Customer IMPACT Agenda: Doing Business from the Customer's Perspective

By Phil Winters

For a customer strategy to be effective in the acquisition of new customers and the strengthening of existing relationships, it needs to reach them throughout their entire purchase decision cycle. To achieve this, it's important to understand the entire customer experience long before they may be in touch with your organization. Effectively: seeing

• Language: English
• Publisher: Philip Winters
• Release date: Feb 19, 2015
• ISBN: 9780990466710

Book preview

Foreword: My journey to understanding the customer

I’ve always loved the (true) legend of Johnny Appleseed and found inspiration in his life and achievements. For those of you who don’t know him, here’s a very short synopsis – with my obvious slant.


Johnny Appleseed (John Chapman, 1774-1845) was an eccentric nurseryman who planted apple trees – always from seed – across large tracts of the United States as the western territory was being settled by pioneers [0.01]. Even in his own day, he was renowned for his deep conviction in both the validity of his cause and the value of his product. Robert Price, perhaps the definitive authority on John Chapman, writes in his 1954 biography of Chapman, Johnny Appleseed, Man and Myth:

This man had imbibed so remarkable a passion for the rearing and cultivation of apple trees from the seed, and pursued it with so much zeal and perseverance, as to cause him to be regarded by the few settlers, just then beginning to make their appearance in the country, with a degree of almost superstitious admiration [0.02].

Completely at ease in the wilderness, Johnny Appleseed always established new nurseries in unpopulated regions a couple of years ahead of the next wave of settlement, such that his saplings would be ready for sale when the homesteaders arrived. Although others also planted trees, Johnny Appleseed became an American legend mainly through his industriousness and his marketing strategy. Price continues:

The one unique thing about John’s seedling tree business, as it eventually emerged, was his scheme for moving it with the frontier. Few other nurserymen could adjust their lives and business to such a plan [0.03].

News flash: customer behavior has changed drastically since the early nineteenth century!

Johnny Appleseed offered a highly desirable product at a fair price and could therefore rely on a steady stream of customers with little competition for their patronage. Today, this axiom no longer holds true. Partly because of the wide variety of suppliers and partly due to the large number of information sources and easy communication powered by social media, individuals have seized control of how they are ‘sold to’, with the effect that formerly effective marketing techniques now fall quite flat: by the time the message reaches the potential customer, a decision has likely already been made, and perhaps for a competitor’s product. In order to position themselves competitively, organizations need to rethink the ‘customer experience’ – in particular when it actually starts and stops. The single most important step in this rethinking is to take the customer’s perspective, that is, to look at one’s business from the outside in as one’s customers do.

Difficult but rewarding

Taking your customer’s perspective is a rigorous exercise that should cover all the phases of an individual’s decision-making process and (at least) acknowledge all the touchpoints – or points of contact, whether directly or indirectly connected to you – that can be used to gather information in pursuit of that decision. But those who spend the effort may discover surprising new customer segments and business processes.

Especially in the age of digital communication, it’s crucial to have a foundation for viewing your business from the customer’s perspective, in order to develop effective and modern communication strategies. This book presents exactly that: an approach for seeing your brand, organization and products through your customers’ eyes, a guide for prioritizing internal resources and actions (IMPACT), and a framework for structuring interactions with your customers: the Customer IMPACT Agenda. We illustrate these ideas and hypotheses with current business examples in use at leading-edge organizations and present materials intended to help you navigate through the whole process yourself, in your own company.

Having sown these seeds in your mind, I now invite you to think differently about your business as we explore the importance of doing business from the customer’s perspective.

Phil Winters

Part I: Taking the Customer Perspective

In this section, we describe the foundational ideas on which the Customer IMPACT Agenda is built: first, what the customer experience really entails, when it starts, when it stops. Here, we move the bookends!

Second, but perhaps most important, is the customer’s perspective, which means looking at your organization from the same viewpoint as a customer does. Never mind all that handy jargon that allows you to skim over topics without questioning what they imply… We talk about the way people go about taking a decision to purchase or do something we want to be involved in (isn’t that what makes a customer a customer, after all?), as well as the many ways they find out about that something, or (try to) communicate with the providers of that something.

And third, fully embracing the concept that you should start with your feet on the ground, we offer a way to help you decide where your limited resources – both human and otherwise – should be spent for maximum IMPACT.

Are you ready to take a fresh look and possibly toss some long-held marketing beliefs out the window? If so, then read on.

Chapter 1: The Customer and ‘Customer Experience’

Before we can change our understanding of our customers, first we have to let go of some old ideas about markets and marketing; we then have to start thinking like our customers do. In traditional marketing terminology, the customer experience only begins once a consumer purchases and starts using a product or service, which leaves quite a lot of the customer’s actual experience with an organization off the table. However, meaningful consideration of the interactions that happen before the customer ever directly engages with you can have a far-reaching effect.

What taking the customer perspective can do for the organization

The common denominator among all the organizations I’ve worked with – indeed, probably of all organizations out there – is that they’re already customer focused. Without exception! They must be, in order to be able to sell a product or service, or focus an offering toward a group of individuals. This applies not only for business-to-consumer (BtoC) and business-to-business (BtoB) organizations, but to governments, charities and non-profit organizations, as well as religious institutions. Put simply: if they weren’t actually customer focused, they probably wouldn’t be in business (anymore).

However, another thing a majority of organizations also have in common is the misconception that just being customer focused means that they understand their customers.

Some of the errors commonly made include defining a ‘customer perspective’ as understanding the market. For any given organization, there’s no such thing as ‘the market’. There are groups of customers that have common needs, behaviors and values. Sometimes these will be very large groups that, once their potential is added together, reflect a substantial aggregate potential for an organization.

However, there are too many differences in most target customer audiences to simply boil everything down to a standardized ‘market’ definition; assuming so can be dangerous when putting a customer strategy in place. Instead, what’s required is fact-based insight that provides a foundation for defining target groups.

Another trap is the thought that customer perspective is somehow defined by the organization’s view of their customers. While this organizational perspective is indeed incredibly important because it allows us to structure manpower, processes, information-gathering and sharing, and IT systems around addressing and serving customers and prospects, it’s not a ‘customer perspective’.

Many customer relationship management (CRM) initiatives fall into this category; the more successful ones are probably those that have dealt with some aspect of focusing the view of the organization toward the customer.

Lastly, in my experience, there’s another thing common among all organizations: the need for a structured way of defining the customer, from the customer’s own perspective. That is what this book is about – providing a practical approach for organizations of any type to define both their customers and their interactions with those customers, starting with understanding the customer’s own perspective.

‘customer’ [1.02] A party that receives or consumes products (goods or services) and has the ability to choose between different products and suppliers

First, who or what is a customer?

Let’s first agree on what a customer is. The traditional definition of a customer is a person who buys or accepts products or services (see sidebar), but a more pertinent – even modern – concept comes from the "more generalized meaning a person with whom one has dealings [which] emerged [in the] 1540s [1.01]." Consumers, sports fans, doctors, merchandisers, community constituents and parishioners are therefore all examples of customers.

The key here is to consider anyone who’s the focus of an offer of a product, service or exchange as a customer. This person will have character traits, desires, wishes and needs, and will undertake activities that make him or her unique. This understanding of customer already goes far beyond the one underlying traditional direct marketing: customer = end consumer who buys.

But the generally accepted meaning of ‘customer’ does not stop with the individual. The customer has also been defined as a group of persons who have something in common, such as a household, a business, an agency, a governmental department or a group of businesses: in essence, a group that transacts as an entity for new products or services.

In this book, we’ll respond to the position held by many marketers that BtoB relationships are somehow far removed or vastly different from BtoC relationships. This couldn’t be further from the truth! At the end of the day, even in the BtoB world we’re still dealing with one or more individuals who make the buying decisions on behalf of their companies or groups.

‘customer experience’ [1.03] The entirety of the interactions a customer has with a company and its products. Understanding the customer experience is an integral part of customer relationship management. The overall experience reflects how the customer feels about the company and its offerings. Surveys, feedback forms and other data collection techniques help a company to determine the customer experience.

Expanding the definition of customer experience

The classic definition of customer experience is the sum of all experiences a customer has with a supplier of goods or services, over the duration of the relationship with that supplier. It can also be used to mean a single experience during one transaction; the distinction is usually clear in context.

Traditionally, the focus has been on the sequence of events that begins, usually post-purchase, once the customer actually starts using the product or service – and therefore starts interacting with the organization in a way that can be measured. Over time, many organizations have extended this to include the actual purchasing process.

In 2009, an initial attempt to define and measure customer experience within organizations decisively concluded that "customer experience directly correlates to business results; many companies lack the understanding, technology, and willingness to adopt effective customer experience programs; and the businesses that do ‘get it’ are gaining an edge against their peers, even in a difficult economy. If an organization views customer experience as a differentiator and ingrains its importance into its culture, measurable results will follow [1.04]."

Since then, the studies supporting the value of providing a good experience have kept on coming. In a groundbreaking work, What Happens After a Good or Bad Experience? (December 2012), the Temkin Group reported on 5000 U.S. consumers’ experience with 179 companies across 19 industries. "More than 60% who had a bad experience with a fast-food chain, credit card user, rental car agency, or hotel cut back on their spending, and many stopped completely [1.05]." Although companies that had tried to repair a bad experience were rewarded with measured increases in future sales from those individuals, there were no conclusions drawn about how best to ensure that result [1.06].

When does the customer experience begin?

To date, a typical structured program around customer experience looks like Figure 1: Generic customer experience chain. An organization scrutinizes customer interactions by coordinating and optimizing its manpower, systems, communication channels, processes and technology. Information-gathering and key performance indicator (KPI) measures usually focus on getting the balance right between measures of customer satisfaction, increasing margins, turnover with the company, and optimizing cost-to-serve. This is obviously extremely important, and all organizations carry out either formal or informal customer experience programs of this type.

A wider definition of customer experience – one encompassing a structured identification of needs and the customer’s process of researching options and narrowing down the choices – has traditionally not been considered. Initially, paying attention to those other very tangible aspects (purchase, delivery, usage) proved so important that it provided huge differentiators right away, even in mature and highly saturated markets – so why look any further? For example, Toyota tracks post-purchase experience and ensures that sales representatives can keep abreast of their customers’ status because, at some point, everyone will need a new/another car [1.07]. But that’s no longer cutting-edge marketing.

Figure 1: Generic customer experience chain

Even in areas where a focus on the customer has not been at the forefront of differentiating strategies, like in the utilities business, clear leaders have emerged. For example, LichtBlick, a European provider of 100% green energy, maintains market leadership not simply by virtue of its commitment to being green but through an extreme focus on knowing and understanding each of its points of customer contact, defining key metrics against which to measure them, setting targets, and then checking – weekly – to see if they are meeting those goals. It should come as no surprise that, for four years running (2009-2012), LichtBlick accepted the award for Germany’s most customer-oriented utility (Deutschlands kundenorientiertester Energieversorger) [1.08]. For more detail on how LichtBlick focuses on its customers, see Chapter 11: Measuring Customer IMPACT: Delight vs. Satisfaction on page 86.

Viewing customers as individuals, not as a market

The concept of one-to-one marketing was first defined in 1993 by Don Peppers and Martha Rogers, Ph.D., in their seminal work, The One-to-One Future [2.06]. Revolutionary in its day, the Peppers and Rogers approach shook the business world by looking at the differences between customers, grouping them by characteristics, and treating these groups appropriately differently.Now, this is well established business practice and used in some form or another by virtually all leading organizations.

Customer lifecycle

Of the vast number of marketing practices focusing on the customer, the most grossly misnamed of them is the customer lifecycle – when used to describe a product. While a widely accepted strategy technique, it doesn’t accurately reflect the progress and changes in the customer relationship. A customer neither begins nor ends in a customer lifecycle: what does happen is an individual’s decision for our products and/or services, followed by a phase of usage, and perhaps the cessation thereof.

The customer isn’t born with our product, but starts using it; likewise, he doesn’t die at the end; he may, in fact, become someone else’s customer. It’s the use of our products, and possibly – if it was a bad experience – our brand that dies. The customer is still alive and well, and possibly better off for having moved on to a competitor’s product or services.

So, where does marketing fit in?

Well, for many organizations, it simply doesn’t. Marketing has always focused on early identification of market needs, particularly through use of market research and focus groups. They have then worked on programs to identify and communicate with initially unknown individuals that can be transformed, if not directly into paying customers then at least into identified ‘leads’ that can be passed to a sales process for closing a sale. Successful organizations have translated this understanding into campaigns that help promote their products, services and brands using above-the-line techniques, such as television and print advertising, to reach their general markets and below-the-line direct marketing techniques for their target markets.

For most organizations, the ‘needs identification and awareness’ of target markets (often handled by marketing) and the ‘customer experience’ of the individual processes (in many cases the remit of customer service) have been very separate worlds.

And regardless of how well your departments work together: today, it’s probably not enough to ensure a competitive edge. Your key competitors are doing the same thing – using their orientation to the customer to gain a competitive edge. In addition, there are more and more new cross-over competitors emerging every day, within every industry: retailers offering telecom services, auto manufacturers offering financial services and credit cards providing multi-partner loyalty cards, and each with their own focus on the customer experience. Why? Because customers, powered in part by social media, have far more choice and our current approaches to customer experience don’t result in any structure for understanding, capturing and proactively responding to the decision-making process of the identified individual.

That’s exactly what this book is about.

Chapter 2: The Customer(’s) Perspective

We dip briefly into human psychology to help understand the emotional and social motivators, as well as the physical mechanisms, at work when individuals make decisions of any kind. All this has direct implications for both the definition of customer experience and the way we should view the process by which customers make purchase choices and take decisions. This, in turn, expands opportunities for influencing prospects into territory that marketing has heretofore been unable to address. Examining the complete customer experience – including all phases of the purchase decision cycle and considering major preferred touchpoints – from the customer’s own perspective can lead to the discovery of surprising new customer segments and business approaches.

Understanding the decision-making process well enough to define it

To understand the customer, we need to understand how decisions are made: not just purchase decisions but all types. The human decision-making process is a special form of the normal cognitive processes everyone goes through when faced with a choice. Two very notable psychologists – Daniel Kahneman and Amos Tversky [2.01], winners of the 2002 Nobel Prize in Economic Sciences [2.02] – defined this clearly in 2000 in their seminal research work, Choices, Values and Frames [2.03].

In his most recent book, Thinking Fast and Slow, Kahneman describes the cognitive process as having two paths