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“Next Practices” Market and Customer Centricity- A 100 Day
Plan to Mobilize Your TeamScott Hamilton
President & CEO
Executive Next Practices Institute
Managing Director, NextWORKS
Feb 6, 2013
Executive Next Practices InstituteStrategy & Marketing Think Tank
.
Source Material
3
Our NewBook
Agenda for today…
Centricity issues in your organizationMarket culture- the new alignment
100 Day Plan of Action and Measurement
2008-2014 Global Brand Turbulence
.
.
.
Who is the Red Digital in Your Industry?
..
The OPPORTUNITY
9CUSTOMER CENTRICITY MRI™ - Audit Best Practices Next Steps Q&A
2/3 of corporate strategy is never executed
Of 2,000 large firms studied, 90% had detailed strategic plans, but 7 out of 8 failed to achieve profitable growth
- AICD (Bain Consulting)
The Execution Issue
For an marketers, success or failure is
made in the first 100 days.
(and it is not about you)
Next Practices
Ideas, processes, concepts and solutions that move us beyond the
“status quo”.
Not “how are others doing it best” but rather, “where do we go from
here that represents a true fundamental shift in value”…
5 Key Steps to Marketing Next Practices
1. Anchor Marketing Initiatives to Business Initiatives
2. Build market centricity
3. ID Opportunities for Value Creation
4. Drive Individual-Team Alignment
5. Develop, Test, Launch, Fast Accept/Reject
Source Material
13
Our NewBook
How has consumer behavior changed?
B2C
• They spend less, delay, trade down
• Aspirations have not changed
• Look for lower cost alternatives
• Increased attraction to well known brands
B2B
• Budgets are reduced or eliminated
• Stronger business case necessary for existing and new investments
Traditional Marketing is not working
• 18%: Proportion of TV advertising campaigns generating positive ROI
• 54 cents: Average return in sales for every $1 spent on advertising
• 256%: The increase in TV advertising costs (CPM) in the past decade
• 84%: Proportion of B2B marketing campaigns resulting in falling sales
• 100%: The increase needed in advertising spend to add 1-2% in sales
• 14%: Proportion of people who trust advertising information
• 90%: Proportion of people who can skip TV ads who do skip TV ads
• 80%: Market share of video recorders with ad skipping technology in 2008
• 95%: The failure rate for new product introductions
• 117: The number of prime time TV spots in 2002 needed to reach 80% of adult population –up from just 3 in 1965
• 3000: Number of advertising messages people are exposed to per day
• 56%: Proportion of people who avoid buying products from companies who they think advertise too much
• 65%: Proportion of people who believe that they are constantly bombarded with too much advertising
So what does this mean for marketers?
• As marketers we are responsible for bringing the customer into the organization
• We are the voice of the customer inside the organization and need to champion a market-driven culture
• What does that mean for your organization?
• What is your internal communication strategy?
• How are you going to influence the rest of the organization?
Where is the greatest opportunity for new market value creation within your company and/or industry?
Market Value CreationEliminate
Which factors can you eliminate that your industry has long competed on?
Raise
Which factors should be raised well above the industry’s standard?
Reduce
Which factors should be reduced well below the industry’s standard?
Create
Which factors should be created that the industry has never offered?
ELIMINATEStar PerformersAnimal showsAisle concession salesMultiple show arenas
REDUCE (Family audience to targeted adult entertainment)Fun & HumorThrill and Danger
RaiseUnique Venue
CreateThemeRefined environmentMultiple productionsArtistic Music and Dance
Importance and Measurement of Customer Centricity
20
CUSTOMER CENTRICITY
MEASURING CUSTOMER CENTRICITY
What is it?- What is driving it?– Why is it important?- Who has it?
Research Reveals 7 Disciplines
MPANY EXAMPLES
1
2
30min
30min
Major Trends Driving the Need for Customer Centricity
1. Globalization – increased competition
2. Power shift to consumers
3. Expectations increasing - Apple
4. Social Media – facebook/twitter
5. Product Commoditization and Digitization
6. Rapid technological change and innovation
– Mobile app disruption
7. Demand for transparency – wiki leaks
8. Need for higher employee engagement
21CUSTOMER CENTRICITY MRI™ - Audit Best Practices Next Steps Q&A
Customer Centricity Defined – it is about culture
22MRI™ - Audit Best Practices Next Steps Q&A
The capacity of an organization and its culture to understand, predict and respond to customer, market and competitor dynamics, demands and disruptions.
Customer centricity must transcend individual departments and functions and be an integral part of the way all employees behave and perform.
“CUSTOMER CENTRICITY
These trends led us to explore Customer Centricity…
The OPPORTUNITY
23CUSTOMER CENTRICITY MRI™ - Audit Best Practices Next Steps Q&A
91% of companies claim to be customer focused.
Only 10% of customers agree
-Forrester Research 2012
“
Two parts to Successful Customer Centricity Programs
Team Culture/Behaviors
Alignment & Buy in
Customer Experience
Management, Tools + Processes
True
Customer Centricity
Customer Centric Behaviours
Customer Centric Behaviours Drive Business Growth and
Profit
The Creation The Outcome
The Results
The Corporate Culture
Sales Revenue GrowthProfit GrowthProfitability
New Product Success
Customer Experience(Evolving)
Customer Satisfaction +
Advocacy(Changing)
MRI™ - Audit Best Practices Next Steps Q&A25
CUSTOMER CENTRICITY
It takes 12 positive
experiences to
make up for an
unresolved
negative
experienceUnderstanding Customers, Ruby Newell-Legner
Why invest in Customer Experience?
The 6 laws of customer experience
1. Every interaction creates a PERSONAL reaction
2. We are SELF-CENTERED
3. Customer understanding creates ALIGNMENT
4. Only ENGAGED people create engaged CUSTOMERS
5. We do what is MEASURED, REWARDED + CELEBRATED
6. AUTHENTICITY can’t be faked
– Source: Adapted from The Temkin Group
Customer Experience Exercise
• In pairs tell each other a story of your personal experience as a customer. Time 10 minutes.
– Either a good experience or a bad experience
– Note what sticks out in your mind as the main factors in creating the good or bad experience? List the one or two factors on the following chart.
– Any lessons for your organization?
Customer Centricity And Business Performance
29MRI™ - Audit Best Practices Next Steps Q&A
Market-driven firms are, on
average, 31% more profitable
than self-centered firms“
The Market Driven Organization: Understanding, Attracting, and Keeping Valuable Customers” George S. Day, Wharton School, University of Pennsylvania
CUSTOMER CENTRICITY
#1 Imperative - Concept of Value
30MRI™ - Audit Best Practices Next Steps Q&A
#1 Imperative in
Customer Centricity
Superior Customer Value
CUSTOMER CENTRICITY
External Drivers
How do you measure Customer
Centricity?
31MRI™ - Audit Best Practices Next Steps Q&A
5Internal Enablers2
... 7 Behaviours in Two Categories
CUSTOMER CENTRICITY
The External Drivers
32MRI™ - Audit Best Practices Next Steps Q&A
Factors DescriptionsCustomer Insight The extent to which employees monitor, understand, and
act on current customer needs and satisfaction.
Customer Foresight The extent to which employees monitor, understand, and
act on potential customer needs and opportunities.
Competitor Insight The extent to which employees monitor, understand, and
respond to current competitor strengths and weaknesses
Competitor Foresight The extent to which employees monitor, understand, and
respond to new market entrants and potential competitors.
Peripheral Vision The extent to which employees monitor understand and
respond to trends in the larger environment (Political,
Economic, Social, and Technical)
CUSTOMER CENTRICITY
The Internal Enablers
33MRI™ - Audit Best Practices Next Steps Q&A
Factors DescriptionsCross-Functional
Collaboration
The extent to which employees interact, share information,
work with, and assist colleagues from other work groups
Strategic Alignment The extent to which employees understand, and enact the
vision, mission, objectives and strategic direction of the
company.
CUSTOMER CENTRICITY
The OPPORTUNITY
34CUSTOMER CENTRICITY MRI™ - Audit Best Practices Next Steps Q&A
2/3 of corporate strategy is never executed
Of 2,000 large firms studied, 90% had detailed strategic plans, but 7 out of 8 failed to achieve profitable growth
- AICD (Bain Consulting)
Links to Business Performance
Outcomes
35MRI™ - Audit Best Practices Next Steps Q&ACUSTOMER CENTRICITY
FactorsCustomer
SatisfactionInnovation
New
Product
Success
Profit
GrowthProfitability
Sales
Revenue
Growth
Customer Insight
Customer Foresight
Competitor Insight
Competitor
Foresight
Peripheral Vision
Strategic Alignment
Cross-Functional
Collaboration
The Market Responsiveness Index
(MRI)™
– A simple, web-based benchmarking system to assess your cultural capacity to win (a 35 item survey)
– Measures your organization’s Customer Centricity and capacity to execute across the seven critical success factors
– Empowers managers to transform organizations and drive measurable financial performance improvement
– Proven to be highly effective in predicting of customer satisfaction, innovation, new product success and profitable growth
– Tested and validated with 100+ companies across many industries
36Customer Centricity MRI™ - Audit Best Practices Next Steps Q&A
Step 1: Highlight which factor you think
your business is strongest and weakest
in (Refer back to your previous ratings)
Step 2: Discuss your findings with your
neighbor and answer these questions:
1. What are the implications? Refer to
the links to business performance chart
2. What could you do to enhance the
results?
3. How might this process be received
in your own organization?
GROUP EXERCISE
Performance Examples from Real Companies
•Circumplex graphics below, which are part of every MRI report, are samples from actual companies. Their relative scores closely correlate with weak and strong business performance metrics.
Strong Performer Weak Performer38
Real Company Example – B2B
Products
39Customer Centricity MRI™ - Audit Best Practices Next Steps Q&A
2009 vs 2010
+ Verbatim Comments from Employees
Now rate your own business
Factors DescriptionsYour Rating (1-
10)
Customer Insight The extent to which employees monitor, understand, and act on current
customer needs and satisfaction.
Customer Foresight The extent to which employees monitor, understand, and act on potential
customer needs and opportunities.
Competitor Insight The extent to which employees monitor, understand, and respond to
current competitor strengths and weaknesses
Competitor Foresight The extent to which employees monitor, understand, and respond to new
market entrants and potential competitors.
Peripheral Vision The extent to which employees monitor understand and respond to trends
in the larger environment (Political, Economic, Social, and Technical)
Cross-Functional
Collaboration
The extent to which employees interact, share information, work with, and
assist colleagues from other work groups
Strategic Alignment The extent to which employees understand, and enact the vision, mission,
objectives and strategic direction of the company.
The 100 Day Plan
For an marketers, success or failure is
made in the first 100 days.
Implementation
42Customer Centricity MRI™ - Audit Best Practices Next Steps
Next Practices
Ideas, processes, concepts and solutions that move us beyond the
“status quo”.
Not “how are others doing it best” but rather, “where do we go from
here that represents a true fundamental shift in value”…
5 Key Steps to Marketing Next Practices
1. Anchor Marketing Initiatives to Business Initiatives
2. Build market centricity
3. ID Opportunities for Value Creation
4. Drive Individual-Team Alignment
5. Develop, Test, Launch, Fast Accept/Reject
Start with a marketing investment audit
EVA
LUA
TE What are we investing in now?
What opportunities are we not investing in?
e.g. New channels to market, online, social etc
MIX What is our marketing investment mix?
Should we invest more in one marketing channel versus another?
Do we have a portfolio approach? Sp
ecif
ic C
han
nel
Rev
iew Are we maximizing
our effectiveness in this marketing channel (e.g. direct mail)
Are we delivering the leads required by sales?
Can we improve our efficiency or effectiveness?
egments
Source: Harvard Business ReviewHow to Market in a Downturnby John A. Quelch, Katherine E. JoczApr 01, 2009.
.
Source: Harvard Business ReviewHow to Market in a Downturnby John A. Quelch, Katherine E. JoczApr 01, 2009.
48
Campaign Marketing Return on Investment Model
TotalIncremental
RevenueContribution
Margin
Fully LoadedCosts
Themarketing
investment ismade
MarketingInvestmentRecovery
IncrementalReturn
Revenue isgenerated as a
result of themarketing
MarketingInvestment
A portion ofthe revenuepays for cost
of goods,leaving the
gross margin
Anotherportion covers
the originalinvestmentleaving the
return
Communicate Your Market Vision.
Align Everyone to Your Marketing Initiatives
Where are
we going?
Map the Ideal
Future for
clarity and to
build
“collective
passion”
Tap the internal Collective Market IQ
Engage –
people must
“experience”
what it is you
want to them
to support
and do
Engage Internal Employees to the
External “Experience”
Measurable employee commitment, productivity and innovation rise in direct proportion to how they experience an activity.
Metrics That Matter
Line of site
metrics-
to marketing
initiatives
Build Your Business Case
• CEO-CMO Mindset
• Marketing integration with other business initiatives
• Maximize your personal Influence
ROI- For Your Business Case
• Businesses that increase marketing expenditures in downturns gain an average of 1.5 points of share
• Businesses that cut marketing do so at an average rate of 23% in recessionary periods
• Those increasing budgets do so at a rate of 17%
• 1/3 of retailers shift ad agencies during recessionary periods
• Firms that hire marketers and increase budgets are 2X as likely to pick up market share
• Firms that changed agencies were 5X as likely to pick up market share!
– Source: http://www.marketingsavant.com/ Dana VanDen Heuvel
.
• .
Develop, Launch, Test, Fast Accept or Reject
How Will You Create a Culture of Next Practices and Sense of Urgency in the next 100 days?
Next Steps
21st Century Competition is About Customer
Centricity
‣Step 1: Phone Assessment and Do a pilot MRI™ to
measure your team’s Customer Centricity
‣Step 2: Discuss the results, identify new initiatives to
improve organizational Customer Centricity
Q & A
Scott Hamilton
Executive Next Practices Institute
Managing Director, NextWORKS
888.857.9722
