27.05.2010
Indeed, measuring and focusing on customer centricity is challenging! To achieve a high degree of customer centricity, companies first need to understand choice drivers of their (target) customers, i.e., what are key hurdles and triggers?; second, they need to build the right capabilities (service, responsiveness, etc.), and third they need to ensure that each step within the customer choice pipeline, i.e., from getting customers on board, increasing up- and cross-selling, to achieving customer loyalty and finally a positive “Word of Mouth” (WoM), is maintained at a high conversion rate, which leads as a consequence to high Return on Marketing-Investments. Measurements will hence comprise from financial performance via conversion rates to performance with regards to choice drivers.
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05.05.2010
Sounds very good, but how would you measure customer centricity?
05.05.2010
Is it all about customer satisfaction? The linkage between satisfaction and customer behavior as well as positive financial outcomes are modest. How much does satisfaction have to improve to have any impact? Satisfaction metrics do not behave like other numbers – their relationships to behavior tends to be nonlinear. Hence, big changes in customer behavior frequently do not happen until satisfaction achieves a certain threshold. Either very low, i.e., customers will be dissatisfied, or very high, i.e., customers are delighted. This makes it difficult for managers to determine where to allocate investments in improved satifaction or how to project a return on their investments. The solution: measure and focus on customer centricity.
29.03.2010
Marketing needs rejuvenation. The several decades old marketing concepts advocate that satisfaction of customer needs and wants is the bottom line of business, and that market-orientation is better than product-orientation. But besides its impact, Gummesson (2008) claims that “customer-orientation has been applied half-heartedly and that it is supplier ego-centric rather than customer-centric” – a challenging viewpoint. Hence one could further argue that the marketing concept of our days as well as customer centricity are oftentimes limited as a foundation for marketing, have not really been implemented in practice so far and need in particular an holistic apporach. I think that we need to accept the complexity of marketing and develop a network-based stakeholder approach, i.e., a “balanced centricity” as Gummesson (2008) claims, epitomized by the concept of many-to-many marketing. Is that the new challenge in the field of marketing?
17.02.2010
The impact of customer satisfaction on profitability is not always straightforward. So if you ask customers right after their purchases whether they are satisfied, the answer will be to a high percentage predictable and correlated to a high customer satisfaction. Does that astonish? And exactly here lies the problem: Marketing professionals often ask the wrong questions and hence quantify the wrong data – nothing is more ineffective in terms of profitability. Interestingly, Bernhardt et al. (2000) investigating 342,000 consumer responses from 472 US restaurants over a 12 month period highlights that customer satisfaction has no impact on financial performance at t1. However, and that is the key message, results indicate a significant impact of change in customer satisfaction during time ranges t and t+1 on change in a restaurant’s profits during time t+1 and t+2. Specifically, restaurants with change in satisfaction of more than 0.1 above an average restaurant have more than 30% improvement in profit over an average performer. Hence recommendation matters. Your most valuable customers might not necessarily be the ones who buy the most, but those whose word-of-mouth brings in new profitable customers. So link the dots in the right manner – in particular in the marketing field to be able to establish satisfaction as a leading indicator of a firm’s financial performance.
08.02.2010
Private Banking as a conflicting business model: Watch the video stream from Jan Nyholm, Managing Partner WATC, on NZZ-Online.
01.02.2010
Conjuring up the latest buzz, without a word. Conjuring your product without additional marketing expenses! An old management adage says that you can’t manage what you don’t measure. However, this message has not yet reached the majority of marketing professionals: 84% of marketing efforts have no significant impact, and advertising ROI is below 4% (Harvard Business Review, 2005). In contrast to those figures, best-in-class peer is Apple achieving excellent customer centricity. How? In the magician’s world, that’s called “the reveal”. Even as the media and technology worlds have anticipated the announcement from Wednesday, 27th January 2010, for months, Apple has said not one word about the iPad. Thus, reporting on the announcement has become crowd sourced, with tech and media journalists scrambling for the latest wisp and building on the reporting of others. Its impact? Significant. Even if people hate Apple, they get the message. Apple is more disciplined in managing messages than any other company in the world, with a corporate culture of “code of silence”. Other companies don’t have the discipline, and the marketing know-how, to do that – they put things in beta, let people try innovations out and then bring it out with tremendous marketing budgets. Apple’s culture, combined with the company’s history of producing technology that jailbreaks digital culture and transforms entire industries (The New York Times, 22th January 2010), means it’s best to remain vigilant, even when the company is saying nothing. The marketing lesson here: make something rather than talk about it, so keep potential customers excited the whole way leading up to the reveal – in other words: Achieving Customer Centricity Excellence.
27.01.2010
Avatar, the blue-aliened, 3-D extravaganza that earned Golden Globes for best director and best dramatic picture hit the milestone of Titanic (CHF 1.04 billion worldwide in sales) only in 17 days for which Titanic took several months. How did that work, in particular with the relatively low-key marketing that went ahead of it? First, by being innovative and persuading filmgoers to put on the 3-D glasses and pay more for the privilege, Cameron, the director of Avatar, has changed the economics of the movie business (Bloomberg, 20th January 2010). And second, the trigger which is different than the pre-launch hype of Harry Potter or Lord of the Rings, which started with better reviews and much higher marketing budgets, are the positive word-of-mouth (WoM) recommendations. WoM heralded in the first week up to CHF 315 million in totals in US domestic takings only (Financial Times, 22th December 2009). The film with its compelling story-line has launched a chain-reaction of positive commentary. It is almost impossible to see Avatar without telling to friends and family that they also have to be a part of this experience. So what can Chief Marketing Officers and Marketing Professionals learn from the Avatar experience? Avatar demonstrates how powerful word-of-mouth can be. A simple message, when passed from person to person, will spread like wildfire. As marketing professionals, we need to ensure we are crafting a message clear and simple enough to spread in the same way. Huge marketing budgets which might give security from the weight of the information we bring to a market is not the key – it is customer centricity from which Fox and its financing partners Dune Entertainment and Ingenious Film Partners, which spent a staggering CHF 325 million to produce the movie, have profited significantly in the last weeks – and will further profit as the word-of-mouth wildfire is ongoing.
03.12.2009
Es gibt viele unterschiedliche Konzepte zur Messung der Kundenbeziehung, was spricht also ausgerechnet für den Net Promoter Score (NPS)? Der Net Promoter Score stellt eine einfache und geeignete Methode dar, um Kundenfeedback einzufangen. Man muss kein Marktforscher sein, um den NPS verstehen zu können und man braucht keine immensen IT-Kapazitäten, um ihn anzuwenden. Auch der Kunde ist dankbar, wenn er statt 25 nur noch ein paar wenige Fragen beantworten muss. Und trotz der simplen Struktur des NPS kommen vergleichbare, aber weit komplexere und aufwendigere Konzepte, wie z.B. der American Customer Satisfaction Index (ACSI), höchstens zu gleichwertigen Resultaten wie der NPS (vgl. MIT Sloan Vol. 49 No. 4). Der Net Promoter Score ist anderen Konzepten somit bezüglich Effizienz und Effektivität klar überlegen.
16.11.2009
I just read a very interesting book „The momentum effect”, that takes up customer centricity and shows how it becomes a driver of sustainable growth. This puts hope that 100 years of history in marketing wasting money will come to an end.
01.11.2009
There are new opportunities in the car insurance industry: Four distinctive client segments clearly differ regarding customer needs. The customer mindset ranges from “I only take what I need” to “relieve me from all sorrows.” Insurance companies need a more precisely defined profile than today to target the right customers and increase customer loyalty.
01.11.2009
New insights on green energy usage and price sensitivity: Easily understandable products with a high transparency regarding energy sources as well as individual mix offers are the key success requirements. This will keep energy companies busy for the next few years.
