Most of the companies I work with have obvious #value, and a firm strategy for delivering that to their customers. But when you probe, explore and investigate more, you realise that not everything they do adds #value. It’s often worse than that – for some companies, much of what they do is actually distracting customers from seeing or feeling their #value.
By way of explanation, here’s an example of a Christmas present. Last Christmas (there’s a song in there!), I bought my son a #gaming chair – one of those that looks like a racing driver’s seat. Imagine a teenager relaxing and playing on the Sony PS4, scoring footie goals and crashing sports cars, and you get the idea.
I’d read plenty of reviews – which is why I ordered this particular make and model. From the point of ordering, what would add #value to this item is great packaging, careful delivery and clear instructions (for setting up the wireless connectivity, to prevent tripping over cables between different gadgets we’ve hooked up in the den). And yet there were none of those things. The seat was poorly packaged (the lightweight wrapper had to be repaired by the courier); it was dumped outside our front door by the delivery driver; and it was completely devoid of decent set-up instructions. And that’s where the problems started.
We just couldn’t fathom how to get the seat to work, and couldn’t find out how to fix the issue. So we tried to call the manufacturer, to find they were closed right through Christmas and until the New Year. Now here’s the key point. I naturally visited their website, to find it had set-up instructions for pretty much every known device. But I couldn’t search for my device; I had to scroll through pages of irrelevant data to get to what I needed. And when I viewed the company’s YouTube channel, what I found was vanity – lots of showing off about how wonderful the sound and movement experience would be on this device. Both website and channel were bloated by extra content, hiding the most important aspect – getting the darned thing to work (that’s a milder version of the word I actually used on Christmas morning). It was like a fat belly hiding a washboard stomach or (in more polite terms) a tree that needs pruning.
And that explains this image – it shows all the things that hide #core value. I’m making the point that most companies need to do some pruning – cutting off some of the branches of (a tree or bush) so that it will grow better or look better (or be free of decay or disease). In terms of #value, it’s about reducing yet improving something, by removing parts that are neither necessary nor wanted.
So what should you prune back? First, you need to think about your core #value. Next, you have to decide what is preventing the customer from seeing and feeling that #value. In my experience, #value gets lost somehow; smothered over time by what the market dictates (or you think it wants), and what your people decide the customer needs. It’s the world of extras, add-ons and embellishments. Some add #value, but many just don’t. It’s natural and critical to adapt and improve. But here’s the problem – without starting with a clear definition of your #value, and only adding and doing things that grow that #value, you can end up with something rampant. And then it’s time to prune the tree.
Maybe a hard prune is needed – only you can decide. It’s probably a choice between clipping away with the secateurs, or hacking away with a saw. But whatever you do, don’t panic or regret how sparse and bare the tree will look. See what it’s become in the Spring…
Just a short story about fun, friends and food. We had a great time eating out with some lovely new friends, at a local pub. Nothing new there, other than a slightly odd experience with desserts.
Now, I continually say that I don’t have a sweet tooth. It’s not true, and I was sulking slightly because there was nothing on the menu that I fancied. With our friends having Banoffee Pie and a Cheese Board, my wife ordered her favourite – Raspberry Eton Mess. Now, there’s usually some excitement and anticipation about Eton Mess – it’s made in many different ways, and looks and tastes different depending on the chef. But this one was very different. Unless I’m very much mistaken, it was Strawberry Eton Mess. Maybe in Theale they grow raspberries with the seeds on the outside. Or maybe not. They were definitely strawberries, and not raspberries.
And I still haven’t stopped laughing about it. When someone serves up completely the wrong fruit, doesn’t even mention it, and expects you not to notice, then I think I’ve a right to tell the story. Meritology talks about being distinctive. But what this pub did made them #standout for all the wrong reasons. There are 218 pubs in the Reading postcode district (thanks to www.pubsgalore.co.uk for that statistic!), and we’ll be trying one of those next time. Maybe they’ll have raspberries in their Eton Mess. And maybe we’ll get what we ordered. Simple really.
Ever had a situation when someone made you think? And I mean really think. When you say to yourself – crikey, I hadn’t thought of that. They come up with either a brilliant idea, sparking suggestion, or just point out something you really hadn’t realised. Here are two of my examples:
First, the wonderful Jost from The Henley Partnership pointed out that we had the word “really” in seven of the titles for our 2015 learning events. So, when I’d stopped laughing at my occasional dopey side (I should have spotted that) we immediately changed the wording to something less repetitive and more obvious to the reader.
Second, we were at our Planning Day last week. By the way, that’s a very dull name for an event that’s great fun and brilliantly productive. I’m working on that! We bring together 20 HR and business professionals, from our 25 corporate members, working in groups to magically produce the rabbit from the hat – a programme of masterclass events and learning sessions that develops (fast) the capability of their directors. And one of our special guests made the following observation – “Mark, you don’t have many sessions about customers”. As observations go, it was pretty obvious. But it made me think. So hard that my head hurt. I’d argue that the customer agenda is implicit and even omnipresent. But is it really? Do we need to be very explicit about the fact that the customer is at the centre of everything we do? Otherwise, why do companies exist? What’s the point of doing business? You may define your customers differently, but we all have them. No disrespect to the third sector, or any company where the intent is about simply doing good, but I’m here to serve my customers. And I think most of you are too…
So I need to make sure we signpost the customer agenda, or run more events about that specific topic. Subconscious or conscious, we need the business brain to recognise that customers are the most important item on any agenda (the cognisance), and spend more time developing our ability to deliver the value they want and need (the capability). And then people like me need to spread the word about why customers are so important (the contagion). And hence this blog. I’ll get down from my soapbox now!
And P.S. thanks to the wonderful members of The Henley Partnership, for their wholehearted support and brilliant contributions to what we do. You are valued even more than you realise. Most of my ideas are inspired by yours. And please keep making me think.
OK, so a slightly flippant post with a serious point. I run The Henley Partnership @Henley_HP for Henley Business School. During our masterclass events, I tweet the insights created, interesting observations and information offered. And I do this carefully, and thoughtfully.
It’s always good to get feedback, and useful to just step back – taking a moment to pause and reflect on your own personal and professional value. In anything you are doing. And in everything you are doing. That sounds a really “deep and meaningful” remark, and I don’t mean you should question the fundamentals of your being (why you are here on this earth, what you are here to do, that kind of thing). I mean something much more straightforward. You need to question the value of the work that you do, and the way that you do it.
So my moment to pause and reflect was on Tuesday, as I was happily tweeting away during one of our fabulous events. An alert popped up, saying that the MD of Scandinavian consulting business had followed me on Twitter. Nothing extraordinary there. I’m deliberately trying to increase my followers at senior director level. Imagine my surprise when the next alert said I’d been followed by someone whose twitter name includes the legendary cartoon character SpongeBob Squarepants. Ok, so “legendary” is perhaps an exaggeration, but I remember many evenings watching Spongebob with my young son. And there was a recent film made about him (can a sponge be a “him”?)
My point is simple. When you get feedback, make sure you listen. Never stop questioning and challenging your value. Was this telling me my tweets are too trivial? Not serious enough? A bit lightweight? Was that why I’d attracted SpongeBob? I spent a good half hour looking back at my tweets, checking that they were right for my customers and my audience. And I still can’t work out what attracted SpongeBob. Maybe the MD of the consulting firm could tell me! But I am happy that my tweets are adding value. Happy that, with a few refinements, they can be better. And happy that I took time out to ask myself those questions. I’d recommend you do the same.
You’d think I’d be writing about when suppliers value and love their customers. But I’m thinking more literally than that. I’m talking about what happens when suppliers actually place a monetary value on the amount a customer could potentially spend with them (or how much a group of customers could spend on average). It’s usually called Customer Lifetime Value, or CLV. What happens?
We’ve seen this approach with banks and their wealth management divisions. They’ve segmented their customers by their assets or wealth (and therefore value to them). Segments include Ultra High Net Worth, High Net Worth and Mass Affluent. There are broadly three different types of segmentation. You can segment customers by:
- value, i.e. the amount of revenue or margin you can earn from those customers
- characteristics, i.e. the features of each customer (in this case including the source of someone’s wealth)
- behaviours i.e. their attitude to the service and how they use it (in wealth, they could be disinterested, self-directed, demanding etc)
When suppliers consider the features and characteristics of their customers, you often see this empathetic approach being reflected in the service provided. If they focus on behaviours, they can provide service that respects those customer wants and habits. And I’d argue that focusing purely on value leads to certain customer segments being ignored or marginalised. In a world where suppliers are competing fiercely for the best customers (people with “ultra high net worth” and “high net worth”), you can see what’s happening to those in the “mass affluent” segment. There are few suppliers willing to provide quality service, leading to customers self-directing their investment decisions (the DIY approach).
Now, I have some sympathy for banks on this point. The sheer weight of legislation, and the impact of the Retail Distribution Review (launched in June 2006 and still having a huge impact) has meant that suppliers can’t make enough profit with those less-wealthy segments, unless brilliant technology and slick interactions make their process efficient and service valuable.
What seems to be happening is that fewer people are getting good financial advice. This is a societal risk. If people fail to get advice, too many will make mistakes with their investments and pensions. They may, for example, take additional risk to try and bolster their shrinking pension pot. Mistakes mean loss and potential hardship. If hardship means relying on others for financial support, that’ll be a burden on all the central and local government services. So it’s down to reputable firms to find a way to service these customers, and still make money, before this situation becomes societal. That will require systematic innovation.
Now I’ve focused on wealth management, where arguably the effect of segmentation is most dramatic. But the same principles apply elsewhere. When I worked in risk, I was involved in a huge change programme led by a “big-four” consultancy. On the face of it, we segmented our customers using buying characteristics. We actually used only their “book value” i.e. their spend with us. We moved the least-valuable customers to a new division, set-up to service these customers in a different way. And we lost all but two of those customers within twelve months. That’s what happens when suppliers value their customers. Segmentation requires something more intuitive. Segmenting by value, characteristics and behaviours is a much more intelligent approach.