The ultimate metric for most companies is the acquisition of customers. If that mega goal is achieved and sustained at an acceptable level, the business is poised to grow. As customer acquisition expands, the challenge shifts to retention, another daunting metric.
Companies that sustain new customer acquisition growth and achieve retention goals over multiple years are in a distinct minority. Most companies stall or stagnate over time, often due to a misalignment between business process and customer expectations.
Customer expectations seem to ceaselessly grow and shift, putting real pressure on our operating models and service delivery systems. The availability of data in the digital age equips the customer and potential customer with decision-making power, unlike anything we have seen in past business cycles. This frenetic pace of change has made the re-evaluation of the customer value proposition an imperative for senior teams and something that needs to occur on a regular basis.
The re-engineering of the value proposition is an important element of a multi-step process to build the customer base, improve retention, and increase cash flow.
Refresh the Value Prop
Refreshing the value proposition is a linear exercise. Gathering customer insights through interviews, focus groups, and frontline observation is straightforward. Competitive analysis should also feed into your customer value proposition work and can easily be accomplished in this age of transparency and big data.
Granted, the work must be done well and sanctioned by the CEO, but the fact is, creating a valid customer value proposition is a project-oriented body of work that isn’t complex. Most companies have little trouble nailing it.
Don’t Stop There
Unfortunately, many companies go to the trouble to re-cast the customer value proposition and don’t leverage what has been learned within the fabric of the enterprise. Leaders may share it internally and hope people understand it and adapt their work processes to align with the value proposition. As you would expect, little changes with this approach, including the customer experience.
If a refreshed value proposition does not lead immediately to a re-examination of the customer journey and your operating models, you have wasted your time.
Sorry to be blunt, but that’s a fact.
I advise my clients to adopt the Three Stage Approach to Customer Acquisition and Retention.
Stage One – Nail the Customer Value Proposition
As mentioned, this is straightforward and supported by proven methods and tools. However, be sure to make a distinction between the current customer and the target customer. If your growth strategy includes capturing new demographics, care must be taken to evolve the value proposition to embrace the new prospective audience. What your current customer tells you could potentially derail the growth opportunity of capturing new markets. Current customer insights can be leveraged within a retention strategy.
Prospective customer insights (new demographics) can be leveraged within re-designed acquisition strategies.
One client experienced an eye-opening revelation by consciously segmenting the audiences – current customers and prospective customers. This led to developing a segmented sales strategy and tiered service delivery model, allowing the business to capture a whole new segment that fueled double-digit growth and extended the lifetime value of their services for both customer segments.
Stage Two – Map the Customer Journey
Much has been written about customer satisfaction being defined by the cumulative effect of multiple customer touchpoints. This is a change from how we used to think about customer satisfaction. We would measure satisfaction at each touchpoint independently and address the weakness in process accordingly. In most cases, we operated under the assumption that all touchpoints were created equal.
We are learning now that the entire journey is the more accurate predictor of customer satisfaction. In other words, if a customer transaction involved four touchpoints, it is how the customer feels about your service or product at the end of the journey that matters most. A sub-par experience with a call center agent at touchpoint #2 can be negated by a superb post-transaction call by a customer care specialist.
McKinsey recently did a study that revealed customer satisfaction with health insurance was 73% more likely when the company focused on the journey and not simply the touchpoints. In other words, leaders who have a burning desire to be sector leaders are learning how to manage and influence the cumulative experience of the customer. This way of thinking also informs us as to where to invest in the journey, investing big in the touchpoints that matter most.
In one client situation, we brought together the owners of 5 different touchpoints to discuss and brainstorm how to create an amazing cumulative experience for the customer. This exercise included lead generation, sales, scheduling, office reception, and service delivery. It was amazing to see what these owners of specific touchpoints learned from each other!
When everyone had their eyes opened to the entire customer journey, they couldn’t wait to roll up their sleeves and work together to make the cumulative experience best in class. This exercise even led to re-allocation of resources – beefing up the most critical touchpoints to exceed customer expectations.
Stage Three – Embed the Customer Journey in the Operating and Sales Models
Now we come to the toughest, yet most rewarding step toward monetizing the customer value proposition – embedding the customer journey in the culture. Companies that make the customer journey a cultural imperative are rewarded with exceptional customer conversion rates and best in class retention.
“Cultural imperative” is defined as:
“The re-examination and re-design of every function in the business to align with the customer value proposition and the cumulative customer journey objective.”
Embedding the customer journey in every part of the business can be a daunting task and requires bold leadership. It often means casting aside trusted processes and practices for new, customer-centric methods. There is sure to be resistance to this degree of change, as you will be asking those who may never see an actual customer to change how they do things.
This degree of internal change requires a methodical approach, helping all employees move through the stages of awareness, understanding, and finally to commitment. It is only when commitment is achieved that you can expect the necessary changes to workflows and processes to take hold.
Awareness and understanding happen through the internal communication of the Stage Two outcomes. This is essentially an internal marketing strategy. In fact, it is wise to leverage marketing expertise and principles to construct the story around the cumulative customer journey that was mapped during Stage Two. Mindsets need to shift before you can expect processes to change. In one case, the CEO kicked off a series of small team meetings and introduced the refreshed value proposition and customer journey map. This created the necessary awareness, the first step toward commitment.
Once awareness has been established, employees are mentally prepared to gain a deeper understanding of the value proposition and customer journey…and to begin modifying their own workflows to align with the customer journey. In other words, they are ready to be influenced by those who have been actively involved in the Stage One and Stage Two work. These influencers are the early adopters of the customer experience map and have an obligation to help others commit to the necessary operational changes.
Staying with the earlier example of the CEO leading a series of small team meetings, Stage Three involves small team work sessions facilitated by the aforementioned influencers and/or outside experts. The work sessions are designed to be the initial step in process re-design.
Work sessions are undertaken with every business function:
- Lead Generation
- Customer Service
- Human Resources
- Recruiting/Employment Brand
For example, a work session might involve the lead generation team to re-examine target audience, prospect profiles, and prospect messaging. The marketing work session might focus on collateral, local marketing investments, and sales support mechanisms. The outside sales team would likely need to re-examine lead management, closing techniques, and service delivery hand-off protocol.
Also, don’t ignore the functions on the periphery of the customer experience. For example, customers might be curious about your culture and what it’s like to work there. Websites like Glassdoor make it relatively easy for anyone to learn about your culture. That’s why the employment brand is an element that should be addressed as part of the overarching customer acquisition and retention effort.
Transform to Agile
Interlocking the value proposition, customer journey, and operational model will pay dividends. Once the organization develops the capabilities needed to address customer acquisition in this holistic, aligned fashion, it becomes an organic and repeatable exercise.
We use words like “nimble” and “agile” to describe such businesses. Why not join their ranks?
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