Technique 8.12 Empathy Map

Introduction

It is used to achieve a better understanding of environment, behaviours, concerns and aspirations and usually start by describing the customer segment by using demographic characteristics like income, location, etc

  what does he/she think and feel?
what really counts?
(major preoccupations,
worries & aspirations)
 
what does he/she hear?
what friends say
what boss says
what influencers say
Empathy Map
(simple customer profiler)
what does he/she see?
environment
friends
what the market offers
  what does he/she say and do?
attitude in public
appearance
behaviour towards others
 
pain
fears
frustrations
obstacles
  gain
wants/needs
measures of success


Another way of exploring this is by asking the following questions
1. What do customers see?
(describe what the customer sees in their environment, ie
1.1 what does their environment look like?
1.2 who surrounds the customer?
1.3 who are the customer's friends?
1.4 what types of offers is the customer exposed to daily (as opposed to all market offers)?)
2. What does the customer hear?
(describe how the environment influences the customer, ie
2.1 what do the customer's friends (including spouse) say?
2.2 who really influences the customer and how?
2.3 which media channels are influential?)
3. What does the customer really think and feel?
(understand what goes on in the customer's mind, ie
3.1 what is really important to the customer (which might not be made public)?
3.2 imagine her emotions, what moves the customer?
3.3 what might keep the customer up at night time?
3.4 what are the customer's dreams and aspirations?)
4. What does the customer say and do?
(imagine what the customer might say or do in public, ie
4.1 what is the customer's attitude?
4.2 what could the customer be telling others?
4.3 what potential conflicts exist between what the customer might say and what the customer may truly think or feel?
5. What is the customer's pain?
5.1 what does the customer truly want or need to achieve?
5.2 how does the customer measure success?
5.3 what strategies might the customer use to achieve their goals?
"...the goal is to create a customer viewpoint continuously by questioning your business model assumptions. Customer profiling enables you to generate better answers to questions such as: does this value proposition solve real customer problems? What would the customer be willing to pay for this? How would the customer like to be reached?..."
Alexander Osterwalder et al, 2010

Handling Customer Problems

Customers who know that their problems are being taken care of are more likely to be satisfied and loyal; they will be happier to deal with the organisation in the future. Associated with this is the ability to reassure them that help is on the way when the customer most needs it.

An effective strategic process is called incident management; the principles are to plan (identify areas where incidents could occur and explore ways to handle these situations); appoint one person as a single point of contact for the customer and he/she is trained in customer service skills; the role of this person is to take responsibility for the provision of appropriate services, including the effective coordination of support services and communications to the customer.

An incident management program has 2 main elements (infrastructure - delivering the service and personal skills - to provide the right level of customer care); skilled staff are essential to the effective delivery of the service, and training may be necessary.

The objectives of incident management are

"...- provide the highest level of quality responses and customer support throughout an incident

- to minimize inconvenience for the customer

- to ensure that incidents are resolved promptly within agreed time scales

- to ensure that support resources are employed effectively to maximize customer satisfaction..."

Lisa Carden et al, 2006

Common mistakes in incident management include

- failing to communicate with the customer during an incident

- not having a procedure to handle the situation before it gets out of hand

- not documenting the communications, responses times, actions taken, etc which will be the basis for a later debrief

. Common sense needs to prevail. For example, a relative of a deceased person rang Telstra (an Australian ITC firm) to close the deceased's account. The relative was informed by Telstra staff that they are only allowed to talk to the account holder!!!!!! This was a bit hard as the account holder was dead!!!!! Yet this phone call was transferred to 8 people in Telstra until someone took the initiative to break the prescribed process; others were fearful of the consequences of deviating from the usual process (Shannon Morrie, 2104)

Divesting or Losing Customers

Divesting customers based on

- customer not profitable to you

- customer is a slow payer

- customer is hard to handle, ie unduly rude, obnoxious and/or troublesome

- your capacity constraints, such as lacking expertise, physical capacity or financial resources to provide a particular service; underestimating consumer demand or the impact of the regulations, etc

- changed strategies, eg decide not to provide certain products and services

- unable to manage customer's expectation

Risks in divesting include

- other customers' business unable to cover your costs of losing a customer

- loss of a valuable source of information, experimentation and innovation

- a competitor could benefit from this customer's change of loyalty

- not understanding links between the divested customer and your other customers, eg organisations may have common stakeholders, such as directors/ shareholders/managers, with one of your other customers

(source: Vikas Mittal, 2008)

Some Comments on Market Research

Need to be careful of management's demand for quantification of opportunities. Usually market research is done in the resource allocation process to quantify the size of the opportunities, not to understand customers nor how markets work. This quantifying focus incorrectly assumes that the customer's world is structured in the same way that the data is aggregated, under headings of products, customers and organisational units, ie how it is sold, how profitable each is, which customers are buying which products/service, and what costs and revenues are associated with servicing each customer or business unit. This incorrect market segmentation causes managers to aim at phantom targets. For example, framing markets in terms of customer demographics, eg averaging across several different jobs-to-be-done, or outcomes that customers are seeking, that arise in customers' lives inevitably produces a one-size-fits-all product that rarely leaves the customers satisfied. Furthermore, defining markets in terms of an organisation's boundaries further restricts innovation from developing products/services that will truly help the customers execute the jobs-to-be-done or provide outcomes that they are seeking.

"...the solution is not to use data that is collected for historical performance measurement purposes in the processes of new-product development. Keep such data quarantined: they are the wrong data for the job. The size and nature of job-based or circumstance-based market categories actually can be quantified, but this entails a different research process and statistical methodology..."

Clayton Christensen et al, 2003

Recent evidence is suggesting it is better to target a certain personality group rather than a particular demographic/socioeconomic group. Psychometric tests, such as Myers-Brigg, can be useful in defining personality types. For example, in selling Weet Bix

- the thinking/logical personality will respond to the product as a healthy choice, ie make decisions based on facts and relationships

- the feeling/emotional types will respond on the basis of their association (positive or negative) when fed Weet Bix in childhood, ie relies on experience and actions as a basis for the evaluation and will judge a product in terms of its benefits from their own emotional perspective

- material/physical types will respond based on the experience of the taste and pleasure from eating Weet Bix, ie they value physical comforts and pleasures, material possessions and achievements

- intuitive/imaginative types will decide by using their heightened sense of perception and intuition based on the product's appearance, ie they have a strong tendency to visualize experiences

Some Comments on Digital/E-marketing

Introduction

Several years ago, Australians have changed their reading and viewing habits. They are spending more time online than watching TV and are embracing the "always on" factor, ie consumers are using Internet day and night. This increases the potential of digital/e-marketing with interactive campaigns and means that there is a need to understand

- the way the Internet works

- the way consumers use the Internet

- how the technology works

- how to handle infringement laws, ie what is a real or fake site?

NB Is there a direct link between users of the Internet and sales? Fortunately everything online is traceable. Sales before and after social media campaigns can be compared.

With the increasing popularity of on-line/digital marketing, such as emails, on-line directories, social networking, mobile phone marketing, on-line videos, paid search and display, the main challenges are

- tracking its effectiveness

- increased costs in paid search ads

- increased competition for premium ad space

E-marketing is linked with the Internet, eg My Space, web sites, YouTube, Twitter, Google (AdWords), permission marketing, viral techniques, etc. Furthermore, it requires a reinvention of whole organisations and the products/services created. It is more than an add-on to the current marketing strategies, and has resulted in fast results at a minimal cost.

The Internet has taught us

"... to read paragraphs, not chapters, to look for quick hits for insights and then to surf on it..."

Seth Godin, 2007

Until e-marketing appeared, traditional marketing tactics required large investments in media advertising/promotions/PR, etc tactics, such as TV, newspapers, radio, tele-marketing, cold calling, etc plus efficient factories to produce consistent products. The traditional approach was based upon scarcity of choice and large resources, with limited customer power.

Comparing traditional marketing vs. e-marketing

Traditional marketing

E-marketing

limited number of media outlets

unlimited number of media outlets

focus on horizontal success

focus on vertical success

market-to-consumer communications

consumer-to-consumer communications

barrier between customers and makers

permeability between customers and makers

product line limited by factory

product line limited by imagination

long product cycles

fads

market share

fashion

features

stories

advertising a major expense

innovation a major expense

large overheads = stability

small overheads = low risk

consumer support

community support

focus groups

launch and learn

Traditional marketers will use the Internet to advance their old agenda, while the new marketers' mantra is "of and by and for the Internet". The former's performance is focused on market share, ie getting big by controlling the conversation, while the latter's is to fashion and create stories that spread because people want to spread them.

"...don't use the tactics of one paradigm and the strategies of another and hope that you'll get the best of both worlds. You won't..."

Seth Godin, 2007

Remember: aided by technology, the world now acts smaller and works faster. Successful organisations of the past built structures that were big, slow and centralized, but as the world becomes more digitized, the older, slow systems are getting in the way.

To be successful, the organisational and revenue model need to match the preferred marketing approach. Too often e-marketing is just an extension of current business and used to support those businesses. This trade-off can reduce the effectiveness of e-marketing.

On the other hand, e-marketing

"...leverages scarce attention and creates interactions among communities with similar interests......treats every interaction, product, service, and side effect as a form of media......by telling stories, creating remarkable products, and gaining permission to deliver the messages directly to interested people..."

Seth Godin, 2007

Furthermore, e-marketing fits in with what marketers do, ie

"... we spread ideas. We tell stories that people want to hear and believe. We translate emotion into action. We close the sale. We make things people want to buy. We use the best available medium to reach the right people at the right time..."

Seth Godin, 2007

"...International conversion rate for buying online is 1.17% whilst the average bricks and mortar conversion across goods is around 20%. In other words, despite the fact we are spending more time online researching what we might like, the majority of buying still takes place in stores. Rather than viewing online sales as eating into off-line sales, the goal should be to use digital tools to best influence purchase conversions..."
Rachel Botsman, 2014b
The fundamental questions customers ask are around
- am I getting the best deal?
- what is on sale?
- Is the item in stock? If not, when can I get the item?
All these questions can be answered via apps. People are using apps to write their shopping lists and to navigate the fastest way to find the products in store.
Need to focus on how to make the digital and physical work together to improve the customer's experience.

· An integral part of e-marketing is permission marketing. It stresses the consumer's point of view, ie

- permission exists to help the consumer and not the marketer. Marketing messages need to be personal, relevant and expected, otherwise the consumer is not interested

- the consumer's permission is non-transferable

- the consumer doesn't care about the marketer; he/she is only interested in their own situation/imperatives/circumstances, etc. Marketing messages need to be tailored to this understanding

- privacy policies and fine print are meaningless to consumers. The marketer needs to realize that he is making a deal and promise to the consumer, and not the other way around

- the customer demand is for complete loyalty, trust and respect from the marketer. If the marketer does not realize this, they are in the history books!!!!!!

Some examples of successful businesses in e-marketing include

- Threadless - the two entrepreneurs who built a T-shirt business that does more than $20 million a year in revenue - and doesn't even have an artist on staff. Customers design their own T-shirts!

- the lawyer who built Techcrunch - a blog that generates $1 million dollars a year in revenue

- the car dealership in Syracuse that happily sells cars to people who live hundreds of miles away in New York City

- Kiva - the non-profit organisation that raises money in Kansas and funds craftspeople in India -. without an office in either place.

- Etsy ‐ an on-line web site where people are able to buy and sell all things home-made. For a small fee anyone can be part of a virtual craft fare 24/7. Members are encouraged to post their profiles alongside their wares. In 2009 gross sales reached $US 180 million; with monthly on-line visits exceeding 670 million and over 250,000 stall holders.

It is of interest to note that GM (after exiting bankrupt protection in 2009) is experimenting by partnering with eBay to sell on-line new Chevrolets, Buick, Pontiac and GMCs.

Some other examples of increasing focus on e-marketing/digital world include the fashion /luxury goods industries (e.g. Louis Vuitton, Chanel, Burberry, Marie Claire, Myer, Sportsgirl, etc.). Some of the techniques being used to interact with the community are blogs (which include videos), polls, style snaps, interviews, music reviews, free downloads, on-line stores, tweets, FaceBook, YouTube, Twitter, etc. Some bloggers are now getting preferential treatment, such as being invited to fashion parades, etc. The fashion industry hopes that these techniques will encourage people to visit their websites and increase sales. Furthermore, luxury goods traditionally regarded themselves as different from mass brands with buyers wanting the "store experience" with luxury goods, ie human touch and experience of walking into a luxury store, seeking expert advice, etc. Generally customers of luxury goods, like perfumes, come into stores to "smell the scent" and, after the initial purchase, re-buy on-line.

Recently the convenience of the Internet/mobile phones has become more important with the growing significance of Asia and youth in the luxury goods markets, eg

"...in China alone, 60% to 70% of luxury consumers are 20 to 27 years old..."

Melinda O'Rourke as quoted by Hannah Tattersall, 2010

Technology is allowing marketers to gather more information about customers than ever before. Every time you click on the Internet, more information is available, ie

"...Professional data miners used electronic data to create a detailed picture of what you have bought in the past ("history sniffing") and how you bought it ("behavioural sniffing"). They can then draw your attention to products you may want to buy..."

The Economist, 2011

Use of peer group pressure with technology, ie

"...What is new is that the data revolution and social media has greatly increased the ability to start "social epidemics" ..."

The Economist, 2011

Other evidence

- that piped music in American department stores increases people's spending by around 20%

- nagging children have a powerful effect on their parents' (wallet carriers) purchasing habits

- the average American three-year-old can recognise 100 brands; recites advertising jingles more readily than the times table

- the younger you can hook your customers, the better

- men are shopping more like women, ie for themselves and buying female-like products: such as male grooming has grown from 0 to $US 27 billion industry.

In summary,

"...the combination of technology and competition has led to a world where many people get what they want, when they want it. A world where people have control over the attention they give to marketers. A world where we have so much income, so many assets, that we can demand just about anything we can imagine.......The most important thing that has changed is the ability of consumers to finally have what they wanted all along......to be treated with respect and to be connected to other people..."

Seth Godin, 2007

This reverses the way you normally do business, ie instead of finding customers for your products/services, you are finding products/services for your customer. An example of this is a difference between a book publisher (who is seeking new readers for his new writers) and a magazine publisher (who commissions articles for his existing readers). The latter makes more money!!!

The key to success with the Internet is to

"...make something worth talking about; and make it easy to talk about. These attributes of success have nothing to do with budget or scale or corporate will and everything to do with bottom-up strategy of making good stuff for the right people...... far more realistic (and profitable) is to ignite your networks. To create a story that spreads from person-to-person, from blog to blog, that moves through a community and leaves an impact as it does ..." Seth Godin, 2007

Furthermore, it is important e-marketers start to ask questions and listen to the answers, rather than just spread information. They need to find out what people are saying about products, services, brands, industry, etc. Then they can determine the opportunities that exist.

Fourteen trends

The trends are

"...- direct communication and commerce between producers and consumers

- amplification of the voice of the consumer and independent authorities

- the need for an authentic story as the number of sources increases

- extremely short attention span due to clutter

- the long tail

- outsourcing

- Google and the dicing of everything

- infinite channels of communication

- direct communication and commerce between consumers and consumers

- shift in scarcity and abundance

- triumph of ideas

- shift from "how many" to "who"

- the wealthy are like us

- new gatekeepers, no gatekeepers..."

Seth Godin, 2007

i) direct communication and commerce between producers and consumers

This means eliminating the middleman and going direct; "one click" shopping means that consumers can deal immediately and directly with the person who can make things happen; "permission-based" e-mailing campaigns are much more successful and cheaper (no stamps) than direct mail campaigns, eg success rate is 20 to 30 times that of direct mail; there are thousands of people who want to interact with you, and/but the challenge is to make it profitable; permission marketing is an integral part of this.

ii) amplification of the voice of the consumer and independent authorities

In a market where everyone is a critic, the need to create products/services (plus after-sale service) that appeal to, and satisfy, critics is paramount; mass marketers can no longer ignore individual disgruntled customers, because with the Internet a few malcontents have the potential to destroy a brand's reputation; Youtube has turned people into directors; it is no longer "us and them" - it is "us and us"; the Web remembers forever; blogs have converted readers and viewers into writers, it is a personal publishing platform that is connected, tracked, indexed and spread around, ie

"...the easiest way to understand blogs (text, audio or video) is to understand that they (finally) connect three real desires: to hear our own invoices, to be heard by others, and to hear what the crowd thinks..."

Seth Godin, 2007

The 1% rule,

eg 1 percent of the community are givers,

- Wikipedia (1 percent of the users create and edit articles)

- Microsoft's Channel 9 web site (1 percent of visitors contribute comments)

- blogs (1 percent of blog readers are blog writers)

- talk back radio (1 percent of listeners are callers), etc

Unfortunately we do not know who they are.

iii) the need for an authentic story as the number of sources increases

Need to "walk the talk" as consumers are able to differentiate between fake and real; when making decisions, consumers are more likely to rely on the information they receive from the community rather than the organisation.

iv) extremely short attention span due to clutter

As the demise of mass marketing is partly due to increased choices and the deluge of interruptions, complex messages are not effective; things are moving faster, getting smaller and easier to do, eg to sell something, to publish a book, to market something, etc; you can buy tiny slices of attention for a fraction of what it cost just a decade ago; every interaction with a consumer is a "make or break" proposition.

v) the long tail

The concepts of leading brands is disappearing; consumers prefer providers that offer the most choice, eg Starbucks offers 19,000 varieties of beverages; in the long-term, variety always leads to more sales; the number of markets and micro-markets are skyrocketing; give people of choice, the tail always gets longer; some trends include

"...- online shopping gives the retailer the ability to carry a 100 times the inventory of a typical retail store.

- Google means that a user can find something, if it is out there

- permission marketing gives sellers the freedom to find products for the consumers, instead of the other way around

- digital products are easy to store and easy to customise

- digital technology makes it easier to customise non-digital goods..."

Seth Godin, 2007

As marketshare can be very temporary, it is not the key to surviving and thriving.

Furthermore,

"... many consumers...... know they ought to be able to instantly search an entire inventory, to find relevant items in proximity to the ones they are already looking at, and to have every single item available to purchase at the same time in the same place. They also want to buy it all with one click..."

Seth Godin, 2007

This highlights 3 challenges

"...1. Find a market that has not been found yet

2. Create something so remarkable that people in a market are compelled to find you

3. String together enough of these markets so that you can make them into a business..."

Seth Godin, 2007

Linked with a long tail is the concept of critical mass. This refers to a situation where a series of events results in an uncontrollable chain reaction. Volume or quantity is important in this concept - once a certain number is produced, the extra ones are produced at a minimal cost. Furthermore, this feeds on itself as it becomes more popular, ie it becomes the thing to do. With e-marketing, the critical mass is a lot smaller than it used to be, ie it's easier to attract an interested community on the Internet. As the Internet makes it easier and faster to connect, it lowers the level at which critical mass is reached. The critical mass checklist

"...1. do more users benefit the other users by bringing down prices for increasing the power of communication?

2. Are we falsely relying on the masses to solve problems that are obvious when we have small numbers of customers?

3. How can we lower the number of users we'll need before the benefits of critical mass kick in?

4. How does style matter? Are we betting that people will become customers because "everyone else is doing it?" If so, how do we realistically cross the chasm?..."

Seth Godin, 2007

In summary,

"...it's not what you think the market wants, or what you want the market to want. It's about creating and assembling a collection of goods and services that catches the attention (and commerce) of the people who truly care..."

Seth Godin, 2007

vi) outsourcing

The means of production of physical goods and intellectual property is no longer based on geography but is based on talent and efficiency; the competitive advantage of low-wage, high skill location will outperform a vertically-integrated organisation; a marketer without a factory is more innovative, faster-moving and more fad/trend/customer, etc-focused than a traditional production-focused organisation; the ease of outsourcing puts pressure on traditional suppliers to be more competitive; outsourcing can save money and time; outsource and/or mechanize every repetitive, by-the-book task; organisations need to concentrate on activities that cannot be outsourced

vii) Google and the dicing of everything

By atomizing the world, goodwill has changed the end-to-end solution offered by most organisations, replacing it with a pick-and-choose component-based solution; need to offer more than a commodity, otherwise someone will sell it cheaper; bundling and middlemen services are less important.

viii) infinite channels of communication

There is increasing media chaos with new forms of publishing, communications and interaction; some organisations will thrive in this increased chaos, some will be unprepared, and some will merely fight it and lose. For consumer decision-making, the consumer will need to know about the opportunity and whether it is worth the time or money or risk to take action; instead of racing around trying to generate attention, the suppliers merely stand by and wait for attention to find them, eg AdWords where Google charges by clicks - advertisers determine what it's worth to get a visit from an interested, qualified, motivated, potential customer; me-media which is targeted messaging that's about the consumers and what they want right now.

ix) direct communication and commerce between consumers and consumers

Examples include increased consumer-to-consumer interaction in the marketplace, such as eBay; increasing importance of social networks in which consumers share information and experiences, and band together in common interest to pressure firms to provide what they want

x) shift in scarcity and abundance

Changes in what is scarce and what is abundant have occurred; owing to changes in technology, the power of scarcity of access, of shelf space, of media availability, of resources, etc is less important; need to leverage the new scarcity of spare time, attention, ability to pollute, trust, skilled workers, natural resources, such as open space and clean water.

xi) triumph of the ideas

Traditionally little ideas resulted in small improvements in productivity, efficiency, production, products, etc while now big ideas are needed to grab people's attention, such as focusing on service.

xii) shift from "how many" to "who"

The focus on the mass has evolved to a focus on the individual; with the Internet we know who is visiting a web site; "who" are the people who have already demonstrated right now they are focused on your product/services, such as by clicking on Google Adwords; helps to search for cheap ways to interrupt the disinterested and make them interested; it helps activate the interested and turn them into campaigners for you.

xiii) the wealthy are like us

There are more wealthy people than ever before and they come from a diverse range of backgrounds and interests, ie the democratisation of wealth; if you want something to be ordinary, then it better be cheap; on the other hand, people will pay for exclusivity, note-worthiness and indulgence

xiv) new gatekeepers, no gatekeepers..."

Traditionally big organisations dealt with other big organisations; the Internet has provided the ability to send messages with no filters, no time constraints and no money, eg "ideavirus" that spreads around the world attracting attention; the Web has allowed people to bypass the traditional channels, ie they can now go "individual-to-individual" and by-pass traditional hierarchical structures; it is different as there are many things to write about, most bloggers (who have a laptop connected to the Internet) do it for free and they are passionate about the topic; the Web means that everyone is approachable; the consumer/interested community is in charge; it is easier and cheaper to connect with an interested community as your mouthpiece than to develop a physical chain of reseller stores

For example, Google has decimated the power of the traditional media gatekeepers like newspapers, radio, TV, etc. Information and access is available to all when desired.

In summary, the success of e-marketing is having

"... low overheads, cheap......location, the high margins because of the long tail inventory, and the unlimited online listings......relentless public feedback..."

Seth Godin, 2007

Use of Networking in Customer Management

The use of social networks, such as friendship groups, especially via the Internet, is offering another dimension to marketing, especially in the viral marketing online through Facebook, Twitter, etc.

The power of networks is demonstrated by this example: if you have 20 friends and these friends have 20 friends and they have 20 friends, you can indirectly impact the lives of 80,000 people!!!

There is evidence that you tend to belong to a group of friends whose behaviour, idiosyncrasies, etc are similar to your own. Peer group pressure and social norms have an impact, ie who we are, who we know and how the two are connected.

"... we're all learning about the power of networks in an accelerated way because of the rise of online social networks and the ability of the commercial world to use data and regression analysis..."

Michael Allen as quoted by Deirde Macken, 2010

Some major needs being tracked include happiness, loneliness and depression, eg

- happiness, ie having a happy friend makes you 15% more likely to be happy

- loneliness, ie having a lonely friend makes you 52% more likely to be lonely

There is not a straight line link between these emotions, eg

"... loneliness, happiness and obesity all spread in different ways through networks and the influence of one network can be countered by differences, influences infiltrating from other networks..."

Deirde Macken, 2010

Work on how social trends impact on friendships is showing

"...the boundaries between friendships and other sorts of relationships are blurring and, often, friendship is proving the most powerful relationship..."

Harry Blatterer as quoted by Deirdre Macken, 2010

Friendship usually involves some obligation and involves people shaping each other physically, emotionally and intellectually.

(source: Deirde Macken, 2010)

Some Statistics (mostly USA-sourced)

A 5% increase in customer loyalty can increase profits from 25% to 85%

Firms that achieve both customer and staff engagement outpace their competitors by 26% in gross margins and 85 % in sales growth.

80% of your sales (profit) come from 20% of your clients in traditional organisations.

(NB The Internet is challenging this as it works on the 98% rule, as it makes almost everything available to everyone at any time. This is sometimes called the economics of abundance)

The Internet is changing the traditional relationship between supply and customer, putting the customer in the driving seat. Instead of organisations marketing to customers, customers invite suppliers to make offers for service

In some organisations the top 20% of staff not only provide most of the profit but also cover losses incurred in dealing with other clients

The top 10% of your customers are worth 5 to 10 times as much in potential lifetime profits as the bottom 10% of your customers

It is 6 times more expensive not to train staff because untrained staff:

- take longer to complete tasks;

- create dissatisfied customers;

- interrupt other staff for help;

- create repeat work, ie re-work.

Training should be used to provide staff with the necessary skills to help satisfy customers' needs.

It is up to 6 times harder to get a new customer than to keep one. Yet we make heroes out of staff who capture a new client and become addicted to chasing market share at all costs. Too often we concentrate on capturing new clients and take for granted loyal customers

Take care of your customers and they will come back, ie

- over 65% of sales come from repeat customers

- around 70% of customers who are satisfied with products and/or services purchased, purchase the same produce and/or service again

- a totally satisfied customer is 6 times more likely to repurchase over the next 18 months than a satisfied customer

- extending customer life cycles by 3 years can treble profits per customer

Direct mail vs. e-mail campaign - a typical direct mailing campaign achieves a 1 percent response rate in orders; while a permission-based e-mail can get 20 to 30 times the response rate of direct mail plus savings on stamps. In other words a valid e-mail relationship can be worth 2,000 times what a mailing list is worth.

Why do customers leave?

REASONS

PERCENTAGE

Business moved

9

Didn't like product

12

Price increase

11

Poor treatment of customers*i

68

Notes :

i) This is the most important one and refers to 2 situations, ie.;

a) customers being treated with apathy, ignorance, indifference and/or rudeness,

b) the rules and regulations make it hard to do business..

The vast majority of organisations that excel in satisfying customers rank the ability to handle something that goes wrong as the most important factor in satisfying customers

A friend's comments are considered more powerful than any promotional statement

Effective complaint handling results in a positive comment, ie. a free word of mouth advertisement

Bad news travels faster than good news

A customer whose complaint is resolved satisfactorily tells 5 other people; a customer who initially received good treatment tells 3 others

Complaints are the fastest and least expensive ways of getting feedback from customers

Complaining customers are showing loyalty. Most dissatisfied customers don't complain, they just leave.

Treat customers who have complained as gifts as they are informing you what is wrong and needs improving. Furthermore, the customer you lose, or are about to lose, holds the key to your success. You need to find out why the customer is leaving.

The statement

"...you only get what you pay for..."

should be changed to

"...if you get what you want, when you want it, you are prepared to pay much more for it..."

For every 1 customer who complains, there are 26 more who are unhappy. The majority will never again buy from your organisation. Furthermore, they will share their bad experiences with up to 15 other people

90% of dissatisfied customers will never return. On the other hand, a happy customer will tell, on average, 6 other people

Disappointed customers are the hardest to handle as they do not complain; furthermore, they do not want to engage and are motivated to leave. Disappointment is a low-arousal emotion. Anger is a sense of being violated; disappointment is having your expectation dashed

21% of customers have a "negative experience"; while 26% have a "positive experience"

The advantages of being the perceived service leader

- can charge around 10% more for the same products and/or services (as a general rule, a 1% change in margins is equivalent to a 10% change in sales)

- grow twice as fast as competitors

- improve market share by up to 6% per year while those poorly perceived lose as much as 2% per year

- have a return on sales 12% higher than other providers

Price

- price is only important when you fail to differentiate on other aspects such as service, quality, convenience, etc. It is more important to provide value for money

- price wars encourage the customer to focus only on price of products and/or services and not on value

- remember: the joy of low price disappears once the poor quality of product and/or service is known

- price is a reference point

- put payment (including price) in the terms that the buyer wants

- referrals and repeat customers are less sensitive to price

(NB Rather than lower prices, it is better to use vouchers, reward points, membership to clubs, etc. The latter are often referred to as soft dollars)

Some comments on focusing on price only, ie discounting and its consequences.

If you cut your price by Need to increase sales by this if your present gross profit is..
 
10%
15%
20%
25%
30%
35%
40%
5%
100.0
50.0
33.3
25.0
20.0
16.7
14.3
6%
150.0
66.7
42.9
31.6
29.0
20.7
17.6
7%
233.3
87.5
53.8
38.9
30.4
25.0
21.2
8%
400.0
144.3
66.7
47.1
36.4
29.6
25.0
10%
-
200.0
100.0
66.7
50.0
40.0
33.3
11%
-
275.0
122.2
78.6
57.9
45.8
37.9
12%
-
400.0
150.0
92.3
66.7
52.2
42.9
15%
-
-
300.0
150.0
100.0
75.0
60.0
16%
-
-
400.0
117.8
144.3
84.2
66.7
18%
-
-
900.0
275.1
150.0
105.9
81.1
20%
-
-
-
400.0
200.0
133.3
100.0

(source: Geoff Perry, 1991)

The above chart shows how many more units in percentage terms you must sell to earn the same gross profit as with the previous selling price

Around 90% of businesses never precisely determine the needs or requirements of their customers

Satisfied customers are repeat customers who tell others (this is a free form of advertising)

Remember the 3 R's, ie customer relations, repeat sales and referrals

Don't be an organisation whose face is to senior management but whose "bottom" is to the customer!!!!!!

Training should provide staff with the necessary skills to help satisfy needs and meet customers' service quality expectations

 

Some Comments on Selling Techniques

The more you ask, the more you get

"...8% of sales people get 60% of the business - just by asking..."

Harvard Business Review as quoted by Wayne Mansfield, 2003

The greatest single mistake made by salespeople is not asking for the order. Even those who do ask, quit too soon. For example,

- 44% quit after 1 "no"

- 22% quit after 2 "no's"

- 14% quit after 3 "no's"

- 12% quit after 4 'no's"

In other words, 92% quit after 4 "no's". This means the more you ask, the more you get!!!!!

The Laws of..

- Large numbers - every sales process has a number, eg

i. In the insurance industry, it is 20 calls, 10 people available, 3 will listen and 1 will buy or make an appointment

ii. For advertising space, it is 40 calls, 15 people available, 3 will listen and 1 will buy

- Averages - the more you try, the more the chance of success, ie if you try 20 times, chances of success (all things being equal) are twice as good as if you only tried 10 times. Try 40 times and your chances are 4 times as great.

In buying, emotions are more important than rational thoughts, ie generally people buy on emotions and later they justify the purchase rationally. There are 8 emotional reasons for people to buy, ie prestige, love, curiosity, imitation, fear, rivalry, self-preservation and variety. This highlights the importance of not selling products and/or services, and the need to find out the reasons people want to buy. Furthermore, sales occur in the mind first, ie expectations/perceptions are more important than prospects.

People dislike being sold to but people love to buy. Most people buy from those they trust. Learn to build trust by asking them questions, letting them talk and listening. Furthermore, what you say, how you say it and the impression you create builds trust

· · Persuasive words sell, such as use of personal name, understand, proven, health, easy, guarantee, money, safety, save, new, love, discovery, right, results, truth, comfort, proud, profit, deserve, happy, trust, value, fun and vital. On the other hand, 24 words that foster distrust are deal, cost, pay, contract, sign, try, bad, loss, lose, hurt, buy, death, worry, sell, sold, price, decision, hard, difficult, obligation, liable, fail, liability and failure.

 

. Advertising thrives in markets where consumers are essentially clueless, ie the quality is hard to assess before you buy the product like medicine, wine, mattresses, etc
. Despite abundant information, consumers often make imperfect decisions. Part of this involves the paradox of choice, ie we have too many options to choose from that we feel overwhelmed and less satisfied with the choices, ie buyer's remorse. Returning to a familiar brand is a mental shortcut that is a lot easier
. On the other hand, social media gathers ratings, reviews, comments from friends, etc and these are more trusted than messages beamed from corporate headquarters
. With many brands under threat, some organisations are looking for inspiration from cult theory, ie all advertising is manipulation and all our needs are unique but we belong to a group. Most cults work on the concept "we feel most like ourselves when we are part of a group", especially if the group offers identity, love and support. Remember that people are not motivated by organisations; they are motivated by other people. Airbnb does not see itself as a cult but organises 1,000+ "meet ups" for users to share their experiences and enthusiasm, ie

"...we're a community-driven brand, but at the same time, we want every host in every home to recognise that they're all individuals, and to use Airbnb is an expression of their individuality..."
Joe Gebba (co-founder of Airbnb) as quoted by Derek Thompson, 2014
One of the hallmarks of a cult is to unite to oppose what they see as an oppressive or illegitimate mainstream culture. The collaborative-economy companies like Airbnb and Uber are proving very successful at exploiting this sense of "us-against-the-world". Apple used it successfully in the 1980s against Microsoft and IBM. Consider its famous hammer-smashing 1984 ad against IBM and its 1998 commercial "crazy ones"

· · The art of selling is to make people feel comfortable when they are dealing with you. If you want to do business, talk quietly and stand far enough away so that they do not feel threatened. When you have gained their trust, they will move towards you. Furthermore, with eye contact, give people the opportunity to feel comfortable by breaking eye contact, ie make eye contact, but do not keep it

 

Use your business cards and referrals/testimonials as much as possible. Give your business cards upside down so that the person has to turn it over to read it!!! Furthermore, use the back of your business card to describe what you do, such as products and services you provide.

Be careful of stereotyping or pigeon holing, ie first appearances can be misleading

Prime numbers can be important, ie 3, 5, 7, 11, 13, 17, 37, etc

Be positive and talk in the future, and not past, tense; positive, optimistic, ie

Don't say: You wouldn't like to..

Do Say: I'm calling to arrange your free trial...

Don't say: I'm calling to check if you are still coming tomorrow..

Do Say: I'm confirming tomorrow's start time is...

Does the person have the authority to make the purchase? You need to ascertain this because sometimes a person with limited authority is delegated to investigate a purchase decision and to make a recommendation

Use the "silent moment". Silence works for you and helps the prospect make up his/her mind. Many sales have been lost because a salesperson could not keep his/her mouth shut!!!! Silence can mean that the buyer has accepted the proposal emotionally and is now justifying the purchase rationally and logically.

A good salesperson has to be prepared to lose most of the time. The successful ones are not worried by losses. They are like addicted gamblers, ie like the thrill of the chase and are excited by the outside chance of an occasional win. Managing sales people requires acknowledging that they will not always win. It is better to show them that you understand how hard it is to lose. Research (Diane Coute, 2006) has found that it is more than money that drives them; it is the value they place on the thrill of the chase or struggle.

Need to understand the perception gap, ie sales pitch is not in sync with the decision-making style of the customer. Decision makers tend to fall into 5 different camps, ie

i) charismatics (25%) - want the big picture and bullet points

ii) thinkers (11) - require lots of data to get to their decision

iii) sceptics (19%) - those decision makers who approach the pitch with suspicion and require persuading with credible information. Most of the sales pitches are designed for sceptics.

iv) followers (36%) - need proof that what they are buying has worked for others.

v) controllers (9%) ‐ cannot be sold to unless they think it is their idea.

Thus you do not have to change your message but just your delivery style.

Remember: the old combative technique of the customer is the enemy to be conquered no longer applicable. You need to listen and respond to the customer's need rather than bending them to your will, and to differentiate your product from your competitors' so that it is not perceived as a commodity.

Some More Comments on Selling techniques

In the 1950s the sales training model was based on the insurance industry and it was manipulative, fast talking, highly scripted and formulaic. It stressed selling product. As a result, many people have a negative perception of selling.

Another way of looking at selling is persuasion and selling is a human thing. An important part of selling is listening and understanding that it is a partnership.

"... if people would stop selling, that is showing, telling, demonstrating, talking, explaining -which are all traditional ways - and do more asking, listening, questioning, observing, discussing, we'd all be better off..."

Bob Miller as quoted by Fiona Smith, 2009u

Some research shows that most salespeople spend 80% of sales calls talking about themselves, and only 20% listening to customers.

According to Bob Miller (Fiona Smith, 2009u), Queen Elizabeth is a very good salesperson as she asks people questions. This is about showing genuine interest in another person's story. It is very engaging.

Remember: all customers want to buy but are too often "sold" to. Need to understand that selling is about enabling the buying process.

In most organisations, the first contact customers have with an organisation is the receptionist. Their attitude to customers is pivotal in developing good customer relationships. If the receptionist is welcoming and regards your relationship with the organisation as important, you will have a different perception of the organisation, compared with a receptionist who is unwelcoming in approach.

(source: Fiona Smith, 2009u)

Some Recommendations

Do everything possible to hold the present "hostage-type" customers, ie strengthen the relationship

As soon as possible, broaden the customer base beyond the current hostage customer base

Look at forming partnerships, alliances, joint ventures etc with customers to bind them to you

Have customers actively involved in all stages of project development

For each business, appoint account managers in order to avoid overlap (with several individuals contacting the same customer) - one person only is responsible for co-ordinating and liaising with a particular customer

Invite customers to attend your meetings, and regularly ask them to give presentations on how to improve service to them

Regularly seek to attend your customers' meetings

Like Woolworth's, have an "empty chair" at every meeting; this chair is the customer's chair to remind staff of the importance of customers, ie an organisation is only in business as long as customers want it to be

Introduce the 50:25:25 rule. It involves managers spending 50% of their time behind their desk; 25% with staff; 25% with customers

Regularly review all activities, and if activities are not adding value to the customer, stop doing them. The best test to determine if an activity is adding value is to identify if the customer will pay for the cost of the activity

Continue to regularly survey customers, but also recognise that retaining customers (loyal customers who return for more business with you) is even more important than merely satisfying customers

At every opportunity, employ staff (technical and non-technical) who have had commercial experience at both the corporate and business levels

Rank customers into "As, Bs and Cs", where "As" are loyal customers who give you all of their business; "Bs" are shoppers and give you a good share of their business; "Cs" give none of their business to you. The aim is to retain all "As"; turn 10% of "Bs" into "As" every year and turn 10% of "Cs" into "Bs" every year

Keep detailed records (including results of follow-up and actions taken to rectify the situation) of all complaints and dissatisfied customers

Under "customer service", develop indicators that measure

- customers satisfied with products and services;

- customers who have had an opportunity to evaluate products and services;

Remember: customer service and satisfaction levels should be continuously monitored, evaluated, measured and used as a basis for constant improvement.

Visit an organisation outside your industry that is a leader in customer service and see what you can learn from them

Never under-estimate the impact of emotions on customers' decision-making. Most decisions are based more on how people feel (emotions) rather than what they think (rational analysis).

- it is more important in marketing to understand the personality types of your customers rather than demographic/socioeconomic groupings

- need to understand digital/e-marketing with its interactive concept

(sources: Bill Synnot, 1996; Bill Synnot et al, 1998; Karl Albrecht, 1994; Wayne Mansfield, 2003; Larry Selden et al, 2002; Craig S. Fleisher et al, 2003; Rochelle Burbury, 2003; Winston Marsh, 2003; Jill Griffin, 2003; Neil Shoebridge, 2004a; Harry Onsman, 2004d; Dianne Coute, 2006; Helen Trinca, 2007a; Catherine Fox, 2007; Lyndall Crisp, 2007a; Lisa Carden et al, 2006; Catherine Fox, 2007g; Narelle Harper, 2007b; Nirmalya Kumar et al, 2007; Martyn Newman, 2007; Clayton Christensen et al, 2003; Richard Branson, 2008; Brad Howarth, 2008; Catherine Fox, 2008f; Brad Howarth, 2008; Seth Godin, 2007; W. J. Henningan, 2009; Hannah Tattersall, 2009; Marion Hume, 2010; Neil Shoebridge, 2009; Andrew Cornell, 2010; Rachel Botsman, 2010; Rob Markey et al, 2010; Rachel Botsman, 2010a;The Economist, 2011; Andrew Cornwell, 2013)

 

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