All Posts Tagged With: "customer knowledge"
Think Like Your Buyers
In the 1980s, four out of five American car buyers were loyal to the company that manufactured their brand. I remember growing up in a Chevy family and we had friends who were Ford people and we were as loyal to our car brand as we were to our religion.
In 2009, only one in five Americans was loyal to the same car brand.
In “The Manufacturer’s World Has Changed Forever” (IndustryWeek, July 14, 2010), Robert Bloom provides this contrast in customer loyalty to point out that the purchasing behavior of customers has changed, which is old news to any company that’s managed to keep its head above water the last two years, but his case study is interesting. Italy’s Fiat Auto reported a net loss of nearly two billion euros in 2002 and experts thought it would not survive. In 2008, it reported a trading profit of more than 1.1 billion euros—a three billion euro turnaround in six years.
How did Fiat Auto do it? Bloom lists several key actions:
- Terminated a failing venture with General Motors to gain full decision-making autonomy
- Eliminated an entire floor of executives to reduce costs and bureaucracy
- Cut Fiat’s product development time in half to get products to market quickly
- Reorganized and re-energized its dealer organization to assure sell-through
- Redesigned every Fiat product to create Customer Preference for the Fiat brand and products
According to Bloom, manufacturers can take several steps to compete in today’s global marketplace—and those steps coincide with Baldrige core values (in parentheses):
- Think like today’s buyer, not like yesterday’s seller…
Be Careful How You Measure Customer Satisfaction
In a recent webinar conducted by ActiveStrategy, Mark Graham Brown, author of a number of Baldrige and performance measurement books, talked about key customer metrics. He advised people to be wary of the most common measurements such as customer surveys (usually fail to ask the most important questions and employees figure out how to “game” the survey), customer complaints (only about one in ten unhappy customers complain), customer loyalty (based on faulty assumptions since loyalty is driven by many factors other than satisfaction), focus groups (expensive and time consuming), and net promoter score (satisfaction doesn’t equal loyalty and the people in the middle aren’t addressed).
Instead, Brown suggested two great customer metrics:
- Customer Aggravation Index. Use focus groups to identify the things customers hate, rank them according to severity, and keep track of how you perform on them. It’s a meaningful metric that predicts loyalty and it’s being used by such companies as FedEx, DTE Energy, and Midwest Airlines.
- Matrimonial Index. Rate customer relationships on a scale of 1 to 10 based on how “married” they are to you or to your competitors.
According to Brown, you can consider a number of factors for an index including satisfaction levels, aggravation levels, length of relationships, level of relationships, willingness to give a referral, monetary value and scope of business, connections to the company (friends/associates at your company), and the price of “divorce” (what it would cost for the customer to find a new supplier).
With quality customer satisfaction and loyalty data in hand, the next step is…
24Mar2010 | Steve George | 2 comments | ContinuedWho Are a High School’s Customers?
A recent article in the Christian Science Monitor described the value of analyzing data for high school educators. (“Numbers Game Grows in Education, Healthcare,” March 4, 2010–no link available). The article uses the California Partnership for Achieving Student Success (CalPASS) as an example of how “data-driven discoveries are helping to revitalize educators’ efforts.”
CalPASS has a database of more than 355 million student records from kindergarten through college. It uses business intelligence software to analyze the data and provides reports on its findings.
One study found that students who stopped taking English courses after 10th grade required the same level of remediation in community college as students who continued to take advanced English courses through 12th grade. Teachers naturally wondered how this could be true, which caused them to examine the differences between what they were teaching and the expectations of community colleges. According to Brad Phillips, executive director of CalPASS, “educators learned that high-school courses emphasized literature, while community-college courses covered writing and grammar, and four-year colleges emphasized analysis and argumentation. As a result, officials changed high-school teaching to create better alignment.”
From a Baldrige perspective, this means that high school teachers identified community colleges and four-year colleges as their customers, identified their customers’ requirements, and changed their curricula to better meet those requirements.
That’s an excellent start but I’m not sure it will solve the bigger problem, which is preparing high school students to succeed in life. The changes high school officials made should help their students be better prepared for college, but are…
15Mar2010 | Steve George | 0 comments | ContinuedServing Customers through Shopper Marketing
Shopper marketing is a relatively new concept that is changing how consumer package goods companies and retailers market their goods. According to the UT Shopper Marketing Forum, available here, “shopper marketing refers to understanding consumers while they are in shopper mode, regardless of the brand, category, or channel and leveraging these insights to create better shopping experiences, superior brand equity, and more loyal shoppers.”
The catalyst for shopper marketing seems to be the need to spend marketing resources more efficiently and effectively. As a result, companies and retailers “are shifting millions of dollars within their marketing budgets from traditional media to shopper focused and specifically in-store initiatives”—yet another nail in traditional media’s coffin.
In addition to consumer goods companies and retailers, shopper marketing involves brokers, advertising agencies, data management companies, and consultants. It affects market research, segmentation models, collaboration programs, pricing structures, packaging, demonstrations, displays, store layout, and floor level execution.
According to IndustryWeek, 73% of consumer product goods manufacturers and 86% of retailers rank shopper marketing as the number one activity that delivers meaningful return on investment (“Shopper Marketing Is a Supply Chain Partner’s Next Marketing Frontier,” Marcel M. Zondag, January 18, 2010). They are embracing shopper marketing because the Internet and social media are creating a new type of customer who is more particular about shopping and because of its ability to reach more people. As the article notes, “whereas 35 million people watched the American Idol finale, 150 million people shop at Wal-Mart every week!”
Shopper marketing will require organizations to change…
22Jan2010 | Steve George | 0 comments | ContinuedHarvard Business Review’s Most Influential Management Ideas of the Decade
Everybody has a Top 10 list and HBR is no different. Well, they’re a little different: Their editors came up with the Top 12 most influential management ideas since 2000 (“The Decade in Management Ideas,” Julia Kirby, January 1, 2010):
1. Shareholder Value as a Strategy. And not a good one. Even the guy who popularized it concurs. “Shareholder value is a result, not a strategy,” said Jack Welch. “Your main constituencies are your employees, your customers, and your products.”
2. IT as a Utility. Cloud computing is the latest step toward buying computing capabilities as services.
3. The Customer Chorus. Technical and social developments have given customers a stronger and more pervasive voice—and companies are finding ways to listen.
4. Enterprise Risk Management. Chief risk officers hold the new umbrella over pockets of risk that had been scattered, and addressed separately, throughout the organization.
5. The Creative Organization. The ability to produce creative output was seen as a competitive advantage to encourage through collaboration and diverse perspectives.
6. Open Source. Wikipedia, which represents the power of open source, was born in 2001.
7. Going Private. According to the article, “As the decade wore on, private equity’s playbook for turning around businesses was increasingly held up as best-practice management,” especially in the areas of strategic focus and governance.
8. Behavioral Economics. Rational thought alone does not explain human decision-making. Yup, that’s the 2000’s in a nutshell.
9. High Potentials. Some managers are more equal than others and you would be smart to develop them.
10. Competing on Analytics. The data you collect…
4Jan2010 | Steve George | 1 comment | ContinuedLessons Learned from Dell Hell
In the mid-1990s, I helped a Dell facility apply for the Texas Quality Award. It had world-class manufacturing processes that allowed it to build desktop computers from specs on paper to a customized computer ready for shipment in four hours. They called it “moving at Dell speed.” Asked how it measured performance, everyone pointed to Dell’s stock price, which was climbing so fast the company did 2-for-1 stock splits six times from 1995 to 1999.
It strengths obscured its weaknesses, one of which was the lack of systematic approaches to engaging customers who were not corporate buyers. Dell assumed that the orders it received every day told it all it needed to know about its customers. It took orders. It didn’t listen. And that had to change.
In the introduction to Mark Benioff’s book, Behind the Cloud: The Untold Story of How Salesforce.com Went from Idea to Billion-Dollar Company—and Revolutionized an Industry, Michael Dell, founder, chairman, and CEO of Dell, describes IdeaStorm, an online community forum the company uses to get ideas from its customers. As of today, customers have contributed more than 13,000 ideas through IdeaStorm, which were promoted by other customers nearly 710,000 times, with more than 88,000 comments. Dell has implemented 390 of its customers’ ideas.
In truth, IdeaStorm is a response to “Dell Hell,” a post written by blogger Jeff Jarvis in 2005 that became a lightning rod for customer complaints about Dell’s service. Jarvis had bought a Dell laptop that didn’t work and he couldn’t get anyone at…
29Dec2009 | Steve George | 0 comments | ContinuedMy Personal Baldrige: Customers
You have a job because you provide something that someone else needs. Could be external customers. Often it’s other departments in the organization. Maybe it’s your manager. Whoever your customers are, if you serve them well, you’re making your organization more effective and your contributions less dispensable.
First, a caveat: You can’t personalize Baldrige without a little learning and effort. Second caveat: The Baldrige model is not designed to prescribe an individual’s role, so we’re taking some liberties in doing so. We welcome your feedback on whether you think we’re on track.
As the Baldrige Criteria state, “performance and quality are judged by an organization’s customers.” Your performance and quality are judged by your customers. That being the case, you need to know who your customers are, what they require, and how you can meet and exceed those requirements.
Here are steps you can take to apply customer-driven excellence to your job:
- Identify your customers. Your boss is a customer. Coworkers are often customers. Other departments may be customers. Look at who gets the output of your work—they are your customers—then consider who is served when your work comes together with the work of others in the organization. Which external customers use the output of this work?
- Determine what each customer/customer group requires. Customer requirements fall into four categories: quality, delivery, cost, and service. Examples of customer requirements include accurate and complete (quality), on time (delivery), under budget (cost), and fully responsive to customer needs (service). Group your customers, internal and external, by what they require…
