Vodacom CM Programme 2015 - Part 5

Nando’s Example – Benefits

• Tasty peri-peri (Sexy and invigorating?)

• Fun ads• Décor and ambience• Healthy for you (grilled

versus fried)• Happy chickens –

ethically sourced• Halaal and Kosher• Snob/status value

• Cleanliness and hygiene

• Service/friendliness• Availability and access• Serviettes and washing

facility• Speed of service• Parking• Affordability• Quality meal• Not burnt

Maximising Value through Customer Management

Nando’s Example – Taste and “Snob” Value• Taste: 80% high need for taste, 20% don’t care• Snob value: important to 60% of customers, not

important to 40%

Tast

e

Snob Value

NB

Not NBNot NB NB

48%

8%

32%

12%

HiT:HiS = 80X60 = 48%HiT:LoS = 80X40 = 32%LoT:HiS = 20X60 = 12%LoT:LoS = 20X40 = 8%

Okay, so now you have a good understanding of your most important segments and channels

The next step is to target and select the “valuable” customers where your efforts will get the best return, and match these with the amount of effort that you want to put into each segment by offering a superior value proposition to each

Targeting: Evaluate the attractiveness of each segment

and choose a target segment


But the superior value proposition must not only be

achieved and visible, but must also be communicated to and

valued by customers!

(See “Positioning”)

Who are the customers that we’d

kill to have?

(Targeting and Selection)



What Makes a Customer

“Valuable”?

What Makes Customers Valuable and/or Attractive?• Revenue, value, frequency &

distribution channels

• Lifetime value & potential growth (Up-sales, X-sales, price sensitivity)

• Profitability of this customer, and “expensiveness” (cost to serve) Also, hidden costs

• Ability to meet/exceed and differ-entiate needs. Delighted versus hostile versus mercenary customer

• Competitors and nature of rivalry

• Our share of the customer, (portfolio saturation,) & their share of us. Long tail may be profitable – or not

• Referrals & recommendations, and promoting our offer to their customers

• Risk: Creditworthiness, financial stability, assets, default likelihood

• Efficient ways of serving them & reduce cost to serve, physical accessibility, initial investment

• Willingness to share info, build relationships, learn & grow

• Our capabilities, competences, & assets

• Prestige, influence, & more

Our Competitive Strengths Are we stronger or better than our rivals?• Market share • Brand awareness of products/services• Ease of doing business with you• Innovativeness• Price charged, and costs of doing business

with you• Their service requirements and our ability to

customise• Quality requirements and our capacity/quantity• Any investment that we are prepared to make• Added value for them in the supply chain, right

up to the disposal stage at the end• Long-term sustainability and risk profile• Our experience and/or willingness to learn


Hi

Lo

Lo Hi

Customer Attractiveness

Competitive Strengths

The GE Matrix – Customer Selection

Grow!Grow!

Why are we here?Why are we here?

Develop & invest in

Develop & invest in

Maintain & manage


Peppers’ and Rogers’ Approach: One-to-One Marketing

Peppers’ and Rogers’ Approach: One-to-One Marketing

I D I C

Identify your customersIdentify your customers

Distinguish between themDistinguish between them

Interact with themInteract with them

Customise your offer and behaviour (TSP)Customise your offer and behaviour (TSP)

MVC’s

MGC’s

BZ’s

Tiering Customers by Value

MVCsMVCs MGCsMGCs MigratorsMigrators BZsBZs

Actual Value - Now

Strategic Value - Future

Cost to Serve

Use KAM to keep these customers…

…and to grow these

Migrate these (Strategic value unknown)

Spend no resources marketing to these

Differentiate Your CustomersC

usto

mer

Val

ue

Number of Customers

Mass Marketing

KAM

Move the fence over time…

How do you deal with the long tail and perhaps even “fire” your customers?

• First, you need to be very clear on why you are doing this: “Who or what are we neglecting while we pay attention to this?”

• Be diplomatic: “In an effort to be more efficient for you…”

• Give away to associates/re-sellers

• Increase prices and/or effort (e.g. COD)

• Reduce cost to serve: don’t invest in them at allMaximising Value through Customer Management

It is more profitable today to have less market share, and more share of

customers:

If you fire 70% of your customers, you may see your

profits going up and up

It is more profitable today to have less market share, and more share of

customers:

If you fire 70% of your customers, you may see your

profits going up and up


Profitable/ Attractive

Unprofitable/ Unattractive

Profitable/ Unattractive

Current Situation

Future Situation

Selecting Your Customer Mix

Unprofitable/ Unattractive

Fire Manage

Disci-pline

Reward and

Invest

Where do your opportunities

lie?

Where do your opportunities

lie?

The quality and history of your relationships is perhaps the only source of competitive advantage that ultimately cannot be imitated by rivals


PositioningThe act of designing the company’s total offer and

image so that it occupies a distinct and valued place in the target customer’s mind

How will we position ourselves in this segment compared to other companies competing here?



Positioning Your Offer

If our company was…

•An animal

•A movie

•A drink

•A car

•A property

•A newspaper or magazine

…what would it be?

Use these to find out what your customers’ perception are right now, (e.g. postcard contest, or focus

group,) but also to determine what your desirable state will be


Positioning Your Offer – The Statement

•Convince… A segment

•That… Our product or service

•Because… Differential benefit

•Health conscious eagles

“Nandos is healthy because our chickens are not fed with hormones”


Theme 5: Creating the Climate, Capability, Infrastructure, and

Architecture for Customer Management

Aki Kalliatakis

[email protected] www.DelightYourCustomers.co.za

mailto:[email protected]

http://www.delightyourcustomers.co.za/


Agenda

• A framework for customer management: Bringing it all together

• Measuring success

• Developing people capabilities and motivation

• Value innovation and blue oceans

• Ensuring sustainability and avoiding failure

Customer Management Cycle

Customer Management Activity is aimed at implementing plans to deliver the customer vision/mission and value proposition across the customer retention life cycle

Segmentation & Targeting

Enquiry Management &

Conversion

Welcoming & Getting to Know

Delivering the Basics

Customer Value

Development

Managing Problems/ Recovery

Win Back

Customer Management

Retention Activity





Conversion



Customer Value

Development


Win Back

Customer Management

Retention Activity

• What formal and informal activities and programmes do we have to ensure customer retention and loyalty? (Evidence?)

• How do we measure customer retention and loyalty in our business, and does it predict repeat business (versus churn,) and increased spending?

• What do we need to do to improve this, and who should be responsible for this on our team?



Conversion



Customer Value

Development


Win Back

Customer Management

Retention Activity

• Are we clear as a business about the LCVP of every customer or segment?

• What formal activities do we have in place to increase cross-sales of other products and services, and up-sales/upgrades in our business?

• What formal ways do we have in place to use the power of referrals and recommendations?


Cross-Selling Boosts Retention

Only 3% of customers have all 3 products.

Why are you still chasing new customers?

Critical Illness

Cover 5%

Income Protection Cover 15%

Life Insurance

55%

7%

8% 7%

3%3%


Measurable Results

There are a number of clear measures, both internal, and external (from customers and

others,) that can give a clear indication of the success of customer management. They are

also used to plan activities, give individuals and teams feedback on performance, and to create

an environment for improvement


“Too often we measure everything and understand nothing. The three most important things you need to measure in a business are customer satisfaction,

employee satisfaction, and cash flow. If you’re growing customer satisfaction, your global market share is sure to grow, too. Employee satisfaction

gets you productivity, quality, pride, and creativity. And cash flow is the pulse — the key vital sign of a

company”


Jack Welch on Measurement

• Measurement directs behaviour• Measurement increases visibility of performance (You can’t

manage what you can’t measure)• Measurement focuses attention• Measurement clarifies expectations (People do what management

inspects, not what management expects)• Measurement enables accountability and performance• Measurement improves decision making• Measurement improves problem solving (It’s not the 95% that is

right that makes something work; it is the 5% that is wrong that messes everything up )

• Measurement enhances understandingIf you cannot measure something, you cannot understand it. If you cannot

understand it, you cannot control it. If you cannot control it, you cannot improve it

The Value of Measurement


Performance

Impo

rtan

ce

PoorGreat

Low

HighUrgent Action!

Best Place to Be

Why are we here?*

* May create future opportunity?

Why are we here? (Lite)

Betrayal!Yes

No

Improvement?

Customer Retention, Loyalty and Efficiency Measures

• Repeat business, retention and return rates: portion of new versus existing customers and related cost

• CSAT, NPS and CES, cost to cust.

• Rates of cross-sales and up-sales

• Customer/segment profitability including cost to serve (ABC?)

• LCVP, & length of relationship

• Defections/Failure Analysis

• Complaints/Returns/Refunds

• Waiting times at all stages

• Feedback from mystery shoppers and customer focus groups

•Willingness to participate in R&D, feedback sessions, make complaints, and in other events…

•Willingness to share mission critical information

•Willingness to refer, introduce and recommend, and actual referrals

•Support of our programmes/ systems processes, and openness to try new things, “visits”

•Willingness to try out competitors, or propensity to defect, and, if possible, our share of wallet/spend

•Growth in commitment to our business

Internal Process Measures• Cycle times/delays/response and

fulfillment times

• Internal failures, problems & defects

• Machine/hardware breakdown and downtime

• Penalties and reimbursements

• Staff skills and effectiveness

• Staff motivation and morale, including staff t/o, absenteeism, teamwork & communication

• Corporate “memory” of customers/segment: Current? Effectively used?

• Social media monitoring

• Sales & financial measures/ratios, ROI on promo activity, strike rate

• Customer unhappiness indicators, like debtor days, theft

• Call centre metrics, e.g. dropped

• Information management

• Ongoing improvement and value innovations

• Supplier effectiveness

• Distribution channel effectiveness

• Competitor analysis and benchmarking

• Are we effective as a business in measuring the factors which will lead to success in customer management?

• What formal and public metrics do we use?


Customer Information Measurement in CM


Education

Vodacom CM Programme 2015 - Part 5