Roy's Blog: June 2009
June 30, 2009
Create packages of value rather than flogging products.
“Value Paks” are created based on what you discover to be the total overall needs, wants and desires of your targeted customer group.
They reflect a broad customer dimension rather than a narrow thin slice that typifies a product-driven approach.
They place an organization in the VALUE delivery business and not the product supply business. The “ALL ABOUT ME” WOMEN’S WEEKEND” package provided by the Fairmont Chateau Whistler, for example, offers ...“an indulgent and exhilarating women’s weekend retreat… a selection of inspiring and uplifting workshops, fun activities, and empowering presentations” with accommodations and meals, for a flat rate of around $600 CDN.
Value Paks are priced to reflect the value supplied; they are not based on discounting the sum of the component parts as is commonly done today in the plethora of bundles being provided by many companies.
As a result, margins are not eroded as in discounted bundling; rather margins are increased if the marketer is astute in the value components being provided.
Here are 5 benefits to the packaging strategy:
1. Companies are viewed as creative - looking at the customer as a total entity.
2. They are viewed as market leaders - few offer more value for premium prices. Most are in the discounting game.
3. Their brand currency goes up - based on innovation and market leadership.
4. Their customer relevance increases - Paks are based on specific customers rather than on the general needs of mass markets.
5. Margins increase - based on premium pricing not discounting.
Value Paks are not bundles.
They are created around value components discovered to be unique to a specific customer group.
They are sold on the basis of a singular value proposition that integrates all package components into an expression of value like the Fairmont’s women’s weekend package. They are priced up based on relevant and compelling value provided.
Bundles are old and tired; everyone uses them under the misguided belief that they create customer stickiness or loyalty.
How can that be the case when they are nothing more than price plays and there is a glut of companies in the market that provide them?
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- Posted 6.30.09 at 11:37 am by Roy Osing
June 11, 2009
Rule #4 the four step process to AMAZE customers deals with the often encountered situation when your rules clash with what the customer wants, and how your frontline employees are empowered (or not) to deal with the situation.
Do your frontline employees spend a great deal of their time enforcing the rules, policies and procedures of your organization and, as a result, are constantly saying NO to your customers?
The most frustrating thing for frontliners is to have to be a rule enforcer and having customers constantly pushing back.
Do you really think it is possible to amaze and dazzle anyone when you are constantly trying to get someone to tow the line on something they don’t agree with?
Every organization has a rule infrastructure to govern their operations; its a necessity. BUT when your rules start to butt heads with a customer to the point that they get upset (and yes, enraged sometimes) and recoil from you due to your rules, you need to introduce the notion of flexing to the customer when it makes sense to do so.
Frontline people need to be able to bend a rule on the customer’s behalf if it means keeping the customer loyal.
I’m not talking about doing anything illegal or anything with this type of consequence; rather the internal policies that can be bended for a customer who has special circumstances that were not foreseen by the policy.
Rules and policies are created in the image of an “average” customer but the reality is that the average customer doesn’t exist. They are ALL different.
So, empower your frontline people to bend one of your ‘standardized’ rules, policies or procedures when the customer needs a different treatment; when their needs are quite reasonable but out-of-bounds to what the book says.
First of all, your frontline will NOT ‘give away the store’ and chaos will NOT result from this. In fact in my experience, empowering frontliners to ‘say yes’ actually produces a greater degree of rule enforcement as they typically reserve flexible treatment for those customers who truly need it.
You will be rewarded by a customer who is dazzled by how they are being treated as a human being rather than as a transaction that has to be controlled by the rules.
And, in addition, you will have a loyal customer who will tell others how truly great you are.
- Posted 6.11.09 at 08:20 pm by Roy Osing
June 6, 2009
Rule #3 of the four step process to AMAZE customers involves a common occurrence in most organizations every day: customers run head on into an internal rule, practice or procedure that annoys them makes them go postal.
This is the “dumb rule”, a rule that was given birth probably by some control freak with a nonsensical purist view that a customer should behave in a certain way that serves the organizations purposes with little regard for whether or not a customer will react favorably to getting treated in the prescribed manner.
In my experience the fathers and mothers of dumb rules can be found in staff jobs whose role is to develop and implement operating procedures to govern, among other things, customer transactions.
And, unfortunately, in some cases where customers are not the prime target they become collateral damage in the rule’s application.
One of my favorite dumb rule stories took place at The Mirage Hotel Resort and Casino in Las Vegas. There is a wonderful deli in the casino that serves the best rueben sandwiches ever but the customer friendliness of their rules sucks.
My wife and I show up and asked the hostess for a booth and were told flatly that our request was not possible since it was their policy to offer booths only for parties of 6 or more.
I get that some analyst wanted to maximize the check value from these specific seats, but in this case the store was empty save my wife and me! Maximizing revenue beyond the two of us was an impossibility!
Not only is this rule stupid (since the appropriate way to deal with customers from a hostess point of view is to ask the customer where they would like to be seated), the hostess was not empowered to break it in this case when it made sense to do so.
She enforced this stupid policy mindlessly with utter disregard to the impact it was having on us. Not her fault really as the organization had their rule enforcer glasses on and were not about to bend even a fraction of a standard deviation from it.
Dumb rules need to be killed or they will kill the business!
They serve as nothing more than a de-dazzler in the customer experience and people will definitely take their business elsewhere.
How do you go about identifying and wacking these ugly loyalty threateners?
The issue is do you have the courage to listen and do something about them?
I created “Dumb Rules Committees” in operations divisions and appointed a leader for each committee responsible to seek out and destroy (or otherwise modify) rules that made customers crazy.
Fun was had by all over this concept. All divisions welcomed this initiative; they all were passionate about the purpose; all made stupendous progress.
We had contests among the committees and celebrated the winners; the committees that not only identified the most aggravating customer rule (judged by their peer group) but also took whatever action necessary to get it resolved.
My role and that of my direct reports was to remove any roadblock’s preventing the committees from getting a rule dealt with.
What about rules that are required by law or regulatory governance?
First of all do careful due diligence to make sure that the claim is real and not posturing of a champion who doesn’t want their rule or policy removed. If the rule IS necessary, however, then at least look for ways to make it customer friendly.
And reconsider how the rule is enforced with a customer; what communications strategy is used. Is it friendly and helpful or is it demanding and intimidating? Take the time to design the customer communications content to minimize an adverse reaction; not always possible but it is worth doing nevertheless.
At the end of the day, if you purify your organization of 80-90% of dumb rules your customers will reward you with continuing loyalty and your reputation will soon attract new customers as well.
- Posted 6.6.09 at 06:54 pm by Roy Osing