Stop Enabling Your Customers! And Get Your Product “Hired” Now

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Have you ever heard product or service claims like these:

  • [Our service] enables executives to achieve their top priorities.
  • [Our product] enables you to make better use of your network to help the people you trust.
  • [Our product] enables you to create beautiful native mobile apps styled with CSS.

These are typical examples of statements that all too often appear as the headline of product data or sell sheets, web pages, and other promotional material.  Two of these examples come from small companies you probably don’t know, and one comes from a large company you probably do know.  And while this type of phrasing is all the rage in Silicon Valley, it pervades plenty of other industries as well.

But it says nothing.

Or at least nothing useful.  In these headlining statements, the companies producing the product have failed to communicate to the potential buyer why it is so important to the buyer to have the product or service being offered.

Of course, we want to enable our customers to do something that is of value, but all too often, when I see statements like the above, the value is either misplaced or misunderstood.  This is often indicative of a serious underlying issue with the positioning of the product or service.

Allow me to explain.

In his seminal work on innovation, The Innovator’s Dilemma, Clay Christensen points out that every product, in order to be successful, must have a job.  This means that in order for any person or organization to buy a product or service, they must have a job they want that product to do, and then they make a decision to “hire” the product or service to do that job.

Sometimes we know well the job we need done.  A simple, if dated, example of this is the personal computer.  When PCs were first brought to market in the 1970s, they were hobbyist toys.  Then along came Dan Bricklin with a program called VisiCalc, and suddenly companies could “hire” personal computers to do the arithmetic that had taken junior accountants much of their day to accomplish.  As the versatile computer became more of an office presence, it found more and more jobs to do but would never have been there in the first place had it not had a job in the first place.

Sometimes we don’t know the job we need done until it shows up in front of us.  A personal example goes back just two years to when I bought my first iPad.  As Silicon Valley marketing professional, I was a fairly mobile worker able to find ways to be reasonably productive from pretty much anywhere, whether traveling on business or working from home.  Once I learned how to connect my iPad to all the relevant services, however, I became a walking office.  Everywhere I went, all I had to do was open the iPad and suddenly there was no difference between being in an office and being anywhere else.  The iPad did the job of making me location-independent (or as one of my campaigns put it, “as productive from anywhere as I am at my desk”).  I wasn’t very aware I needed that job done, but once it was being done, there was no question that I had made a great “hire.”

So what’s the problem with statements like those above?  They don’t connect the value of the product or service to the value the potential buyer needs.  The marketers behind them found a really cool thing that their product enables, but they either failed to connect it to something their buyer needs or communicate that connection.  This is a serious positioning error that could cost you your ability to successfully enter a market or overtake competition.

Fortunately, the solution is simple, and it is nothing more than great positioning. Here’s how:

  1. Understand your intended customer’s needs:  What do they need done for them?  What needs does this create?  Which needs are being met and which are not?  Can you identify any needs they have — or soon will — of which they are not aware?
  2. Look carefully at your own capabilities:  not just your product or service but the whole range of capabilities your company, including its people and technologies, can bring to the market to serve those needs.
  3. Match your capabilities to the identified customer needs and figure out exactly how your capabilities meet those needs.
  4. Communicate as potential results your customers can achieve rather than things they could do, which will allow them to understand the compelling reasons to “hire” your product or service.

There is one more pitfall.  Many of the start-up companies with which I work fall into the trap of defining customer needs as what they want them to be (or, in the worst cases, wish they were).  It’s nice to think your customers should have a need to do whatever your product does for them, but (as we so often have to remind ourselves) we do not get to define what customers need and why.  Our task is to discover the actual needs and meet them.

When you define customer needs, make sure you do not believe your own mythology.  Make sure your findings are grounded in reality.

So stop enabling.  Start solving problems and creating results.  And your product will be the one that gets “hired” over and over.


Keep Your Customers Coming Back: How to Increase Repeat Business and Reduce Churn

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Are you in a business that depends on returning customers?  Or a business that sells a subscription service?  If you are, then you already know intuitively that bringing your customers back — or ensuring they renew — is the lifeline of your business.

Knowing that, are you spending disproportionately on new customer acquisition and leaving renewals to a customer service team that lacks the incentive to maximize return/renewal revenue?

Many of my clients are in the technology industry, which is in the midst of making an industrywide shift from one-time product sales to subscription based services (the trend to so-called cloud computing is leading the way).  In the old model, it was fair to assume that once a customer purchased a product, they would most likely use it and then buy smaller add-ons, such as upgrades or service contracts.  In that model, most of the revenue came from the initial purchase, so most of the marketing and sales effort went into new customer acquisition.

But as the model has shifted, the investment has not kept pace.  My clients see symptoms such as customer service teams that are expected to renew their customers but have little or no incentive to do so or sales reps that have no incentives tied to long-term customer success.  The result?  Churn (customer turnover) rates as high as 33% are common.

So how do you keep one-third of your revenue from walking out the door every year?

The most common response I get when I ask this question is, “Good customer service.”  But what does that mean?  It’s usually measured by anything from product performance, to support center response/resolution rate, or to customer satisfaction survey scores.  This is all good, and these are desirable results.  But they are not (necessarily) what keeps your customers coming back.

To succeed in a repeat customer or subscription renewal business, you need to do two things very differently:

  1. 1. Redefine your business strategy and goals to align with this desired result.
  2. 2. Create metrics that both demonstrate success and allow consistent incentives to be

provided to those teams responsible for that success.

Aligning Your Business Strategy

You have, I presume, a very successful sales and marketing strategy and process for acquiring new customers.  Do you have a parallel sales and marketing process for bringing customers back?  This won’t be the same approach as customer acquisition, but it will take advantage of the existing relationship — and everything you know about your customer and how they value your products.

The information you have from your ongoing customer relationships will determine how to set strategy and process for renewal/return sales and marketing.  To define that strategy, you must answer questions such as

  • What customers are most important to you? Why?
  • How do you determine the value of a customer to you?  Are you considering all the aspects that matter?
  • How important are you to your customers?  Why?
  • What criteria do they use to evaluate your relationship and determine whether they return/renew?
  • How predictable are return customers or renewals?  What predicts them?

If you have sources of data — and you likely do — that hold information about customer behavior, usage patterns, specific activities, interactions with the various parts of your organization, etc., then you have an opportunity to mine that data, test (or defy) conventional wisdom, and learn very specifically what actions (or lack of action) can give you a reliable signal about your customers’ intentions.

Which leads to the second part of building an effective strategy: investing in the right people, systems and processes.

Once you know how to value your customers — what actually signals a return or renewing customer and what signals a departing customer — you can then institutionalize this in processes and systems, and communicate it to your people so concerted, prioritized action can be taken to maximize your ongoing revenue stream.

Creating Metrics and Driving Results

How you measure the success of your renewal/returning customer sales and marketing processes will depend on your specific business and what results you want to achieve. But with the data about how to value your customers and predict behavior, you can start by creating metrics that measure things such as

  • Increases in renewal/return rates year-over-year (or reduction in churn).
  • Increases in value of your customers to you.
  • Increases in value of you to your customers.
  • Success of programs that persuade customers to take the actions that predict renewal/return.
  • Success of programs that convert predicted nonrenewers to predicted renewers even before it comes time to renew.

A variety of other metrics can apply, depending on how your organization is structured and how your customers come back to you.

An important point to keep in mind is that a repeat business or subscription based business model is fundamentally different from a single product sale model.  The differences go much deeper than how you bill.  The investment levels are different, the management of the customer relationship is different, the way you offer and likely distribute your product is different…the list can go on and on.

Those of you in telco (telecommunications) and banking (and similar businesses) will know how to do this intuitively; these businesses depend on repeat customers.

For those of you who are in industries trying to make the shift to a recurring revenue model, don’t underestimate the fundamental changes in strategy and process that are needed. Looking at how you make sure your customers are coming back again and again is a very good start.

In my practice, we have found that understanding the true depth and value of the customer relationship can make the creation of a recurring revenue business much smoother and more successful.

Do you run a recurring revenue business?  Or are you trying to convert to one? Share your thoughts on the challenges and how you address them!


Differentiation is in the eye of the beholder…your customer

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Be honest. If you’re a marketer, you love nothing more than shouting to anyone who will listen (and maybe some who won’t) about why your product or service is so cool, special, interesting….meaning different and unique.

Of course you do – it’s your job.

But while we’re all talking about why our thing is so cool, and what the latest features are, we must remember:

Differentiation is in the eye of our customer, not ourselves.

I want to thank my friend Yvette Cameron for reminding me (leading me to remind you) just how important this perspective shift is. And it’s good to see customers asking this question and defining how their vendors are unique and different, rather than marketers trying to come up with a useful description of the latest new feature.

So, please, when you start shouting about why your offerings are so cool and interesting, ask a few customers first why they think so. They’ll tell you how you benefit them more than your competition (I hope!).

And once you know, go ahead and tell the world.

Share how you discover your unique value in the comments:



Rethinking Customer Loyalty

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I’m paraphrasing any number of management gurus here:

If you want to be good enough, focus on shoring up your weaknesses. If you want to be extraordinary, forget your weaknesses and focus on building up your strengths.

The idea was proposed in the context of how to become extraordinary at whatever it is you do, and in the context of how to evaluate your performance at work.

But why do we not apply the same principle to the corporation and what it does for its customers?

Most of us are – or at least we claim to be – obsessed with customer satisfaction and loyalty. We want our customers to love us and to keep coming back.

So we ask, generally in a survey. Every time a customer wants to leave us (you’re lucky if you’re in a renewal or subscription-based business – your customers have to tell you they want to leave) we ask “Why?” and we learn something about what we’ve done wrong (or what our competition has done right).

Some companies go so far as to try to keep a customer from leaving (think telephone carriers and credit card issuers). I’m sure you’ve had the experience of trying to cancel your service and being sent to the “retention department” who then tries, essentially, to bribe you to stay – and take an offer attractive enough to put up with whatever they did that caused you to want to leave in the first place.

What if, instead of working to fix all the reasons customers left us, we worked on doing even more of what made customers stay?

If you already do that, congratulations. You probably have raving fans for customer. If you don’t, then it’s time to get started.

Start by asking your most loyal (not your biggest, your most loyal) customers why they stick around and keep coming back. I’m pretty sure the reasons will look very little like the reasons other customers leave.

Then ask a group of your customers who are not all that loyal,  but seem to stick around (or come back now and then) anyway: Why are they not all that loyal (probably the same reasons others leave) and why do they come back (probably the same reasons your most loyal customers stay).

Now comes the hard work: Focus on getting better at your strengths. Strengths are the reasons your most loyal customers stay.

Figure out what you are doing right in every single aspect of how you relate to your most loyal customers and do more of it. Refine it, improve it and make it the best in the business, bar none.

And forget about your weaknesses. Weaknesses are the reasons those customers hate you and don’t want to do business with you any more.

Yes, you will find that more unhappy customers will come out of the woodwork. They’ll complain, wondering why you don’t seem to want their business any more.

In fact, you don’t. You cannot be all things to all people, so be what you are good at being and stop trying to be what you are not (feel free to insert your own rant about authenticity here). Letting a group of customers (read: paying customers) go can be scary, but the focus and the new customers you gain will be worth it.

Doing this will also help you define what type of customer is good for your business and what type isn’t. It will give you a different (you might find, better) way to segment your market, and you’ll find that the core of your new segment is much more profitable than the old, less appropriate, segments.

And you’ll find that you end up not only with customers who are more loyal, but they’ll all tell their friends (and colleagues) and you’ll probably end up with even more customers who become just as loyal.

And your (new) customers will become your raving fans.


Stop Circling the Wagons

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This past week I had the privilege of attending The Economist’s 2009 Marketing Forum. As you might expect, the topics this year were focused on managing through challenging economic times, how to prepare for what we all hope will be better times in the near future and how we might know when better times are coming.

The audience was smaller than in past years, which was not at all surprising, but still represented the marketing leadership of a diverse set of companies and organizations – enough so that it was not hard to see how different sectors and industries are faring, and how the thinking differs – or doesn’t – across these businesses. (you can read more on the twitter stream, some commentary on it from day one and day two and read another perspective on the conference)

I heard discussion of the expected topics, such as measurement, marketing mix and spending and investment allocation, plus branding, promotion, channels and the long list of things marketers think about. But after a day and one-half listening to and talking with this group of marketing leaders, there were two things that were notably missing.

I’m pretty sure that if you’re bothering to read this, you don’t need to be convinced that an economic downturn, regardless of how severe or prolonged, is the time when it is imperative that great companies (read: the ones that want to survive) innovate – not just creating a few new, related products, but re-think the way they relate to their customers and the rest of their market, they way they develop and roll-out product (I am intentionally avoiding the word “launch” here) and how they manage the marketing investment for their companies.

I won’t suggest that there were no interesting ideas offered. There were a few. But out of 12 panels and presentations, not one was focused on innovation in marketing or how companies can create the kind of significant differentiation that will allow them to succeed in bad times and dominate when the market turns up again.

I would hate to suggest that, among this group, not one person was thinking about how to do this for their company (or clients for the branding firms in attendance), but there was little to no talk of this, either on stage or in the hallway between sessions. The thing that struck me also, is how much of the conversation still assumes that marketers own and define their brand themselves (hint: your market owns your brand) and how much the style of thinking is still command-and-control-driven in most marketing organizations.

So what was missing? Let me start with these perspectives:

  • The CMO as the portfolio manager of a range of marketing investments (some of this was hinted at by Ward Hanson of SIEPR)
  • The CMO as the steward (not controller, or owner) of the brand in the minds of the members of the market
  • The CMO as the facilitator of the conversation around the company and the brand
  • The CMO as the steward of the relationship with the market(s)
  • The CMO as the driver of a sustainable business model (no, I don’t mean green products)

This is the opportunity that faces us in this challenging market. William Pearce of Del Monte Foods suggested that one of the key responsibilities of the CMO is to be the “driver of growth” – and with that comes the challenge of how to put your company in position to lead the market (and gain market share) in challenging times and to accelerate out of this downturn, leave your competition in the dust and become dominant in your market.

Your market is thinking differently about its relationship with you – and your competitors. Are you willing to do what it takes to enter into a new relationship, start to think differently about how your company operates and markets, and become the organization that everyone else wishes they were?

I hope so – and I’d like to hear how you are getting started.


Happy 4th of July!

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I know I’ve been a bit behind in posting recently, but I want to take this opportunity to wish everyone here in the U.S. (and any Americans abroad who might find their way here) a Happy 4th!

And lest we be reminded of this one too many times (and I hope I’m not sounding jingoistic here), it was 231 years ago that a small group of very smart people had a very different and disruptive idea. They gathered a community around them and created something never seen before – a democratic (system of government, not party) nation.

For much of what we call the “western” world, this is now commonplace. But it’s always possible, for better or worse, that somewhere in the world disruptive political change might be happening again today (it’s happened a few times since 1776).

But I’ll offer my admiration to those who dared to think differently and stake their lives on it (among them one of my most admired people). And I’ll remember that the ability and imperative to create change never ends, and applies to all of our institutions and every part of our lives.


The Visible Experience

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Experience counts. I don’t mean work experience, or the kind of wisdom that gives you insight, but the experience your customer (or prospective customer) has interacting with your company. Your customer’s Experience is the heart of your brand, and the heart of your customer’s decision to stay your customer.

Last week, I had two experiences which stood in stark contrast, and reinforced this.

First the good news:

I was invited to join a (relatively) new business-focused social networking service called Visible Path. In order to vet members to some degree, the service requires that your e-mail be a valid, non-spammer, domain (maybe more than that, I don’t fully know their criteria). So when I went to sign up, the site challenged me. The way it was stated caused me to interpret the requirement as the site admin’s desire to make an arbitrary judgment about my worthiness to join. This did not go over well, and I chose to, rather than join, fire off a rather scalding e-mail to the first contact person I could find on their web site. Within 2-3 minutes, I had a response back from Kathleen Bruno, who asked me to call her directly.

I did. She asked me what had cause me to think this, and how they could improve the process. We talked about this for nearly 30 minutes, discussing everything from word usage to my ideas for how to make the sequence friendlier and more transparent (there’s that word again!). She even told me who else in the company would also hear about my feedback.

This conversation turned my experience of Visible Path from one of a company who is clueless about networking (as an exclusive club?) to one that wants to engage users and make a valuable place to connect with others.

The initial experience was not good (I don’t think it’s completely my privacy fanatacism, either). But the response was outstanding. Here’s a company that “gets it.” They seem to care about the experience. They seem to care about making my experience useful, friendly and productive.

I’ve since completed the sign-up process and will be testing this very interesting new social-networking-for-business service to see if all of the cool stuff they offer really helps me (I’ll keep you posted!) (and, I’m not yet a raving fan of the service, but I am a raving fan of Kathleen!)

And now the bad news:

I spent this past weekend in Deerfield, IL. I stayed at the Embassy Suites (it was the designated hotel for the function). For those of you who know the Embassy Suites, you know they offer a reasonable breakfast buffet. Fortunately, this buffet included some hot food, like eggs and pancakes. Unfortunately, it also included cooked-to-order omeletes. Why is that unfortunate? In order to get any hot food at all, you have to wait in the omelet line. And on the weekend, the hotel is not populated with speed-focused businesspeople, but rather throngs of tourists, all clamoring for as much free food as possible (and ordering 4, 5 or more items). The line when I arrived was 45 minutes long. I didn’t wait.

I did, however, run into the manager as I left the line. I suggested that maybe the scrambled eggs could be placed in a chafing dish outside the line – not as fresh, but far more efficient. I made one or two other suggestions as well in my desire to be helpful and point out the error of their ways.

His response? He told me why my suggestions were bad ideas. He told me that my ideas were not what other guests wanted. All of this is probably true (I’m no hotelier, after all). But it left me thinking: This hotel doesn’t care what I think. They offer a generic service, and don’t care if I take it or leave it. (For the record, I’ll be leaving it next time I’m in Deerfield).

My experience of this hotel was one which does not care about its guests, one that does not listen, and one that does not care to improve my experience.

Contrast that to my new friend Ms. Bruno at Visible Path, who cared enough to want my personal experience to be a good one. I’ll be spending time using that service.

As is my habit, I pose the question: How are your customers experiencing your company? Are you sure? And what are you doing to make sure?

After all, Experience isn’t everything. When it comes to customers, it’s the only thing.


A Step in the Right Direction

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On Friday, CNN reported that Saturn dealerships will now have Toyotas and Hondas (and, oddly, Chevys) on hand for customers to test-drive side-by-side with the Saturns they hope you will buy.

While not an uncommon tactic for technology companies (where nearly every vendor produces comparison charts that, while biased of course, compare their product to chosen competitor(s) ), this is new for car dealerships, whose sales tactics have often relied on getting you to make a deal before you ever had a chance to see a competitor’s model (also called pulling the wool over our collective eyes).

Saturn has finally admitted that its customers are going to check out the competition no matter what they do, so why not let them do it right in our shop where we can also engage them in the conversation about why our product is the best. It’s still a tactic to get us to buy before we go to the competitor’s shop, but all they are doing here is avoiding the conversation we might have with the competitor’s salesperson – who most assuredly won’t offer the same level of open comparison.

I might be biased by the fact that I love my Saturn, but I’d say after a few years of taking heavy criticism for some poor tactics and decisions, this one is a step in the right direction – and more importantly one from which all marketers can learn.

How confident are you that, when seen side-by-side with the competition, your customer will choose your product? (if you’re not, then you should think hard about changing your product!)


Disrupting Because of…

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Doc Searls defines what he calls the because effect

This is what you get when your new business isn’t just about inventing and controlling technologies and standards, but about taking advantage of the new opportunities opened up by fresh new technologies and standards. For example, making money because of blogging, or RSS, or desktop Linux, or whatever — rather than just with those things

In the technology business, we tend to be very obsessed with the technology itself. So many companies claim that what differentiates them is the technology (often only certain features of the technology) and sometimes it’s true, but not often.

But many of the real opportunities exist in taking advantage of all of the technology we’ve invented to do things (anything from business processes to making new friends) differently – and better than ever. Or what can be done because of the technology.

Think about the people making money by running businesses in Second Life. They are not in the technology business, but they are in the design or fun or entertainment (or whatever) business. And their business is able to have the reach is does because of Second Life. You can even say the same for the large corporations who have established a presence in this virtual world. They are able to better interact with partners, customers, etc., because of the technology.

There are two things I ask myself everyday:

1) How am I making use of all of the technology and capabilities available to me to engage my market? to attract new prospective customers? to start an interesting conversation? You might say, what am I doing different/better because of the technology I have at my disposal?

2) I market technology. What are my customers doing different/better because of the technology I market? We marketers like to think in terms of benefits (many of which are not really benefits at all). But if you pose the question this way, the benefit becomes very clear.

What are you making possible for your customers that was not possible before?


Recursive Differentiation

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In order to understand recursion, one must first understand recursion. (Author Unknown)

The topic of competitive differentiation has been coming up in quite a few conversations lately. The context is usually a discussion on how to create “sustainable competitive advantage.” A variety of different frameworks are used to describe it, from Michael Porter’s classic to the currently in-vogue.

When I’m asked how to do this, I have only one answer: you can’t. You can (and must!) create both a process and a culture that continuously creates competitive advantage.

There are lots of ways to create competitive differentiation. A better product. More service. Something free. Customer service. Appealing to needs as yet unmet (even with the same product/service). Hire better people. Spend more on R&D. Create a “faster” organization. Lower your transaction costs. I can go on and on…and some of these things will work for a short period of time, and some for longer.

But can you create sustainable competitive advantage? Every single thing you can do can be copied by your competition. Most things can be done better (they can leapfrog you – and will).

There is really only one way to create “sustainable competitive advantage” and that is to sustain the effort of creating competitive advantage. Sound recursive? It is.

I’ll offer a recursive description of this process.

How to create competitive advantage:

  1. Do something disruptive. Create something that will not just frustrate your competition, but that will do the market equivalent of rendering them speechless.
  2. Assume that your competition (known or unknown) has matched you and outdone you.
  3. Based on the position you are in after that assumption, create competitive advantage.

And you know that if you don’t do this, your competition will.