Roy's Blog: June 2009
June 30, 2009
“Customerization” is DiFFERENT than traditional marketing: Holistic Offers are created for WHO you have chosen to SERVE rather than flogging products to the masses.
Holistic Offers are created based on what you discover to be the total overall needs, wants and desires of your targeted customer group. Offers reflect a broad customer dimension rather than a narrow thin slice that typifies a product-driven approach.
Holistic Offers pace an organization is the VALUE delivery business and not the product supply business. The Mountain Adventure Package Offer provided by the Fairmont Chateau Whistler in BC, for example, creates an adventure experience for people rather than merely a combination of a hotel room + food + a daily Whistler activity (of which there are well over 30 to choose from).
Holistic Offers 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.
Holistic Offers have some amazing benefits to organizations that choose this BE DiFFERENT approach:
- They are viewed as creative - looking at the customer as a total entity
- They are viewed as a market leader - few are active in Holistic Offer creation
- Their brand currency goes up - based on innovation and market leadership
- Their customer relevance increases - Offers are based on the specific customers you have chosen to SERVE
- Margins increase - based on premium pricing not discounting
Holistic Offers are not bundles. They are created based on 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 Offer components into an expression of value (the Mountain Experience 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? The argument doesn’t cut it with me.
For a detailed discussion of the topic, refer to my book. Many examples are provided and I show you how to create an Offer for your organization.
Cheers, Roy Osing
June 25, 2009
The challenge for Marketing teams these days is to change the rules of the competitive game to an approach that defines their organization as BE DiFFERENT. The common marketing discipline today is what I refer to as product flogging, developing and selling products to mass markets in an effort to maximize marketshare.
The BE DiFFERENT Practice, however, drives to create value-based Holistic Offers targeted to smaller customer groups with the end game of maximizing customer share (or share of wallet). Rather than start the marketing process with the product, BE DiFFERENT starts with the definition of WHO your want to SERVE and then creates multiple Holistic Offers for the chosen customer group in an attempt to get more of their business.
Holistic Offers are defined by a package of value they provide to the targeted customer. Unlike the product flogging approach Offers are driven by very detailed and specific holistic customer requirements. Product flogging promotes features and benefits: Offers promote VALUE. That’s the difference.
Here are the benefits of this BE DiFFERENT Practice:
- It is demonstrated evidence of market innovation
- You are able to build your brand as a market leader
- Offers yield higher margins due to the premium prices (not discounting) that are applied
- You increase your customer relevance since Offers are created in the image of specific customer needs
- And in the end, you distinguish yourself from your competitive floggers
I read recently an article reporting the results of a consumer psychology study that concluded ‘buying experiences, not possessions, leads to greater happiness. Think about it. This has amazing implications for BE DiFFERENT marketers. Essentially the task becomes one of creating unique Experience-based Offers for your chosen customer groups. So, use your primary product or service as the anchor and wrap experience components around it. Look outside your organization to acquire the experience components.
Check out what the Fairmont Chateau Whistler is doing.
June 11, 2009
Rule #4 of the four step process to dazzle 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 most precious asset? The most frustrating thing for frontliners is to have to be a rule enforcer and halving customers constantly pushing back. Do you really think it is possible to 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; if you don’t believe so, you haven’t look closely enough ad for sure you haven’t asked a frontliner.
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.
Cheers. Roy Osing
June 6, 2009
Rule #3 of the four step process to dazzle 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 a 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 customers where customers are not the prime target they become collateral damage in the rule’s application. Dumb Rule origination can come from internal audit, staff marketing, credit and collections, finance, and systems and procedures functional areas who wouldn’t know a customer if they jumped up and bit them in the behind.
In Section Four of my book, I mention numerous examples of Dumb Rules. One of my favorite stories took place at The Mirage Hotel Resort and Casino in Las Vegas. There is a wonderful de in the casino that serve the best deli sandwhiches ever but the customer friendliness of their rules sucks. My wife and I show up at the deli about midnight with an insatiable appetite for a rueben. We 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 Dumb (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 when it made sense to do so. Oh no, 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 ir 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? Well, go ask your frontline what Dumb Rules they are constantly having to deal with. They know them. 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 ‘CEO’ 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 DRC’s and celebrated the ‘winners’; these 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? Well, first of all do careful due diligence to make sure that the claim is real and not posturing of a DR champion who doesn’t want their object of control 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? You need to 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 DR’s you have succeeded and your customers will reward you with continuing loyalty and your reputation will soon attract new customers as well.
Know a Dumb Rule? Share it with me and I will pass it on .
Cheers, Roy Osing