to do what’s needed. • Reliable and entirely predictable. In other words, customers want a product or service that will do what they need every time.

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The Six Rules

3

Look at how customers make buying decisions first and foremost

Think twice before you engage in some creative outside-the-box thinking. Be realistic rather than clever. Look at how customers genuinely make buying decisions and monitor your performance in delivering the generic category benefits by comparison with your competitors. Don’t take your eye off the ball – how to create value for your customers. Managers need to be immersed in the details of their businesses. They need to spend more time thinking about the basics – how to become better at delivering what customers want – and less time worrying about being creative. There are lots of ways to achieve this in practice, but the key is usually to spend more time out talking with customers and less time back at the office. It also helps if customer feedback loops are simplified. If negative comments have to go through eight sets of hands to reach the CEO, the odds increase that someone along the chain will censor this vital piece of information, or tag it as being too trivial to consider. In this way, some subtle but vital pieces of information might be missed, potentially resulting in the loss of substantial future business. Simplified feedback systems also enables the organization to react quickly to fresh market information rather than continue to plunge forward on the strength of misinformation. Immersion in customer needs by managers works well because: 1. It provides an unimpeded version of the true facts – allowing managers to know definitively when improvements are needed. Immersion reflects systemic problems that need to be addressed rather than one-off glitches. 2. It provides a lens through which formal market research can be filtered – allowing the management team to interpret the facts correctly and unambiguously. 3. Immersion will generate some rich anecdotes and stories – which can then be harnessed elsewhere in the organization to get people engaged emotionally. 4. It encourages learning – because when people see their bosses taking one day a week to visit customers, they will get the message they need to be doing the same. Ideally, you want your immersion program to be well organized rather than random. Programs should ensure managers are exposed to a representative cross-section of customers. More formal market studies can also be developed to supplement and deepen the customer immersion initiative. An effective customer immersion program should also be complemented by a deep understanding of your competitors. Studying your competitors is important because:
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High-performing companies are typically very sensitive to competitor moves in the marketplace. When you understand your competitors and their mind-set, you can anticipate what their most likely future moves will be. You’ll also have a fair idea how they will respond to your own planned moves. To understand your competitors better:
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Focus – on the handful of competitors who are most likely to compete directly against your firm. Also keep an eye on potential new market entrants from other lines of business who may enter your industry in the future but get to know your current competitors really well. Go back two years for each competitor – and pick out the five or six big things they have done. Build your understanding of their mind-set around these key events. Try to articulate their business strategy – by looking at what they did in the past. Identify their underlying strategies. Share your ideas with any of your colleagues who have contact with that company and see what they think. Also share your conclusions with your frontline staff and ask them to comment whether or not that strategy seems to fit each competitor. Be prepared to make some predictions – extrapolate into the future your competitors’ strategies. Be prepared to update your predictions again as subsequent events unfold, but make explicit predictions on the strength of your analysis. Enlist the help of your employees – encourage everyone to be more aware of what competitors are doing and to pass that information on to you so you can evaluate what’s happening. Move people out of their comfort zone and activate their intelligence gathering capabilities.

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Once you understand how your competitors are performing and how your own business is doing, you are then in a position to ask: “Where do we all fall short? How could all the companies in our industry improve dramatically?” Many times, an entire industry can unwittingly collude to make things more difficult for customers than they should be. At times, even a simple customer survey can throw light on substantial opportunities to enhance the customer experience that nobody else has ever noticed. Many customers are delighted to tell their horror stories but nobody has ever asked. By paying attention to the drivers of customer dissatisfaction, you better understand how to deliver customer benefits better. If you’re lucky, your customer and competitor analysis may open up to your view a new category nobody has ever noticed before. You may become aware of some latent customer needs nobody else has ever noted. By developing just the right offering and then paying attention to your operations and execution, you may be able to build and dominate a new market. If you find yourself in this fortunate position, don’t expect to have that market to yourself for long. Competitors will pile in once they become aware of the market you’re trying to defend. “The term ‘learning organization’ implies being exposed to things you’re not comfortable with. If everyone is comfortable, they’re not learning anything.” – Don Lehmann, Columbia University “Everything hinges on giving customers what matters most to them, even if that proposition seems less exciting that focusing on novelty, uniqueness, or the latest trend. What separates winners from losers is usually not their strategies but their differing abilities to execute those strategies.” – Patrick Barwise and Sean Meehan

They will be targeting the same customers you do. They already have existing customers who think they’re doing something right. They will be recruiting from the same talent pool as you. They will generally have access to the same factors of production as you. More than likely they will be studying the same market research data as you. They will be trying new things to get ahead.

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The Six Rules

4

Focus more on your opportunities and less on your competitive threats

Every industry is constantly evolving as new technologies arrive, different regulations take effect and changes in the customer base occur. Don’t become either too cautious or too complacent. Instead, keep evolving your business. Stay focused on doing whatever it takes to provide the benefits that customers are willing to pay for, even if that means cannibalizing your existing business to do it. This is the only way to look at change as an opportunity rather than a threat.

“To understand what customers really want, first spend time directly with them, give them a channel to gripe, and listen intently. Then look at the drivers of dissatisfaction. A need is always unmet when customers tell you they are disappointed. For the seller, failing to meet needs you set out to satisfy is the worst kind of unmet need.” – Patrick Barwise and Sean Meehan “Our customer service proposition is about the most well defined in the world. We guarantee to give you the lowest airfare. You get a safe flight. You get a normally on-time flight. That’s the package. We don’t and won’t give you anything more on top of that. We care for our customers in the most fundamental way possible: we don’t screw them every time they fly.” – Michael O’Leary, CEO, Ryanair “It’s amazing to hear executives tell us of their attempts to think outside the box when their business still suffer from abysmal satisfaction ratings. It is a little like a weekend golfer who routinely loses five balls in the rough every round and worries about how to get more backspin on his chip. Instead, you should first work hard to pick up any evidence of dissatisfaction – the equivalent of following through on your swing. Understand the most important category benefits, and prioritize fixing those over heroic schemes to rewrite the rules of the game or reinvent the business model.” – Patrick Barwise and Sean Meehan “Creativity is thinking up new things. Innovation is doing new things.” – Theodore Levitt, professor, Harvard Business School “Experimentation is an attractive approach. The challenges here are to ensure that you do not just experiment for the sake of it and to know how and when to decide that the experiment is over and you will need to try something else.” – Patrick Barwise and Sean Meehan “As a rule, we would be worried if executives were spending more than 10-percent of their time dreaming up the next breakthrough. Further, we believe that one way to think about getting the most out of that 10-percent is to spend much of it scanning new entrants, especially those smaller companies that, not burdened with thinking about your market the way you have for decades, seem to be making something of an impact, gaining attention and customer acceptance.” – Patrick Barwise and Sean Meehan “The Internet provides many examples of businesses using technology to be simply better – and quite a few of companies falling in love with technology and forgetting about customers’ real needs. The most successful use of the Internet is by established companies using it to be simply better, mainly through improved customer service and value chain efficiencies. Today, most companies with established channels use the Internet not to bypass those other channels but instead to strengthen relationships with them, as well as with suppliers and final customers.” – Patrick Barwise and Sean Meehan “Do you have an innovation barometer? No? Good, no need. Keep focused on measuring whether you are creating real value for customers today. Understand that customer expectations evolve, and you need to continually push the boundaries.” – Patrick Barwise and Sean Meehan

“Innovation for innovation’s sake is nonsense, but relentless innovation to improve performance on the generic category benefits is an essential element of sustained business success.” – Patrick Barwise and Sean Meehan To be able to treat marketplace change and innovation as an opportunity rather than a threat, you need to have three elements in place: 1. Motivated employees – who will participate fully in creating satisfied customers. Without the active and enthusiastic efforts of your employees, nothing much will happen which will make your business stand out from the crowd. Achieving this will require happy, motivated people who love their work. The starting point for all transactions with your company are your frontline people. Astute managers monitor their employee’s morale regularly, weekly if possible. They put in place systems that help everyone become more productive. Ideally, your frontline staff should be highly regarded by customers as experts in their field who can offer specialist advice and support to their customers. 2. The right business systems – which will deliver your customer value proposition clearly and unambiguously. Designing a sound business system requires that you address all the difficult trade-offs. The real driver should be finding ways to systematically deliver more of what the customer values. Innovators never rest on their laurels. They identify the drivers of customer dissatisfaction, and then find ways to reinvent their business models to give customers more of what they want. 3. An ability to combine experimentation with clarity – so you can figure out how to become better. In some companies, there is not enough analysis of the insights that can be derived from each new commercial idea. That results in experimentation becoming an end in and of itself rather than a driver of new and more profitable business ideas. When you introduce new ideas, put in place systems that allow you to measure whether your new ideas are creating added value for real customers today. Find out unambiguously whether customers (existing or new) find your experiment attractive. Have data which shows whether you’re using new technology to become better in the eyes of the customer. Too many companies which fall in love with their own technology end up developing solutions looking for a problem to solve. As long as the customer’s needs and preferences take center stage, there shouldn’t be a problem in experimenting with clarity.

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The Six Rules

5

Use outside-the-box advertising only when your delivery systems are in place

To get noticed in the marketplace, you don’t advertise the fact that you deliver the generic category benefits better than everyone else. That will get lost in all the background noise and besides, consumers will expect every company in your industry to say that. Instead, you need some memorable, completely outside-the-box marketing communications. The only way to cut through the clutter is to be distinctive yet relevant – a hard combination to master. Your product doesn’t need to be distinctive but your advertising most certainly does. To stand out from the crowd, you need some disciplined creativity. You need to focus on a customer benefit that only you provide and that cannot be claimed by any other brand. That benefit then needs to become the centerpiece around which all your advertising and marketing revolves. Good marketing materials come from a partnership between the creative types and hard-nosed business managers. If the artistic people aren’t subject to some control, you’ll end up with advertising that wins awards but fails to meet the business objectives. Conversely, if the managers have too much influence and over control things, you’ll end up with material that is too bland to cut through the clutter and background noise of the marketplace. A fine balance is required. What’s needed is “disciplined creativity” – marketing communications that are creative enough to get noticed but practical enough to actually generate sales rather than leave consumers wondering what’s going on. To achieve that fine balance of disciplined creativity, answer five key questions: 1 Where are we at present?

Question #2 requires customer insight and quite possibly some soul searching on your part. You need to look at how you’ve been positioned in the past. Are you a major player in a growing niche market or have you become a niche player in a large but declining market? What are the customer’s perceptions of your brand? Question #3 is where some novel or creative insights can be felt. T his question is all about determining your communication objectives, which might be: • To increase brand awareness and relevance. • To build cohesion between your different models. • To add prestige to your brand. • To enhance and sustain your brand differentiation. Outside-the-box thinking is required in answering question #4. This is where the creative thinking occurs as you come up with something which will get noticed. Typically, this is where you involve an advertising agency or other consultants. Ideally, the answer to this question will come from one single creative idea which is simple and memorable. Question #5 demands hard-nosed data and analysis. This is where the company determines the results quantitatively rather than by means of anecdotes or other less comprehensive means.

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Note again that this is disciplined creativity in action. The creative people aren’t engaged until solid business objectives have been established and success metrics determined. They do their part in developing advertising materials which will stand out, but it is your call as to what you want consumers to think, feel or do. The creative elements flow on from your business objective, not the other way around. Ideally, once you set the business objectives, there should then be little or no constraints placed on how they are to be met. Specialists can come up with how to best use various channels of communication in such a way that the impact of your message is enhanced. Different channels are better for different tasks, and this is an area where a good advertising agency can help mold an integrated message. Always keep a sense of perspective about your marketing. Branding is a useful tool, but all great brands are built on a foundation of trust derived from the customer’s experience in buying and using your product or service. Advertising can reinforce those customer perceptions but unless you have a good product which is priced attractively and supported well nothing much will happen. “In putting the customer center stage we urge managers to reassess how well they really understand what customers want. Every company serious about customer focus should aim to be the best at the things that matter to customers.” – Patrick Barwise and Sean Meehan “If you don’t get noticed, you don’t have anything. You just have to be noticed, but the art is in getting noticed naturally, without screaming or without tricks.” – Leo Burnett, founder, Leo Burnett Company “In today’s society, customers receive so many commercial and other messages that they filter out the vast majority, both through selective attention and by using their TV remotes. In order to cut through the clutter and attract the customer’s attention, a message needs to be distinctive and eye- or ear-catching, as well as relevant. It requires outside-the-box thinking.” – Patrick Barwise and Sean Meehan

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How did we get here?

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Where could we be in the future?

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How can we actually get there?

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How much progress have we made?

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Question #1 means to analyze realistically where your company is at present, in terms of market share and brand awareness. This should be relatively easy to answer if you have the right metrics in place. If you don’t know where your company is at present by comparison to your competitors, then this is what you need to determine before you attempt to initiate a marketing campaign. Find out what your current and prospective customers think about you and your brand to set in place a good foundation.

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The Six Rules

6

Regularly immerse yourself in the realities of the marketplace

Three distinct factors lead to organization being able to make faster and better decisions consistently: 1. Direct learning – where the people within the organization make judgements based on a combination of immersion, intuition and factual research. Experience can fine-tune an individual’s intuition so he or she can sense an opportunity. Factual research then validates the market opportunity. 2. Hard-work decision making – which means replacing frantic activity with rigorous debate about the most effective way forward. Good management teams learn to disagree with each other without becoming disagreeable. A vigorous debate about the way forward will usually incorporate: • Up-to-date data rather than guesses. • Multiple alternatives instead of one or two options. • Common goals. • A balanced power structure. • Humor to ease the tensions. Many highly successful Silicon Valley companies make robust debate a central tenet of their operations with impressive results. This isn’t a sign of weakness on the part of a leader. On the contrary, in many high-performing management teams, leaders make good decisions because they are guided by input from the rest of the group, and then everyone throws themselves wholeheartedly into execution. Whenever a company is in a turnaround situation, being fast usually matters more than being right. Here a top-down approach works best. Over the long haul, however, waiting for just one person to make all the decisions can create a bottleneck. It’s far better to get more people involved in debating the issues and interpreting what’s happening in the marketplace. 3. Accountable experimentation – meaning when trials do happen, they are based on all available data intelligently applied rather than being a random stab in the dark. Companies involved in accountable experimentation still expect mistakes to happen but not the same mistake over and over. Accountability means the results of the experiment are evaluated thoroughly and applied. If the experiment is unsuccessful, it is shut down immediately. Conversely, the success of any experiment is also picked up on and exploited systematically rather than being left to chance. To make these factors work for organizations, the right kind of underlying culture must be in place. The key features and elements of a suitable culture in this regard will be:
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To stay customer-focused, insist that everyone in your organization gets out and talks with real live customers on a regular basis. This is too important a fact finding mission to be left just to the sales and marketing people, or to be outsourced to others. Instead, make it a priority to visit customers on their own turf and observe them buying and using your products and those of your competitors. The insights this will generate will energize you and keep you focused on what really matters rather than all of the peripheral issues. How do you learn about the markets you aspire to serve? The best way of all is to spend time with those who use your product; • Your biggest customers. • Your smallest customers. • Your closest customers. • Those customers farthest away from your base of operations. • New or first-time customers. • Your most established and loyal customers. • Dissatisfied customers. • Previous customers who now buy elsewhere. Get alongside these people and find out for yourself what they’re experiencing and how that makes them think. This unfiltered and unedited information can be invaluable. You can complement what you find out firsthand with market research and other studies which analyze your performance against customer expectations. Of course, all the market information in the world means nothing unless you learn from it and respond accordingly. The extent to which responsiveness occurs will be derived from your organization’s value system: Values Responsiveness Performance

Market sensing

Your organization’s value system determines both the amount of market sensing which occurs and your degree of responsiveness. If deep down, managers are unable or unwilling to respond to customer feedback and instead prefer to focus on internal matters, your organization is unlikely to be customer focused or customer responsive. In this situation, a hierarchy is likely to be in place which is inward-looking, rigid and orderly. By contrast, those organizations which are more customer focused tend to be flexible and adaptable to a much greater extent. In those circumstances, entrepreneurship, creativity, adaptability, autonomy and a willingness to experiment come to the fore. These types of companies value growth and innovation highly. In practice, being customer responsive means being both right and fast in the eyes of the customer. It doesn’t mean constantly giving customers whatever they want, because at times the customer won’t have enough information available to make an informed decision. Customer responsiveness is unquestionably enhanced, however, when the response is delivered promptly and unambiguously.

The entire organization must see challenge and debate as forces for good and not disruption. This enthusiasm for discussing openly conflicting ideas based on the facts must extend not just to the management team but throughout the entire organization. This is the only way to share learning and build sound business judgement. Nobody must expect their proposals to be rubber stamped simply because they are put forward by the right person. Rather, everyone must understand a strong business case needs to be made before the go-ahead will be given. By requiring people to make a strong case in this way, the right signals are sent. Everyone realizes the organization values highly the opportunity to pursue new ideas when they do arise but that these opportunities must be explored intelligently and rigorously rather than in an ad-hoc fashion.

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A good balance needs to be struck between being fast and being right. People need to be encouraged to think clearly and strongly. Compromise needs to be avoided as well – meaning hidden agendas can be thrown out the window completely. The leaders of the organization must be passionate enough about knowing what customers think that they actually go out and spend time in the field interacting with end users. Everyone must know what the organization believes in and how to go about doing what genuinely counts.

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“It is an immutable law in business that words are words, explanations are explanations, promises are promises, but only performance is reality.” – Harold Geneen, former chairman, ITT “Marketing is so basic it encompasses the entire business. It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view. Concern and responsibility for marketing therefore must permeate all areas of the enterprise.” – Peter Drucker, management consultant “Companies that embrace true customer focus start with a crystal clear view of what their business is about and how they create customer value. Unlike competitors that tend to be whimsical and sometimes distracted by the latest big opportunity, customer-focused companies while engaging in many often complementary activities do not have an identity crisis. The leaders of these companies share a passion for the customer, and they and their management teams demonstrate that through action – the resulting stories of important customer interactions become the stuff of corporate legend. Direct, frank customer interactions matter to individual managers who are empowered to do something to respond. Those interactions are the primary source of meaningful customer insight. These managers are obsessed with delivery and execution – because in the end that is what the customer gets. And because they are thinking of what really matters to customers, they clearly execute their strategies with category benefits in mind, rather than slicing and dicing markets and developing unique strategies around those needs.” – Patrick Barwise and Sean Meehan “Only the paranoid survive.” – Andrew Grove, chairman and CEO, Intel “Go to your calendar. How many days in the next four weeks are dedicated to interacting with buyers (those who make decisions to acquire your product or service) and with users or consumers (those who use it)? Get the point? Now clear your schedule. In the next month, make it a priority to visit customers on their own turf – big and small, near and far, new and old, and especially dissatisfied and lapsed customers. Focus on observing and talking to customers where and when they buy and use your brands and your competitors’ brands. Although administration, resource allocation, and high-level strategy are important, take them in moderation. Bite the bullet. You may be surprised by the impact.” – Patrick Barwise and Sean Meehan “Being a customer, whether at home or at work, accounts for a high proportion of our waking hours. Often it is a bad experience. This represents a huge opportunity for companies serious about

putting the customer first. There is often a wide gap between the intent and the experience. Companies have to reconnect. One way to start the process may be to turn the discussion at the next informal outing with colleagues to disasters they have experienced personally as customers of other businesses – we all have them. Now work through one or two of those experiences in more detail. How on earth could that have happened? Could it happen at your company? Of course it could – worse, it already has. But now, with an acceptance that unforced errors will happen, tackle what you can do to improve.” – Patrick Barwise and Sean Meehan “Everything can be done better. There is nothing that cannot be improved.” – Michael Dell, CEO, Dell Computers “This is a never-ending story for two reasons. First, you never get the basics right. If you did, you would presumably achieve a 100-percent customer satisfaction score, and even then you would likely lose it as soon as you took your eye off the ball. Second, there are always opportunities that will require you to increase the complexity of your business or look to new opportunities. The new market opportunities where you can make money at an acceptable risk will most likely build on your existing capabilities. The stronger those capabilities, the more other profitable opportunities you will have. Competitive advantage can come only from a solid foundation of knowing your customers and how they chose and delivering consistently whatever it is that matters most to them. The rest should be seen for what it is – a lottery. So start now, and never stop.” – Patrick Barwise and Sean Meehan “Companies are not as customer-focused as they think. Everyday experience and customer surveys bear that out. At the root of the problem are two assumptions, both wrong. First, companies assume they need to offer something unique to attract business. Secondly, they assume that years of competition have turned the underlying product or service into a commodity. In reality, what customers care most about is that companies reliably deliver the generic category benefits, but, far too often, that does not happen. Therefore, most businesses have a big opportunity to beat the competition, not by doing anything radical and certainly not by obsessing about trivial unique features or benefits, but instead by getting closer to their customers, understanding what matters most to them, and providing it simply better than the competition.” – Patrick Barwise and Sean Meehan “Just as thinking outside the box was the expected approach for managers in the 1990s, we expect a return to fundamentals to become today’s big idea. Back to basics is already gaining ground as the new staple of the executive suite. We can expect headlines like ‘GE Chairman Goes Back To Basics’ to become widespread. We do caution, however, that a successful return to basics is not about slashing and burning parts of your business; rather, it is about being simply better. This requires far more than doing more market research. It is a commitment from the top to transform the entire culture of your business – starting at the top itself.” – Patrick Barwise and Sean Meehan

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