Insights

Q?Can you say what your strategy is?
A.

It sounds easy enough to do but surprisingly many business owners and managers are still not able to articulate a strategy for their company. A strategy is the gameplan. In a very succinct way, it outlines the overall objective that the company is trying to achieve over a three to five year period,the scope of its activities, and the means by which it will achieve this objective.

It provides staff, customers and other key stakeholders with a clear understanding of who the customer is, what will be offered, why it is distinctive, and the activities that enable value to be created in this unique way. Unfortunately, strategy often gets confused with conversations about the mission, vision or values of a company. However, it is more concerning when jargon or motherhood statements are used to cover the lack of a strategy.

A simple strategy statement identifies the specific, measurable objective that will drive your business over the next period and provides your people with clear guidelines of the prioritizing work and making decisions that contribute to meaningful outcomes for the company.

It’s not hard – it just requires some leadership.

Q?Why should customers buy from you?
A.

It’s a simple question but if you can’t answer it, you’re in trouble. Successful companies identify the key dimensions of customer value that motivate target customers and then determine how to leverage skills, knowledge and distinctive competencies to provide superior value on one of more of these dimensions. Before you can develop a compelling value proposition, you first need to select your markets and customer segments, based on your market coverage strategy.

Defining the market in terms of customer needs rather than products or services is key. So is choosing groups of customers within each market where you can leverage resources and capabilities to create a competitive advantage. Developing a value proposition requires an understanding of the extent to which your target market is driven by economic, functional, emotional or symbolic value. Companies with compelling value propositions build a competitive advantage on offering one of these types of value, or a combination of them, and organize their activities to enable customers to create value with them.

It’s a simple question but if you can’t answer it, you’re in trouble. Successful companies identify the key dimensions of customer value that motivate target customers and then determine how to leverage skills, knowledge and distinctive competencies to provide superior value on one of more of these dimensions. Before you can develop a compelling value proposition, you first need to select your markets and customer segments, based on your market coverage strategy. Defining the market in terms of customer needs rather than products or services is key.

So is choosing groups of customers within each market where you can leverage resources and capabilities to create a competitive advantage. Developing a value proposition requires an understanding of the extent to which your target market is driven by economic, functional, emotional or symbolic value. Companies with compelling value propositions build a competitive advantage on offering one of these types of value, or a combination of them, and organize their activities to enable customers to create value with them.

Q?Metrics that matter?
A.

Be accountable for performance but use metrics that mean something. Too often, companies simply adopt the same measures that everyone else in their sector is using. While this can be useful for benchmarking purposes, not enough attention is paid to the significance of what is actually being measured.

A good example is the widespread use of the net promoter score. This single measure that is claimed to be an indicator of business growth has been largely discredited for its lack of validity and reliability. Yet it is still promoted and used within business without question.

A similar argument exists about the use of customer satisfaction measures and some brand preference measures. The reliability of these measures is often highly questionable, because of poor design and the assumptions on which they are based.

In my view, two of the best metrics for measuring market performance from a customer and brand perspective are polarization and shared preference. Polarisation predicts that the likelihood that a customer will repurchase a product or brand. Shared preference tells you which brands that are most likely to switch to if they don’t purchase yours. Together they provide rich information that enables more effective segmentation, repositioning, and evaluation of marketing strategies.

Q?Do your customers want a relationship?
A.

We seem to assume that customers want a relationship but do they? There’s plenty of research to suggest many don’t. In fact, more empowered customers want to do their business. For customers who seek a relationship, it is typically driven by confidence benefits (knowing what to expect), social benefits (being personally recognized), or special treatment benefits (price discounts, faster service, more customized service).

With technology playing a major role in how we interact with customers, we need to determine the type of relationship that each segment expects, and how it is impacts our business model for serving this segment. For example, do customers want personal assistance, dedicated personal assistance, self-service, automated service, co-designed service, customer- generated content, or be part of a community.

The shift towards providing more control and greater transparency to customers is happening. The idea that business should aim to create relationships with customers to maximise lifetime customer value and decrease marketing costs need to be revisited. From a customer perspective, how do your customers want to create value and what do they expect from you.