Sensei Blogs

Customer Experience Cannot be Automated

sam_fiorella@hotmail.com(1 Sam Fiorella) — Tue, 11 Dec 2012 00:00:00 GMT

I’m a bit disturbed by the fact that most customer experience (CX) discussions I’ve had lately with marketers have been about marketing automation and technology. Software firms pitching clients at trade shows, on webinars or at conferences all seem to be leading with the promise that their technology will generate a greater customer experience through automated engagements tracked back to the individual user profile.

I hope the clients of these software firms understand the phrase: Caveat Emptor / Buyer Beware. Customer experience is not downloadable, it does not come out of a box and it’s not about automation. In fact, great customer experience is not a technology-driven principle at all.

So what is Customer Experience?

It's a business discipline; customer experience is something you do, not something you install.
It's corporate culture; customer experience is something you inherently think and believe, not something you schedule.

Customers are more informed, sophisticated and social, which only serves to increase the pressure on businesses to better engage and satisfy. Customers have gained a lot of control over the success of the brands they love and hate and so they’re able to demand an improved customer experience. More automation is the opposite of what is being demanded.

A Deloitte and Forbes survey of 192 U.S. executives proves that this phenomena has become a major risk for the corporation. "Social media wasn't even on the radar a few years ago, and we're now seeing it ranked among the top sources of risk, on the same level as financial risk," Henry Ristuccia, a partner in Deloitte & Touche LLP. The power of the consumer voice, as amplified via social streams is forcing businesses to improve the customer experience or risk alienating current and prospective customers who are actively seeking each other out in these channels.

More High Touch, Less High Tech

Is your customer experiencing your brand solely through technologically-based communications such as social media, email, or automated answering machines? Are campaign decisions being directed by marketing software automation? There is definitely a role for software in the Customer Experience Management (CXM) process, but it must be a supporting player, not the director. CXM software must be chosen to augment real customer experience strategies, not have it dictated by the software’s pre-configured workflow.

When architecting the experience, the only universal “best practice” in customer experience design is to consider the customer’s satisfaction with the product or engagement as THE top priority and benchmark. And since every business and customer base is different – not to mention different customer segments within that base – there is no one technology that can effectively create the customer experience for your brand. In fact, there are an infinite number of outside influences on your customers including social channels, technologies, competition and other market forces, which add greater importance to human intuition and human touch.

It’s time your business stop looking to social media managers to bolster the engagement you have with customers and look to customer experience professionals that will infuse the discipline and culture across all customer touch points with your brand.

Has customer experience become overly automated? Are we building relationships on thin and technology-based connections today? Join the debate below!

Sam Fiorella
Feed Your Community, Not Your Ego

Lead Generation Continues To Challenge B2B CMOs

sam_fiorella@hotmail.com(1 Sam Fiorella) — Sat, 13 Oct 2012 00:00:00 GMT

B2B customers have become more independent buyers in the procurement process as a result of their increasing access to information, research and peer-recommendations. In fact, this modern buyer is something of an enigma to B2B vendors. Traditional lead generation efforts such as trade show and publication advertising, direct mail, email, etc. are decreasing in effectiveness. Lead generation through social marketing has received much hype yet case studies demonstrating real bottom-line impact are still few and far between. How does one capture their attention (and wallet-share) in an environment where competition has surpassed competitive vendors to include the increasing availability of information and perception driven by customers and non-customers alike?

Sales teams and marketing organizations are experimenting with lead generation tactics in an attempt to drive both greater volumes and conversion of leads. However, innovation (and results) within a B2B’s sales process will not occur by morphing existing lead generation practices because the problem does not lie with the tactic but the department the business looks to for lead generation.
Engaging the modern B2B Buyer is no longer about sales campaigns; it’s about re-channelling your business’ sales focus, efforts and budget from external to internal practices. Real ingenuity and results will come when the business shifts their sales efforts from Customer Acquisition to Customer Development.

Traditional Lead Generation Continues To Challenge B2B CMOs

The challenges of generating high-quality leads, as well as high volumes of leads, continues to be the main challenge of B2B CMOs. Further, there has been a decline in the tactical effectiveness from overall quality and quantity of leads generated according to B2B marketers surveyed recently. In fact, many tactics declined by 50% or more in reported effectiveness per Marketing Sherpa’s 2012 B2B Benchmark Report.

Further, this study highlights the fact that one of the key barriers is the lack of internal resources in staffing, budgeting or time. The next largest challenge reported is the business’ lack of ability to stop executing lead generation tactics in order to think and plan strategically.

These findings fuel my argument that shifting resources from customer acquisition to customer development will reap the greatest reward in today’s marketplace. Gartner Group reports that just a 1% increase in a B2B’s client retention rate could represent an average 8% increase in the business’ profits. And at the end of the day, isn’t that what we’re ultimately trying to achieve: greater profits?

Rethinking the Lead Generation Source

I will admit that marketing teams are – and will be – challenged to wrestle resources and budget from traditional sales department s and tactics in a continuingly sluggish economy. However, doing more of the same garners just that: more of the same, which (as the MarketingSherpa study highlights) is more dissatisfaction with lead conversion.

Last week my partner Jeff Wilson here at Sensei Marketing and I debated this issue as a keynote presentation at the MarketingProfs B2B Forum in Boston. I presented the case for a stronger focus on Customer Development strategies to fuel the innovation required to drive greater sales results for B2B organizations. During the debate I argued that the value of existing customers, through improved customer experience and management generated:

1. Increased Quantity of Leads
Moving existing customers from being just “satisfied” to becoming an advocate will drive greater new customer leads by populating the marketplace with positive peer-recommendations and case studies; something buyers are increasing seeking before even speaking to sales teams.

2. Greater Conversion of Leads
Monitoring and measuring the customer experience with both the products purchased and the service received across the entire customer lifecycle generates the insights needed to sharpen the strategies, tactics and messages needed to improve conversion rates with prospective customers.

3. Increased Profits
A better understanding of the relationship between the efforts to maintain a satisfied customer and the profit generated from those same customers, provides the required insight and analytics that will filter and pre-qualify prospects; thus allowing the sales team to focus those limited resources on those customers most likely to drive greater profit.

Clearly both acquisition and development strategies are required for a business to thrive. However, today’s marketplace requires a new approach to acquisition that B2B CMOs are struggling to grasp. Do you argree? Where do you stand on the issue? Join the debate in the comments section below.

Sam Fiorella – Sensei
Feed Your Community, Not Your Ego

How to Manage Advocates and Drive Qualified Leads

sam_fiorella@hotmail.com(1 Sam Fiorella) — Tue, 02 Oct 2012 00:00:00 GMT

Advocacy, the third stage in the Customer Development sphere of the Sensei Customer Lifecycle model, is the culmination of the business’ effort to engage and support the customer. A customer who has reached this stage in the lifecycle has experienced the seamless conversion of your relationship from vendor-prospect to vendor-customer and now embraces you as a business “partner” more than a vendor.

See posts on the first two stages of the Customer Development cycle:
A Purchase Order Does Not Guarantee Customer Loyalty
Advocacy, Not Sales, is the End Goal of B2B Loyalty

At this point, your team and processes have become integrated with those of your customer. You’ve established real-time pathways for communication and you’re providing relevant marketing, sales and business development support. Your customers are satisfied and you’ve earned their loyalty; you’ve created an advocate. Your job is done; sit back and watch the leads come flying in.

Not so fast. Marketers have grossly over-estimated advocacy. Referrals - even among those customers from whom you’ve earned loyalty - aren’t assured. Further, they’re not guaranteed to be quality leads nor qualified leads. This is not the time to become lax in your engagement efforts.

Advocates and the referral process still require proactive management to successfully feed the “Awareness” stage in the Customer Acquisition sphere of the lifecycle. Below are some recommendations:

1. Set Advocate Expectations

If performance expectations were not conveyed to a newly-hired salesperson within your firm, what do you believe their success would be? The same applies to customer advocates. While the best referrals often come from genuine customer commentary, it’s human nature to complain about the products and services we dislike more than complimenting those that we appreciate. For this reason, a business should not shy away from asking for referrals from potential advocates. Since these customers now consider you a business partner rather than a vendor, such requests are usually accepted and acted upon gladly.

Note: requests for referrals are less effective and generate fewer qualified leads when made to customers who have not progressed to this stage of the customer lifecycle.

2. Categorize Advocates

Generic requests for referrals may encourage lead quantity but neither quality nor high conversion. The goal of advocacy is to increase qualified, measurable leads into the Customer Acquisition sales funnel. To do so effectively, your business must first qualify the referrers based on the influence they have within their community, the quality of relationship you have with their key players, the size of their industry, etc., as applicable to your business and industry.

Values are placed on each “advocate category” based on share of wallet earned, profit generated, ease of doing business, speed the customer progressed along the lifecycle, etc. Leads are tracked back to the customer advocates and their categories, providing context, prioritization and instruction for the sales team to better manage the lead funnel.

3. Enable Advocates

Requests for leads, regardless of how willing the customer advocate is, do not always generate action. Translating the willingness to refer into taking action requires you to empower the advocate with the right content and means to act upon that desire. Online tools such as referral forms, co-branded blog posts, etc. or offline events where advocates are encouraged to invite colleagues to a networking event can enable customers to act on your behalf.

Without context and timing however, such tools are less effective. As with the Loyalty Phase of the Customer Lifecycle, relevance is critical to success. Blindly sending requests for referrals to advocates dilutes the referral pool and challenges their good will. Generate a plan that strategically asks for referrals from specific customers when relevant transactions occur such as customer feedback, successful resolution of a customer complaint, financial milestones, etc.

4. Acknowledge Advocates

As with other good deeds, referrals are cause for celebration and a genuine expression of appreciation. Acknowledging the value of a customer’s referral provides the positive reinforcement required to maintain the balance between the two partners in this venture: vendor and customer.

Further, it’s imperative to highlight converted leads and the impact that the new customer provides the referring customer, not your business. The value to your business is understood; you’ve increased your revenue. The value to the referrer is not so clear so it’s important to highlight the connection between their action, the converted lead and the benefit to their business. What has this new client, the lessons learned or the additional revenue added to your business that will directly impact the referring business? Can some new partnership or benefit be created by having both clients reselling your product?

Notice that we didn’t list “reward advocates” here. Rewarding advocates with financial incentives and other perks is often appreciated but typically carries only short-term value. Improving the advocate’s business and/or the relationship between the business partners is strategically a better long-term plan.

The lesson to be learned is that advocacy is not to be taken for granted. Advocacy – and advocates – must be planned, managed and tracked as carefully as any other stage in the Customer Lifecycle. Advocacy is the launching point for new customers, not the end-point of the service team’s customer management efforts.

Join the conversation. Is this a realistic model for B2B organizations? Or are they simply too focused on short-term goals for such long-term strategic planning?

Sam Fiorella – Sensei
Feed Your Community, Not Your Ego

Advocacy, Not Sales is the End Goal of B2B Loyalty

sam_fiorella@hotmail.com(1 Sam Fiorella) — Sun, 30 Sep 2012 00:00:00 GMT

In the B2C world, “Customer Loyalty” has become synonymous with points or rewards membership programs which are used to aid in the acquisition of new customers rather than building value in existing customers. Such loyalty programs are rarer in the B2B landscape yet the tactical importance of loyalty is equally misunderstood and underutilized.

91% of B2B executives questioned in a Sensei Survey listed “increasing sales” as the purpose for generating customer loyalty. If a purchase was the end or final point of the customer lifecycle, then these executives might be correct; however, increased sales are a by-product of loyalty, not the end result. The goal of increasing loyalty is to establish the foundation of customer advocacy.

Creating true advocates, those with the personal dedication and passion required to recommend your business or with the power to truly influence their peers towards a purchase decision, requires unquestioned loyalty. Without it, referrals are infrequently given and rarely without direct solicitation from you. Creating these advocates should be the business’ guiding principle when developing customer loyalty programs.

Relevance is Key to Loyalty

This degree of loyalty is not earned by volume price breaks but through relevance. How relevant is your relationship to the customer on any given day? How relevant are your products and offers to the customer when they’re received? How relevant is the response to customer service requests?
Most B2B businesses group customers by industry, size, purchase volume, share of wallet, etc. and formulate general loyalty strategies to coerce increased purchase orders. Using such general categorizations as the basis for loyalty programs is a short-term plan that limits the value of the customer from reaching its potential.

Sensei recommends the following strategies to generate advocate-worthy loyalty.

1. Align with Your Customer’s Value Proposition

Understand the value proposition that your customer proposes to the end-user and adjust your products, packaging, and options to help them deliver upon that promise. Remember that your existing customers are not only your customers; through their advocacy they are a conduit to many potential new customers. Adjusting your products and services to better align with the channel’s value proposition ensures the unquestioned loyalty required to drive advocates.

2. Monitor and Be Flexible Enough to Adapt In Real-Time

Monitor the changes in the economy, competitive factors or other issues that impact your customer’s businesses. How has their business’ focus had to change? What are their current attitudes towards the future? Have their short- or long-term strategies changed? Market conditions are evolving at increasingly frequent intervals; what was once a motivator is now an obstacle to doing business. Your business’ ability to proactively adapt to such changes will demonstrate leadership and solidify fervent loyalty.

3. Personalize, Personalize, Personalize

Relevance is not expressed in offers and promotions that anyone in the business’ category or geography can also access. Personalization requires rewards, education, ancillary products or support that is specific to the business, not their category.

Further, don’t confuse loyalty with reward programs in B2B industries. To demonstrate relevance, consider incentives that include premium packaging or personalized marketing collateral that will increase their ability to generate more revenue. Or consider providing the customer an outside consultant to create a customized social or marketing engagement strategy to better connect with their customers. Or for customers with time-sensitive or mission-critical end-user engagements, consider offering priority customer service handling.

Ironically, when you eliminate the goal of increased sales from your loyalty programs, you achieve the greatest sales increase. Shifting tactics from cash incentives or general point-for-purchase schemes to relevant and personalized services builds a longer-term loyalty that produces brand advocates. Among these customers you’ll earn a greater share of wallet and increase their life-time value to your business. However, of even greater value are the referrals generated by these customers, which have the power to drive more qualified leads than most customer acquisition strategies.

Join the conversation! What's your take on Loyalty in B2B? Should the end goal be advocacy as I suggest here or increased wallet share from existing customers?

Sam Fiorella – Sensei
Feed Your Community, Not Your Ego

A Purchase Order Does Not Guarantee Customer Loyalty

sam_fiorella@hotmail.com(1 Sam Fiorella) — Fri, 28 Sep 2012 00:00:00 GMT

There is a significant difference in the tone of a vendor-customer relationship to that of its former vendor-prospect status. The processes are different; the players are different and so too are the expectations. This first step in the customer development sphere of the customer lifecycle is critical for both parties as it creates the foundation of what might be a profitable relationship.

Notice I used the word “might”. Too often B2B businesses take the customer’s satisfaction and loyalty for granted post-purchase. A purchase order does not guarantee loyalty. Loyalty - the second stage of the customer development sphere - is earned, not granted.

Once you’ve converted a prospect, the relationship shifts from the “get to know you” honeymoon phase to the reality of working with a client. The complexities of changing project scope, shifting needs, new employee opinions, transfer of knowledge, invoicing, payment terms, shipping delays, etc. enter the equation. Generally, this is a more frustrating period for the customer than it is for your business; therefore, at this juncture mitigating risk is imperative to ensure the long-term value of the customer. How well you manage this sets the stage for how rapidly – and if at all – you’ll move the customer along the lifecycle towards loyalty and eventually to advocacy. Below are three critical steps your business must take to guarantee initial customer satisfaction.

1. Digitally Map and Connect the People

In most B2B transactions, once a purchase order is issued two entirely different teams execute the deliverables. On the vendor side, sales execs and technical sales support are replaced with inside sales personnel, customer support teams and accountants. On the customer side, the team who researched the market, the procurement team who wrote the RFP and the executives who made the purchase decision are often replaced by front line staff, marketing teams and/or warehouse personnel. It is these new players, often forced to work together with little warning or guidance, who will dictate the customer experience.

Fostering these relationships requires proper introductions complete with mapped communication paths, feedback mechanisms and tools for quick and easy contact. Sensei recommends B2B vendors create a digital map that displays names, avatars, job descriptions, responsibilities, and instant contact options for team members on both sides. The map should be organized to illustrate the lines of communication that match the physical transaction between the two groups. Critical to the success of this online tool is the facilitation of in-line chat, emailing, troubleshooting, video conferencing or group discussions.

2. Document How the Customer’s Expectations Will Be Met

Once the team is introduced and connected, visually re-iterate your understanding of the customer’s need with a detailed blueprint that demonstrates exactly how your business will meet those needs. Consider it a “mission statement” that guides daily interactions with this client. Don’t leave this to chance. Document it; have it signed; post it and reference it frequently. Within the roadmap provide a clear illustration of the delivery paths for how products and services will be provisioned, how returns are to be managed, the procedure for accessing support and the process for providing feedback.

Important: take the time to identify the possible obstacles of doing business together. What geographical or cultural issues may arise? What competitive forces are at play? Whatever is discovered, provide contingency plans and escalation paths to ensure that they take no one by surprise and that each “issue” becomes part of a regular routine and not a point of contention.

3. Set Goals and Measure

Lastly, be upfront about what you want to get out of the relationship and how that aligns with the customer’s goals. As an example: you want the customer’s loyalty and in exchange you will meet their need to have products delivered on time, 100% of the time or a 1% rebate will be issued for every day delayed.

Be sure to include long-term goals in this exercise. Where are the growth opportunities in the market for both of you to increase sales? Is there a new technology or shift in buying patterns predicted that may allow cost-cutting measures to be realized?

Next, identify how such goals will be measured. For example, you will measure your goals by tracking the next order to be placed in three months, which is expected to be 25% larger than the initial order. You will measure the customer’s goals by tracking the sell-through rate, expected to be 80% or more at full margin.

Committing to openly communicate mutual goals and how they will be measured, then posting them internally to all members will create an immediate sense of ownership among the players that will foster improved teamwork and communication.

Remember, establishing “satisfaction” within the scope of a customer development program is not based on your ability to deliver a product but the customer’s view of how that product or service met their expectations, how easy it is to do business with you and frankly, how much they enjoy working with your team. Obstacles to satisfaction can be mitigated when teams, processes and mutual goals are quickly identified, aligned and documented.

Do you agree that such strategies would eliminate obstacles from doing business, thus creating a better longer term relationship? Share your thoughts below.

Sam Fiorella – Sensei
Feed Your Community, Not Your Ego

Yahoo’s Cowardly Retreat

sam_fiorella@hotmail.com(1 Sam Fiorella) — Sun, 23 Sep 2012 00:00:00 GMT

I wish to congratulate Yahoo on selling its stake of Alibaba, a Chinese Internet company, for a reported $4.3 billion dollars. After all, this transaction fulfills many financial analysts’ predications and recommendations for Yahoo’s success when it appointed Ms. Marisa Mayer CEO back in July of this year.

“In the short term, just how much cash Yahoo gets from the sale of its Asian assets — including its share of Yahoo! Japan and Alibaba — is of greater importance than any long-term strategic vision”, says Laura Martin of Needham and Co.

At the time analysts strategized that such a sale was the logical next step in acquiring the needed cash reserves to allow Ms. Mayer to duplicate for Yahoo what she was credited for at Google. So all is looking up at Yahoo right? Well, let’s not get ahead of ourselves.

America’s Corporate Ethos: Profit (at all costs)

What the analysts forgot was that the culture at Yahoo is vastly different from Google. I’ve often argued here on Sensei Blogs that the ethos of modern corporate America is not customer value but shareholder value, a sentiment illustrated by Ken Sena, Corporate Analyst for Evercore Partners:

“Yahoo! needs to slash expenses, including partly by slashing its workforce, as it figures out how to boost its user base and whether or not to outsource ad sales.”

Notice that Mr. Sena called for an increased user base in the same sentence as “slashing expenses” and “outsourcing.” His statement, made in response to Ms. Mayer’s appointment in July 2012, is the perfect example of Corporate America’s short-term, profit-by-cutting-costs mentality. Further, he completely ignored “driving innovation” or “improving the customer experience,” the very reasons given for the selection of Ms. Mayer as CEO.

One can’t even argue that the needs of the customers fleeing Yahoo’s service were a secret and hard to uncover. As soon as Ms. Mayer’s appointment was announced armies of former fans took to the Internet pleading: “make Yahoo products cools again.” Some went so far as to create the www.DearMarissaMayer.com to express exactly what they wanted in order to return to Yahoo.

Yahoo Jumps the Shark

That same week, I predicted Ms. Mayer would not be successful as long as she reported to the board of directors and shareholders whose focus was driving personal profit rather than improving the company’s customer experience. While radical, I suggested that the Yahoo Board of Directors “shoot the horse” before considering a jockey replacement. As long as an improved customer experience was not the mandated top priority, no CEO would have the necessary power to turn Yahoo’s fortunes around regardless of his or her pedigree.

Fast forward to today and it seems my prediction was accurate. Yahoo did sell off its stake in Alibaba but announced that it would give $3.6 billion of that $4.3 billion to its shareholders instead of investing it in Ms. Mayer’s promised abilities. Analysts are patting themselves on the back. Shareholders, giggling like little school girls, are running for their banks. Customers, on the other hand, are left scratching their heads as they continue their exodus towards other Internet portals.

The reality is Boards of Directors task their CEOs with building shareholder value, not customer value. And building customer value only occurs when a business is accountable to customers and their needs, which is often the polar opposite (at least in the short term) to the immediate needs of the shareholders.

What Would You Do?

If you asked me: “As a Yahoo shareholder would you want the payout?” my answer would probably be yes. I’m no fool and I’m not averse to making money. But I’m not a shareholder.

Oh, and know what else I’m not? A Yahoo customer...at least not anymore.

Companies with the largest market share quickly tumble when they choose short-term shareholder value over building long-term customer value. In my opinion, Yahoo is making a cowardly retreat. Instead of fighting to stay in the game, they’re planning a strategic – and profitable – exit for their executives and shareholders. The irony is that a stronger investment in Ms. Mayer and in building customer value would result in even greater long term rewards for shareholders.

So to Ms. Mayer I say: Congratulations on your first quarter with Yahoo and, in advance, good luck finding a new job.

Sam Fiorella – Sensei
Feed your Community, Not Your Ego

What are your thoughts? Has Yahoo jumped the shark? Was Ms. Mayer’s appointment just a shell game? Should more of that capital been invested back into driving innovations and improved customer experiences?

*Image Credit: ABC Television, Take the Money and Run Logo

Stop Pandering to Loyalty Programs – A Rant

sam_fiorella@hotmail.com(1 Sam Fiorella) — Thu, 20 Sep 2012 00:00:00 GMT

Got points? Perks? Discounts? Of course you do. We all do.

Is your 11th coffee free? Do you get a 15% discount on a $7.99 shirt cleaning bill after you’ve invested $100 in the dry-cleaner’s business? Yes?

Yes, we all have. And we’re all “loyal” to these businesses who have trained us to be so when a reward is teased in our face. We happily jump up on our hind legs, tongue wagging and we beg for more.

Until we don’t.

Loyalty programs should be the ones trained to play dead, not us. Businesses have the capacity to understand every personal need and desire. In fact, there is enough data being collected that can accurately predict when we’ll have such needs and desires. Be it for lack of budget or willingness to invest, if the business does not possess such widely available technology, they merely have to ask customers for that information. Or simply listen; customers are feverishly sharing this information across social networks. The point: there’s no excuse to not know.

Focus on Relevance, Not Perks

Why then do I receive the same offer and perk from Delta Airline’s reward program (my favorite airline by the way) that all other Delta Platinum frequent flyers receive? If they understood me, they’d know that while I appreciate free flights, I’d gladly give up those free flight perks for better accessibility to airport lounges, improved access to seat upgrades or free onboard WiFi.

The reality is that every airline awards free flights when you purchase enough flights to justify their expense. So why do I choose to fly Delta? Because of their loyalty card and free flights? Certainly not.
I choose Delta because they have the greatest number of available flights – and options – when I’m stuck someplace because of a storm, a technical delay or simply because I slept in. I’m more likely to get to where I need to be – despite myself and “acts of God” – if I fly with Delta.

What does this teach us? I’m an individual. I have individual needs and priorities. I value speed, ability to work freely while I travel and access to more flights – not free flights. I’d give up those free flight awards if I’d receive more of the perks that I do value in exchange.

Loyalty Is About the Consumer, Not the Business

Imagine: a loyalty program that is about me and not the business; a loyalty program that is more focused on my needs and my preferences. A business that uses a loyalty program to retain customers and increase spend by truly rewarding individuals and not training us like dogs.

That relevance and customization in a loyalty program would cost the same to deliver in the long term, increase true loyalty and better still, increase advocacy. Imagine the improved customer experience they’d facilitate.

So why then are businesses still treating loyalty programs like a lead-acquisition program instead of a true customer development strategy? Because we’re up on our hind legs, tongue wagging and happily begging for more.

Isn’t it time we stop begging?

Sam Fiorella – Sensei
Feed Your Community, Not Your Ego

Refocusing Loyalty Programs on the Customer

sam_fiorella@hotmail.com(1 Sam Fiorella) — Tue, 18 Sep 2012 00:00:00 GMT

Customer loyalty programs first launched with great marketing hype surrounding their intention to thank and reward the business’ most loyal customers. Truth be told, they were conceived as part of a customer acquisition strategy and designed to be a differentiator that pulled customers away from competitors or to encourage repeat purchases. These programs have expanded to almost every industry (if you don’t believe it, ask me about the loyalty program I built for chicken farmers); however, the basic purchase-reward mechanism of these programs hasn’t changed much.

When loyalty programs became part of the customer’s base expectations they lost their ability to significantly grow the business’ revenue.

What Loyalty Should Have Been Designed For

Had loyalty programs been created with the true intention of strengthening the customer relationship we would have seen more variety and innovation within the industry. Today, we’re at a fork in the road where a business can choose to:

a) continue down the path of purchase-reward mechanisms, which will continue to “satisfy” customers; or,
b) re-navigate their strategies toward a customer development path that moves customers from “satisfaction” to “advocacy.”

In both B2B and B2C industries, businesses must move beyond simply acquiring and satisfying customers. This is a short-term strategy fraught with reactionary service and increased churn rates.

A strong and healthy customer base that earns advocacy serves two purposes: First, it increases customer data and insights; second, it floods the marketplace with the recommendations, content and conversations that modern buyers increasingly turn to when making purchase decisions.

Balancing the Relationship

Traditional loyalty programs took more than they gave and created an imbalance in the business-customer relationship. “Today's consumers are intensely aware that they are being tracked, and just as aware that they aren't receiving commensurate value from the companies doing this,”, states Bryan Pearson, President and CEO of LoyaltyOne.

In his book The Loyalty Leap, Mr. Pearson claims that loyalty programs must become about customer intimacy rather than rewards. For customers to become advocates they must be engaged on a deeper level as equal partners in a relationship, not in the predatory style in which loyalty programs originated. Conversations, equal exchanges of information and value beyond “points” and price breaks will become the true differentiator of modern businesses deploying loyalty strategies.

Customers understand that their transactional history, preferences and demographics are being collected and analyzed at every pass, regardless of whether or not they’ve authorized businesses to do so. Loyalty programs can leverage this situation to engender trust by individualizing the customer experience.

Personalized Value

As Mr. Pearson outlines, relevance in your customer’s experiences with your business is a longer-term and more profitable strategy than price-breaks. “Relevance is what makes the customer engage you when they shop, and not just because you have a cheaper price,” he writes.

Customers are demanding more. They’re empowered by the resources they have quick, free and easy access to. They are emboldened by the wisdom of crowds they participate in through their myriad of interconnected devices and social channels. The balance is shifting.

Are you rewarding your customers or are you strengthening your relationship with them?

Join the debate! Are loyalty programs simply a cost of doing business? Do they have the potential to evolve and once again drive business value?

Sam Fiorella – Sensei
Feed Your Community, Not Your Ego

Are You Failing the B2B Prospect Handoff?

sam_fiorella@hotmail.com(1 Sam Fiorella) — Mon, 13 Aug 2012 00:00:00 GMT

I met with a sales executive at a national technology firm recently who reported that they achieved their sales quotas last year yet the business had zero growth. It was discovered that for every client they brought in, another client was cancelling their contract. Apparently, churn and managing the Customer Development process was a challenge for this business.

“Clearly, there is a disconnect between the confidence your customers had in choosing your business and the satisfaction (or lack thereof) they felt after that decision”, I quipped. I offered the following as possible reasons:

The prospect was promised something different than what they actually needed.
The customer’s needs or requirements changed post sale.
There is a problem with your product or customer support/service.

The answer I received from this executive, which mimics the response from most B2B businesses in this situation, was: “I don’t know”. The disconnection between pre-sales campaigns and post-sale delivery is a growing problem for a number of reasons starting with the obvious: most don’t having a plan to manage the customer relationship AFTER the sale. As I wrote in the opening article to this series, profitable customer relationships don’t stop at the sale, but build through the sale towards advocacy. The sale is not the end point of the relationship but another stage in the customer value chain.

Simply having a customer development strategy does not make a lifecycle marketing program successful however. Other obstacles to success include the increasing number of touch points between businesses and customers and the number of disruptive factors within the relationship (social media, evolving markets, etc.).

The Handoff

At the end of the day, the biggest obstacle that all these issues point to is the disconnection between Customer Acquisition strategies and personnel and Customer Development strategies and personnel – or the “handoff”. Successfully handing off a prospect into the Customer Development program (provided your business has such a strategy implemented) is the key to mitigating these risks.

A proper transition from prospect to customer must include a customer engagement data set, which is managed by a predefined process. It’s the responsibility of those involved in attracting and converting the prospects to collect and supply this information to those who are tasked with managing and growing the life-time value of the customer. No easy task given the lack of communication and coordination between sales, marketing and service teams.

Let’s look at a summary of the documentation required in that handoff first:

What channel did the prospect first respond to during the “Awareness” stage
What touch points did the prospect have with your business between “Awareness” and “Purchase” (listing all including duplicates and date/time of each)?
What was the nature of the conversation, subject matter or community that first drove the prospect into the funnel?
What were the final decision criteria or circumstances surrounding the decision that lead to the purchase?
What was the client’s intended goal when purchasing this product from you (EG. larger market share, decreased costs, improved end-customer satisfaction, etc.)?
How is the client going to be judging success in their decision to choose your product and service?
Who are the stakeholders involved in day to day engagement post sale and who will determine the success of that decision?

There are two main purposes for the collection and transmission of this information during the handoff:

To supply the customer development team (inside sales, customer support, delivery, etc.) with the required knowledge to successfully manage the customer’s expectations.
To supply the customer lifecycle model the required touch-point data to properly track, measure and score the engagement that lead to the conversion, which is later combined with the “customer value” data collected in this next phase.

I’ll elaborate more on that and the processes required for the handoff in my next article here on Sensei Blogs.

The first stage in the Customer Development program is to support the customer's transition into their consumer role and ensure they are satisfied with the service and value your business brings to them. With that in mind, I urge B2B businesses to understand that the customer is not satisfied if you simply deliver the product or service purchased. They’re only truly satisfied if the product or service you delivered meets their expectations. Thus, ensuring your service team has the required data to manage that expectation becomes priority number 1 in this handoff.

Previous Post: Bending the B2B Customer Lifecycle
Next Post: The Customer Handoff Process (coming soon)

What have your experiences been? How critical is this handoff in ensuring the growth of customers and increasing their value to your business? Join the discussion below.

Sam Fiorella
Feed Your Community, Not Your Ego

Bending the Linear #B2B Customer Lifecycle

sam_fiorella@hotmail.com(1 Sam Fiorella) — Wed, 08 Aug 2012 00:00:00 GMT

The customer lifecycle references the stages customers pass through when considering, purchasing and using products or services offered by their vendors as well as the associated marketing, sales and service tactics the business engages in to push those customers towards a purchase decision. Among B2B marketers, this is not a new concept; however, the manner in which their customers engage with them – and with each other – has necessitated a shift in the typical linear lifecycle marketing model.

The illustration below presents a typical B2B lifecycle marketing process.

Many marketers, including the sales and marketing software that support them, focus on tracking, scoring and possibly even measuring the pre-sale lifecycle. This is no mystery since, according to David Skok, VC and Hubspot board member, customer aquisition costs can run as high as $75,000 (for groups with field sales teams).

As our customers became more connected through technology, marketing practices and software evolved to include customer development practices into the program. Yet, it’s usually an independent practice appended to the program, not a core component of it. Certainly, there's litte interdependence between the two forces driving revenue.

There are three fundamental problems with this model:

The increase in customer acquisition attainable by strong customer development strategies is lost.
Placing revenue at the center of the model shifts focus from the customer experience, which in fact decreases the business' total revenue generating possiblities.
Lifetime customer value and marketing effectiveness cannot be accurately measured or scored without customer development strategy set as an equal partner in the methodology.

Bend It Like ~~Beckham~~ ... a CX Strategist

Effective B2B customer lifecycle marketing is circular, not linear. A more effective approach is based on the YinYang philosophy where customer development provides an equal balance to customer acquisition. Modern sales and marketing practices integrate post-sale customer engagement, thus combining revenue development with sales funnel development for maximum business growth.

Further, as illustrated in the Sensei model above, in contrast to traditional lifecycle methodologies the purchase is not the end point but another equal stage in the process. The goal of a business is definitely revenue and profit yet making it the end goal in your sales and marketing strategy erects a yield sign along your business’ path to growth.

Managing (and measuring) customer interactions from awareness – THROUGH the purchase – towards advocacy creates a self-sustaining and highly potent ecosystem that will drive greater revenue with larger margin.

This post is an introduction to a new series in which I will focus on the importance of customer development strategies and tactics within this model. Subscribe via the RSS feed to get direct notice of each new post.

In the meantime, I open the debate to you. Is customer development the most important aspect of building a B2B business sales funnel? Is the sale the end result or just a step in the business process?

Sam Fiorella - Sensei
Feed Your Community, Not Your Ego