HBR: Shoppers Need a Reason to Go to Your Store — Other Than Buying Stuff

Does your store make small pickups a convenience? Should our building supply stores provide a compelling or memorable physical experience? How do you balance between time-well-saved and time-well-spent for your customers? Below is a blog from the Harvard Business Review by B. Joseph Pine II:

Shoppers Need a Reason to Go to Your Store — Other Than Buying Stuff

The holiday season, which is by far the most important time of year for retailers, highlights the increasingly intense battle between physical stores and online websites. Given the large number of casualties this year — witness the bankruptcy filings of such venerable institutions as Toys ‘R Us, The Limited, H.H. Gregg, Gander Mountain, Payless Shoes, and RadioShack, to name but a few — retailers must finally wake up to the core terrain over which they’re fighting: customers’ time.

Online retailers offer consumers time well saved. People can find what they want, when they want it, with incredible ease and convenience, and with the physical good shipped directly to their homes in a matter of days (and increasingly, in large cities, hours). As often as not, they don’t even have to pay shipping costs, and returns are a relative breeze. While the U.S. Census Bureau puts e-commerce’s share of the U.S. retail market at less than 10% as of the first quarter of 2017, online sales are growing at almost 10% per year. Should that trend continue — and it appears to be accelerating slightly — online retailing will account for nearly 20% of the total in 2025, over 30% in 2030, and about 50% in 2035.

To address this threat, one path physical retailers can take, of course, is to compete by going online themselves and even using their physical stores as a pickup spot — a strategy that many bricks-and-mortar retailers have taken. (One retailer I know saw a 35% bump in sales when it gave customers the option of picking up merchandise in its stores that they had bought online.)

But that alone will not save many retailers’ physical stores. They have to provide a compelling reason for consumers to visit them that online retailers can’t match. The best way is to compete on the basis of time well spent — to offer an experience so engaging that customers cannot help but spend time with you! And the more time they spend with you, the more money they will spend.

Consider what I think is the best new retail format in ages: Eataly. This Milan-based retailer (which so far has 13 stores in Italy, five in the United States, and five others in other countries) manages to combine all things Italian cooking into one amazingly engaging space: a café, one or more restaurants, a cooking school, and — especially — rows and rows of Italian groceries, kitchenware, and small appliances for sale. Consumers often spend hours there, and then memorialize their visit with photos posted to their Instagram feed or other social media outlets.

Many retailers (even banks) incorporate cafés to engage the senses and encourage consumers to linger, such as Restoration Hardware’s new 70,000-square-foot place in Chicago, which features a courtyard café, an espresso bar, and a wine room. Others, such as cosmetics retailers Lush and SABON, focus on getting consumers to experience their goods in the store, knowing that will increase the chances they will make a purchase.

Another approach is to focus on the story of each product, as happens in L’Occitane en Provence when customers encounter associates. Yet another way to offer time well spent is to stage special events, which even Walmart is doing this holiday season: It’s hosting 20,000 parties across its 4,700 stores, knowing that’s something Amazon cannot do. The Christmas season, of course, furnishes the perfect time-tested tactic that has worked for decades for department stores: Santa Villages and other Christmas extravaganzas for which people gladly pay to give their kids a festive experience.

Interestingly, many of the most engaging retail experiences have come from manufacturers. There’s American Girl Places, which immerses girls in its doll’s stories; Nespresso Boutiques, which lets people experience its espresso machines before they buy them; LEGO Stores, which feature play and building; and, of course, Apple Stores, where every product is live and workshops offer skills, “geniuses” offer support, and sessions offer inspiration. (Even Starbucks started out as a manufacturer before Howard Schultz turned it into an experience stager.) And recognizing the demand-generating power of physical engagement, numerous online retailers have opened up their own bricks-and-mortar stores; examples include Warby Parker stores, Bonobos Guideshops (bought by Walmart), and mass customizer Indochino Showrooms.

Those that are best at staging experiences have even figured out that when consumers truly value the time well spent they encounter in these places, the retailer can charge for that time via an admission or membership fee. Billed as the world’s most beautiful bookstore, Livraria Lello, in Porto Portugal, charges an admission fee of €3 just to enter the store — and then consumers get that money back if they make a purchase. Universal CityWalk in Hollywood charges from $5 to $50 (depending on location and time of day) per vehicle — not for parking per se but specifically to send the signal that it is a retail place worth experiencing.

Generally, though, retailers charge for particular experiences within their stores and do not charge for admission to their stores. American Girl charges for its café experience, a photo shoot and magazine cover, and even a doll hair salon experience (not to mention birthday parties that can run into the thousands of dollars). Recreational Equipment Inc. (REI) charges customers $20 to $40 to tackle the 60-foot climbing walls and structures it has in its flagship stores, offering instruction and also essentially getting customers to pay to try out its mountain-climbing equipment. And the Mall of America charges for the various rides in its Nickelodeon Universe theme park in the middle of the mall.

Wingtip, a men’s store in San Francisco, doesn’t charge for the retail experience — as engaging as it is, with superb merchandising of clothing, including a bespoke experience, plus wine and spirits, cigars, and a barbershop fulfilling its theme of “Solutions for the Modern Gentleman”; instead it created the Wingtip Club in the top two stories of its building for which it charges membership fees. The club is a refuge from the bustle of the city, with a lounge, bar, game room, whiskey corner, and golf simulator; members spend hours at a time there. The price of a membership is a $3,000 initiation fee and then $200 per month for unlimited access. All members (men and women) receive a 10% discount on merchandise.

There will always be physical stores for pickup convenience and the commoditized or very inexpensive merchandise like Dollar Tree stores sell. But providing a compelling or memorable physical experience is a different strategy that can work. Physical retailers must choose between time-well-saved and time-well-spent strategies. Whatever they do, they should be careful not to choose a middle-of-the-road approach that fails to excel at either.

Original Page: https://hbr.org/2017/12/shoppers-need-a-reason-to-go-to-your-store-other-than-buying-stuff

 

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HBR: Selling Products Is Good. Selling Projects Can Be Even Better

As building suppliers, we tend to focus on bigger projects such as new homes and commercial buildings. Is your company or yourself focusing on small projects? Are you helping your customers complete their projects? Below is a blog from the Harvard Business Review by Antonio Nieto-Rodriguez.

Selling Products Is Good. Selling Projects Can Be Even Better

In the beginning companies sold products. And then they sold services. In recent years, the fashionable suggestion has been that companies sell experiences and solutions, solving the needs and aspirations of customers.

Companies, indeed, do all of these things. But increasingly, what companies sell are projects. To understand the difference, think of an athletic shoe company, such as Nike or Adidas. A focus on products means a focus on selling running shoes. A focus on experiences might mean they sell you a membership to a local running club. A focus on solutions might mean they figure out how to help you reach your goal weight. While these clearly offer more value than simply selling you a pair of shoes, they also have limitations. Selling products limits the revenues you can make from clients: Unless you are innovating and continually updating your product offering, customer attrition tends to be high, and incentivizing repurchases can be hard. Selling experiences provides intangible benefits that are hard to quantify and measure, often focusing on meeting the needs of one single customer, preventing any mass production. Selling solutions became popular in the early 2000s when customers didn’t know how to solve their problems. But today, in the internet age, people can do their own research and define the solutions for themselves.

A focus on selling projects would mean helping someone do something more specific, such as running the Boston Marathon. Nike could provide you with its traditional sports gear, but in addition it could include a training program, a dietary plan, a coach, and a monitoring system to help you achieve your dream. The project would have a clear goal (finish the marathon) and a clear start and end date.

And that is just one type of project. More so than products, the possibilities with projects are endless.

From Products to Projects at Philips

Consider the evolution of Philips. Founded in Eindhoven, in the south of The Netherlands, in 1891 by Gerard Philips and his father Frederik, it began by producing carbon-filament lamps. Its success was achieved by a culture of innovation and the speedy introduction of new products. Over more than a century of profitable existence, the range of products offered by the company has mushroomed. Today, Philips produces everything from automated external defibrillators to energy-efficient lighting for entire cities. It even applies its smart sensor technology to teeth brushing.

This profusion of products means that Philips is cash-rich, yet sales have stagnated in the last decade, and concerns about the company have been reflected in its stock price. Faced with this changing reality, Philips took a long, hard look at itself. It identified the absence of focus and lack of strategy implementation capabilities as crucial elements that needed addressing. Five years ago, with intensifying competition, the Philips board split the organization into three different companies: Consumer Health, Lighting, and Healthcare.

It then went on to launch “Accelerate,” a program aimed at accelerating growth by transforming each new independent company into a focused organization. At the heart of the changes brought about by the Accelerate program are projects.

Over the years, Philips had become an intricate, blurred matrix. Accountabilities and responsibilities were shared between products, segments, countries, regions, functions, and headquarters. It set out to simplify this convoluted and archaic organization structure.

To do so, Philips put projects center stage. Projects were identified as the best management structure to break up silos and encourage teams to work transversally (end-to-end) in the organization.

As part of this, Philips Health Tech was divided into just three divisions. Essential to making this happen was a substantial increase in the work executed through projects. The shift was from selling customers a few products every year to creating an engaged relationship over decades.

One of the biggest challenges facing Philips Health Tech is that the life expectancy of its products is becoming shorter and shorter. Soon after launch, products are copied by the competition, which means they must be priced more cheaply. Soon, they become a commodity. This removes any opportunity for steady, high margins over the long term. Philips has experienced this even with its high-end health care products. Shifting its emphasis to selling projects rather than products was a strategic response to this problem.

For example, Philips sells high-tech medical devices. In the past it sold them simply as products (and it still does). But now Philips seeks out the projects in which its products will be used. If a new health care center is being considered, Philips will seek to become a partner from the very beginning of the project, including the running and the maintenance of the new center.

Among the results of this project focus at Philips is a partnership with Westchester Medical Center Health Network aimed at improving health care for millions of patients across New York’s Hudson Valley. Through this long-term partnership Philips provides WMC Health with a comprehensive range of clinical and business consulting projects, as well as advanced medical technologies such as imaging systems, patient monitoring, telehealth, and clinical informatics solutions.

In similar long-term partnerships with Philips, hospitals have been able to significantly improve radiology volumes and cut MRI waiting times in half. These organizations are seeing a 35% reduction in technology spending while improving clinical quality.

The Project Revolution

Philips is not alone in using an increased focus on selling projects as a means of disruptive transformation. At Microsoft, the company’s entire focus has shifted to Cloud services, most of which are offered as projects. It now has around 10,000 operating projects. Airbnb, valued this year at $30 billion, recently announced that it will start selling “experiences” — small tourism projects — as a way to create new revenue streams and address the increased regulatory scrutiny in some of its bigger markets. The biopharmaceutical industry is also seeking to work with governments and other purchasers on focused treatment programs, rather than simply offering individual drugs.

Clearly, the shift to becoming a project-driven organization and selling projects rather than products or services presents sizeable challenges to corporations and their business models. Working in projects throughout my career, I have identified these as the important ones:

  • Revenue streams. Revenues will be generated progressively over long periods of time, instead of right after the sale of a product. This will affect the way revenues are recognized, as well as accounting policies and the overall company valuation.
  • Pricing model. New pricing models will need to be developed. It is easier to price a product, for which most of the fixed and variable costs are known, than a project, which is influenced by many external factors.
  • Quality control. Delivering quality products will not be enough to meet customer expectations. Implementation and post-implementation services will also have to be of the highest possible quality to ensure that clients continue to buy projects.
  • Branding and marketing. Traditional marketing has focused on short-term immediate benefits. Marketing teams will need to promote the long-term benefits of the projects sold by the organization.
  • Sales force. The buyer of the project will no longer be the procurement department of an organization. Sales will be pitched to leaders of the business, so the sales force and sales skills will have to be upgraded with strategy and project management competencies.

Stop for a moment and consider what your organization is selling. Is it a project? Increasingly, the answer is clear and affirmative. If not, beware, your products might soon become part of a project sold by someone else.

 

HBR: The Most Common Reasons Customer Experience Programs Fail

What are your Costs-to-Acquire, Customer Penetration, and Customer-Lifetime Value? Do you have a Customer Experience strategy? Below is a blog from the Harvard Business Review by Ryan Smith and Luke Williams.

The Most Common Reasons Customer Experience Programs Fail

Most customer experience (CX programs) are positioned as strategic, but quickly veer away from business objectives and become simply about tracking CX metrics. Time passes slowly, data continues to mount, and paralysis sets in. Big, strategic goals evolve into score improvements and incrementalism instead of gleaning useful insights that allow change with confidence.

So where does it all go wrong?

Most CX programs are broken in similar ways:

  1. They are not designed with change or innovation in mind.
  2. They have “soft” metrics rather than real business goals.
  3. They move slowly and without purpose.

Mistake #1: Forgoing change and innovation

Ask your CX program leader about the purpose of the program. If the answer is something other than, “So we can make intelligent changes that benefit the customer and the business,” you may have a serious issue. CX programs must be about change.

At the most rudimentary level, basic programs track performance over time. Yes, that’s useful, but why is it important? Because you want to improve over time. This means you must do things differently than you did them before. While it’s not complicated, this is a frequently overlooked premise to having a CX program—it’s about change.

Effective CX programs prioritize the importance of what gets measured and stack those data against your desired outcomes—what’s called “driver analyses.” Good driver analyses unlock the method for having the most change in the fewest possible moves.

While executing driver analyses enables change, it’s not actual change. It’s just more data until you do something with it. The reasons change doesn’t often happen are reporting paralysis, the lack of “think time,” and failure to collaborate.

Reporting paralysis can occur when teams are so wrapped up in distributing data, ensuring data quality, or writing up insights that they forget the purpose of data. If you “measure everything and report everywhere,” you’re not being strategic with your data.

Building in “think time” can help with this. Instead of just measuring, manufacturing, and distributing, build in time to understand the implications and applications of the data. This will give you clarity and confidence in what you’ve seen, how the pieces of the puzzle fit together, allow hypotheses to be formed and plans for change to be made.

Collaboration is also important if CX is going to result in any real change. CX experts must work with other departments and stakeholders to push the agenda for customer-focused improvement. Yes, it’s hard to do this when no one has time to meet, much less collaborate. But the CX program is uniquely positioned to try to make this happen anyway. They own the customer, they’re the advocate, and they have the analysis. Most importantly, the CX program reminds everyone else why they have to make time for the customer, above all else.

Mistake #2: Linking metrics to business outcomes

Most CX programs use their own tracking measures as emblems of success or failure. If a score improves, that number is heralded and CX teams use it as evidence of innovation and improvement by the team. Often, these results are accepted at face value.

But the problem with this approach is you really can’t control for all other things that could cause scores to rise, and you can’t assume that a rise in scores is good for net revenue. When it comes time to set key performance indicators (KPIs) for the program, be sure to match them up against input from both your CMO and your CFO.

What are the kinds of things you might want to consider? Here are some examples:

  1. Cost to Acquire and Serve a Customer (CAC and CSC): The better you understand your customer and prospect base, the more you build experiences and services they crave, the lower your CAC and CSC should be.
  2. Customer Penetration and Share: Customer penetration is simply increasing the number of customers you have. Share of wallet is the ultimate measure of how they spend their money when the ultimate point-of-sale (POS) decision occurs. Study the drivers and barriers of both to optimize here.
  3. Customer Lifetime Value: This is the net present value of all future customer revenues with account for attrition and your discount rate. It’s a complex measure, but the best firms understand it and make it a central part of their scorecard.
  4. Customer Churn: A well-run CX program can contribute to gains against customers shifting away from your brand (attrition) or abandoning it altogether (defection).

There is place in the world for performance benchmarking survey metrics like net promoter score (NPS). Many firms aren’t sufficiently sophisticated with respect to the above measures, so measuring NPS or other metrics may be the only empirical evidence available. When this is the case, though, be certain to study KPI success or failure with caution. A satisfied customer is not necessarily a profitable one.

Mistake #3: Moving slowly, without purpose

A CX program is a living, breathing thing. It’s either in a state of growth, peak productivity, or decline. CX programs are like mountain climbing — if you aren’t confidently moving through the problem, you may be wasting valuable energy trying to figure out where you’re going.

While it’s critical that CX programs be well designed and methodologically sound, sometimes wasteful activities are allowed to creep into the design process and bog down the program. Lack of momentum and sluggishness spell doom to a CX program, and leadership must propel the program.

True CX leadership comes from:

  1. Ownership. There must be a program owner: a single person who is ultimately responsible for the success and quality of the program.
  2. Expertise. The leader doesn’t have to know everything about the business, research methods and analytics, or strategy to be effective. But the more they know about each, the more effective the program will be.
  3. Resources. Multi-million dollar budgets aren’t necessary to create or capture value. Start with a basic budget commensurate with those of an IT program. Let them demonstrate value to earn more resources.
  4. Empowerment. Give your leader the authority to be successful.

Going slowly when you don’t intend to is clear evidence that the program has slipped into neutral in the leadership camp.

There are many obstacles and detours that can prevent full ROI from your CX program. In our experience, these three are the most common. To avoid them, remember that CX programs are not merely about watching scores go up and down. The goal is to create experiences that add value to the customer and the firm simultaneously, and this requires constant change. So think about what ideal experiences you want customers to have, and work backwards from there. Work quickly. And re-invent as needed.

Original Page: https://hbr.org/2016/12/the-most-common-reasons-customer-experience-programs-fail

 

BoF: The Business of Love and Passion 

Are you in the people business? Below is a blog from the Brains on Fire:

The Business of Love and Passion 

At Brains on Fire we believe with all our hearts and souls, it is possible to fall madly and passionately in love with the people you serve. And we believe that it’s possible for those folks to fall in love with you, too; and, yes, for you to become famous and grow your organization because of that love.

That’s exactly what we’ve done to grow our own business over the years. Not only have we fallen in love with our customers, we received the permission and indeed the honor to get to know and care for our customers’ customers. It’s our role as marketing matchmakers to help connect our customers with their employees and customers through shared passions.

Every business owner should be wildly romantic and passionate about your advocates; the employees and customers who help fuel your success.

What does it take to fall in love with your advocates, the customers and employees who are ready, willing and happy to fall in love with you? Start by following these Passion Principles.

  1. Love people. Never leverage people.
    We hate it when we hear companies talk about leveraging fans to tell their story. Think about it: Do you really use people you care about? Absolutely not. You listen to them. You get close to them. You see them frequently. You want to be a meaningful part of their life. You inspire them and in return, they inspire you.

If you want people to be in love with you and talk about you, you must fall in love with them first. Your clients, customers, donors, tribe, employees, advocates—what you call them doesn’t really matter—can and should become beloved heroes in your organizations.

  1. Love takes patience.
    For real and lasting relationships to take hold, you have to be in it for the long haul and not for a one-night stand (perhaps the marketing equivalent of a one-time purchase).

Loving your customers is not something you do for a limited amount of time. It’s something you do every single day. And the value of that effort grows exponentially stronger and deeper with time.

  1. Get people to talk about themselves.
    The passion conversation isn’t about getting people to talk about YOU, the brand. It’s about getting people to talk about themselves. Encourage others talk about themselves, their lives, their hopes and their dreams. Create platforms, online and offline, for the people you serve to share their own stories. Give them opportunities to talk and be willing to listen.

At Brains on Fire, we no longer consider ourselves to be in the marketing business. Instead, we’re in the people business. This makes sense for us because marketing nowadays is more about reframing the work you do in the world to inspire your employees and customers. The most successful word-of-mouth–driven businesses in the world have always been in the business of inspiring people.

Good stuff happens when you’re in the people business. We promise.

 

HBR: What Most Companies Miss About Customer Lifetime Value

Are you measuring your customers’ lifetime value? Are you investing in and enabling customer capabilities? Below is a blog from the Harvard Business Review by Michael Schrage.

What Most Companies Miss About Customer Lifetime Value

For managers and marketers alike, the power to calculate what customers might be worth is alluring. That’s what makes customer lifetime value (CLV) so popular in so many industries. CLV brings both quantitative rigor and long-term perspective to customer acquisition and relationships.

“Rather than thinking about how you can acquire a lot of customers and how cheaply you can do so,” one marketing guide observes, “CLV helps you think about how to optimize your acquisition spending for maximum value rather than minimum cost.” By imposing economic discipline, ruthlessly prioritizing segmentation, retention, and monetization, the metric assures future customer profitability is top of mind.

For all its impressive strengths, however, CLV suffers from a crippling flaw that blurs its declared focus. The problem is far more insidious than those articulated in venture capitalist Bill Gurley’s thoughtful CLV vivisection. In fact, it subverts how customers truly become more valuable over time.

When my book Who Do You Want Your Customer To Become? was published, five years ago, its insight was that making customers better makes better customers. While delighting customers and meeting their needs remain important, they’re not enough for a lifetime. Innovation must be seen as an investment in the human capital and capabilities of customers.

Consequently, serious customer lifetime value metrics should measure how effectively innovation investment increases customer health and wealth. Successful innovations make customers more valuable. That’s as true for Amazon, Alibaba, and Apple as for Facebook, Google, and Netflix. No one would dare argue that these innovators don’t understand, appreciate, or practice a CLV sensibility.

Pushing organizations to rethink how they add value to their customers stimulates enormously productive discussion. A fast, cheap, and easy exercise for clarifying the innovation investment approach emerged when I operationalized my book’s principles. The simple but provocative tool generates actionable insights. Having facilitated scores of workshops around it worldwide, I know it gets results.

Ask people to complete this sentence: ”Our customers become much more valuable when…”

The immediate answers tend to be predictable and obvious. For example, customers become much more valuable when “they buy more of our stuff” or “they pay more” or “they reliably come back to us” or “they’re loyal to our brand.”

There are no prizes for recognizing that these initial responses reflect the variables that go into computing traditional CLVs. While everyone agrees these things are important, participants in the exercise quickly recognize how limited, and limiting, those instant answers are.

It doesn’t take long before the answers start to incorporate an investment ethos that sees customers more as value-creating partners than as value-extraction targets. For example:

Our customers become much more valuable when…

  • they give us good ideas
  • they evangelize for us on social media
  • they reduce our costs
  • they collaborate with us
  • they try our new products
  • they introduce us to their customers
  • they share their data with us

Almost without exception, these follow-on answers are disconnected from how the firm calculates customer lifetime value. But, almost without exception, these responses push people to revisit and rethink how customer value should be measured. At one company the immediate response was to look for correlations between CLV and net promoter score. At another, the conversation led to discovering a core group of top-quintile CLV clients, who served as essential references for closing deals with firms identified as top-decile CLV clients. Those reference firms instantly won renewed attention and special treatment.

The more diverse and detailed the answers, the more innovative and insightful the customer investment. The most-productive conversations came from cross-functional, collaborative interaction — not just from marketing, R&D, or business unit leaderships.

For example, for a global industrial equipment provider, customers became more valuable when they performed more self-service diagnostics and shared that information with the firm. That led directly to the firm’s technical services teams offering cloud-connecting APIs and SDKs that let customers customize remote diagnostic gateways for their equipment. Customers embracing self-diagnostics inherently boosted their CLV. Not incidentally, information access swiftly redefined how the company qualified prospects and computed lifetime customer value.

By investing in and enabling new customer capabilities, firms create new ways for customers to increase their lifetime value. Making customers better truly does make for better customers.

But in keeping with the segmentation spirit of CLV, the question can easily be edited and modified to produce targeted insights. For example, at one workshop we used two versions of the sentence: “Our best customers become much more valuable when…” and “Our typical customers become much more valuable when…”

The innovation investment insights for one’s best customers proved qualitatively and quantitatively different from those for one’s typical customers. Forcing people to rigorously define the distinctions between typical and best frequently leads to even greater creativity around customer value.

My favorite CLV vignette emerged from a session at a global financial services giant in London. As the responses grew longer, richer, and more detailed, one of the participants called attention to an interesting fact. Some of the answers, he observed, began with “we,” as in, “Our customers become much more valuable when we do something.” The others, however, began with “they,” as in, “Our customers become much more valuable when they do something.”

“What is the difference between the potential customer lifetime value when we do something versus when they do it?” he asked. After a few moments of silence, the conversation went to a whole other level of engagement, around how the firm wanted to engage with and invest in its customers.

The best investment you can make in measuring customer lifetime value is to make sure you’re investing in your customers’ lifetime value.

HBR: What Creativity in Marketing Looks Like Today

“The changes happening in consumer behavior, technology, and media are redefining the nature of creativity in marketing. Do these changing roles require a new way of thinking about creativity in marketing?” Below is a blog from the Harvard Business Review by Mark Bonchek and Cara France:

What Creativity in Marketing Looks Like Today

What makes marketing creative? Is it more imagination or innovation? Is a creative marketer more artist or entrepreneur? Historically, the term “marketing creative” has been associated with the words and pictures that go into ad campaigns. But marketing, like other corporate functions, has become more complex and rigorous. Marketers need to master data analytics, customer experience, and product design. Do these changing roles require a new way of thinking about creativity in marketing?

To explore this question, we interviewed senior marketing executives across dozens of top brands. We asked them for examples of creativity in marketing that go beyond ad campaigns and deliver tangible value to the business. Their stories — and the five wider trends they reflect — help illustrate what it means to be a creative marketer today.

  1. Create with the customer, not just for the customer

Everyone likes to talk about being “customer-centric.” But too often this means taking better aim with targeted campaigns. Customers today are not just consumers; they are also creators, developing content and ideas — and encountering challenges — right along with you. Creativity in marketing requires working with customers right from the start to weave their experiences with your efforts to expand your company’s reach.

For example, Intuit’s marketing team spends time with self-employed people in their homes and offices to immerse themselves in the customer’s world. Through this research, they identified a pain point of tracking vehicle gas mileage. Based on these marketing insights, Intuit created a new feature within its app that combines location data, Google maps, and the user’s calendar to automatically track mileage and simplify year-end tax planning.

Brocade, a data and network solutions provider, created a “customer first” program by identifying their top 200 customers, who account for 80% of their sales. They worked with these customers to understand their sources of satisfaction and identify areas of strengths and weakness. Brocade then worked with sales teams to create and deliver customized packages outlining what Brocade heard is working or not working, and what they would do about those findings. Later, Brocade followed up with these customers to report on progress against these objectives. The results? Brocade’s Net Promoter Score went from 50 (already a best in class score) to 62 (one of the highest B2B scores on record) within 18 months.

  1. Invest in the end-to-end experience

Every marketer believes the customer experience is important. But most marketers only focus on the parts of that experience under their direct control. Creative marketers take a broader view and pay attention to the entire customer experience from end to end. This includes the product, the buying process, the ability to provide support, and customer relationships over time. That takes time and resources – and it also requires bringing creative thinking to unfamiliar problems.

Kaiser Permanente believes that as health care becomes more consumer-oriented, the digital experience becomes a key differentiator. The marketing team instituted a welcome program to help improve the experience for new plan members. Members are guided on how to register for an online member portal, which provides access to email your doctor, refill prescriptions, make appointments, and more. The welcome program required coordination with many areas of the business. As a result of this program, about 60% of new members register within the first six months. These members are 2.6 times more likely to stay with Kaiser Permanente two years later.

Like many retailers, Macy’s has traditionally spent 85% of its marketing budget on driving sales. Each outbound communication is measured individually for immediate ROI. However, recently they began to take a more holistic approach, focusing on lifetime value and their most profitable segment, the “fashionable spender.” This group looks across the business to gather behind-the-scenes information on the runway, newest clothing lines, and aspirational fashion content. The metrics also changed. Macy’s started evaluating engagement per customer across time and platform instead of per marketing message per day. The results? In the last year, customers in the top decile segment increased digital engagement by 15%, cross shopping by 11% and sales by 8%.

  1. Turn everyone into an advocate

In a fragmented media and social landscape, marketers can no longer reach their goals for awareness and reputation just through paid media and PR. People are the new channel. The way to amplify impact is by inspiring creativity in others. Treat everyone as an extension of your marketing team: employees, partners, and even customers.

Plum Organics gives each employee business cards with coupons attached. While shopping, all employees are encouraged to observe consumers shopping the baby category. When appropriate, they ask a few questions about shoppers’ baby food preferences and share business cards with coupons for free products as a gesture of appreciation.

For Equinix, surveys revealed that a third of employees were not confident explaining its company story. The company introduced an internal ambassador program for its more than 6,000 employees. This program gives employees across all disciplines and levels tools to educate them on the company, its culture, products and services, and how they solve its customer’s needs. More than 20% of employees took the training online or in workshops in the first few months of the program, and employee submissions to its sales lead and job candidate referral programs were up 43% and 19% respectively.

Old Navy has traditionally dedicated their media budget to TV, particularly around back to school. However, over the past few years, they’ve focused on digital content to engage kids around positive life experiences and giving back. Through this approach, the 2016 #MySquadContest led to 32,000 kids sharing their “squads” of friends for a chance to win an epic day with their favorite influencer, creating 3 million video views, a 60% increase in social conversation about @OldNavy, and a 600% increased likelihood of recommending Old Navy to a friend (versus those that viewed TV ads only). In addition, the program led to record breaking donations for their partner, The Boys & Girls Club.

  1. Bring creativity to measurement

The measurability of digital engagement means we can now know exactly what’s working and not working. This gives marketing an opportunity to measure and manage itself in new ways. In the past, marketing measured success by sticking to budgets and winning creative awards. Today, the ability to measure data and adjust strategies in real-time enables marketing to prove its value to the business in entirely new ways.

Cisco has created a real-time, online dashboard where the entire marketing organization can look at performance. The leadership team conducts a weekly evaluation to assess, “Is what we’re doing working?” This analysis can be done across different digital initiatives, geographies, channels, or even individual pieces of content. The result is an ability to quickly adjust and re-allocate resources.

Zscaler, a cloud-based security platform for businesses, created a Value Management Office. The Office helps each client define, quantify, and track their unique business goals associated with Zscaler implementation. Zscaler and their clients hold each other accountable to specific, measurable, time-based results.

OpenTable recently launched a companion app just for restaurants to make better use of the data they’ve been collecting through their reservation system. Restauranteurs can now get a handle on their business right from their smartphone, allowing them to easily answer questions like “How did your last shift perform?” The app can tell them if they are running light on bookings, and soon they’ll be able to activate marketing campaigns to increase same day reservations. More than 50% of restaurant customers on OpenTable’s cloud-based service are already using the app, visiting an average of 9 times a day, 7 days a week.

  1. Think like a startup

In the past, marketers needed to be effective managers, setting goals well in advance and then working within budget to achieve those goals. Today, creative marketers need to operate more like entrepreneurs, continuously adjusting to sustain “product/market fit.”

The start-up Checkr represents a trend we are seeing more of in the Bay Area in particular. Marketers are adopting the business practices of entrepreneurs such as lean startup and agile development. For its background check solution, Checkr wasn’t getting the results it wanted from traditional sales and marketing tactics as it expanded into new market segments. They realized they had to think beyond marketing as promoting an existing product. Adopting an agile method of customer testing and rapid iteration, they worked with engineering to rethink the product and bring a “minimum viable product” to market for these new buyers. As a result of this integrated, agile approach, the company easily hit some early 2017 revenue targets with conversion rates that are four times what is traditionally seen in the industry.

 

The changes happening in consumer behavior, technology, and media are redefining the nature of creativity in marketing. The measure of marketing success isn’t the input, whether that’s the quality of a piece of content or a campaign, but rather the value of the output, whether that’s revenue, loyalty, or advocacy. Marketers of the past thought like artists, managers, and promoters. Today’s marketers need to push themselves to think more like innovators and entrepreneurs — creating enterprise value by engaging the whole organization, looking out for the entire customer experience, using data to make decisions, and measuring effectiveness based on business results.

 

 

Original Page: https://hbr.org/2017/03/what-creativity-in-marketing-looks-like-today

 

 

HBR: Ineffective Sales Leaders Can Cause Lasting Damage

Is your vison or strategy going in the right direction? Are you retaining the right talent? Are you serving your customers? Or managing your sales team badly? Is your culture wrong for your vision and strategy? Below is a blog from the Harvard Business Review by Andris A. Zoltners, Sally E. Lorimer, PK Sinha.

Ineffective Sales Leaders Can Cause Lasting Damage

Success in a sales force requires having strong talent up and down the organization. A weak salesperson will weaken a sales territory, a bad sales manager will damage their team and dampen results in their region, and a poor sales leader will eventually ruin the entire sales force. For even the most seasoned among us, it can be difficult to recognize the signs of a poor sales leader and the possible damage the person can do — especially when they appear to do some good early on.

Consider two examples.

An education technology startup hired a sales leader who came from a large, well-respected firm. He had extensive market knowledge and a stellar track record. Although good at scaling and operating a sales organization, the leader was unable to succeed in a rapidly changing environment that needed experimentation and nimbleness. The mismatch between the startup’s need and the leader’s capabilities set progress back at least a year.

A medical device company hired a vice president of sales with an intimidating management style. He ruled by fear. Achieving goals was everything. He tolerated (and even encouraged) ethically questionable sales practices. Results looked excellent at first, but the sales culture became so unpleasant that good performers began leaving in a trickle, and then in a flood. The average tenure of salespeople dwindled to just seven months. The damage to the company continued for years after the VP was replaced.

The reasons that sales leaders fail fall into four categories:

  • Direction. Poor understanding of the business, leading to errors in vision and strategy
  • Talent. Inability to pick and keep the right people for the team
  • Execution. Poor processes serve customers and manage people badly
  • Culture. Inappropriate values damage the very core of the organization

When such failures are coupled with a leader’s egotism or lack of self-awareness, it’s unlikely that the leader can lean on others to overcome his own deficiencies.

Yet ineffective leaders can do some good in sales organizations. They can bring about needed change quickly. Leaders who lack sensitivity have an easier time eliminating poor performers. Leaders who are intimidating can use their muscle to implement difficult changes that past leaders avoided — for example, an organizational restructure that disrupts an existing power hierarchy.

But unless a poor leader can overcome or compensate for his deficiencies, eventually the bad will overpower any temporary good. A tyrant, for example, may fix some things in the short term but create other problems at the same time. For every gain, there are likely to be multiple missteps with the sales force’s vision, team, execution, and culture. A key and very visible marker of ongoing or impending trouble is when talented people on the leader’s team become frustrated and depart the company.

It can take years to repair the damage done by an ineffective sales leader.

First, it takes time to replace the leader and reconstruct the sales team. When a health care company hired the wrong leader for a sales region, it took more than three years to rebuild the team and recover from the initial error of putting the wrong person in charge.

Second, it takes time to reverse the questionable decisions that ineffective sales leaders make, especially decisions that affect sales force structure or compensation. Weak leaders at a technology company made a decision to restructure the sales organization using a model from their own past that did not match the current situation. Again, it took more than three years to undo the damage.

Third, it takes time to rebuild the culture a poor leader creates. Poor leadership at a medical device company had allowed an unhealthy “victim” culture to pervade the sales force. Salespeople had no confidence in their leaders, and managers were willing to accept salespeople’s constant excuses for poor performance.

Bringing about change required replacing the company’s president, followed by more than two years of sustained focus on transforming the sales force using the following process:

  1. Create a fresh vision, reflecting a culture in which salespeople trusted their leaders and in which all salespeople were held accountable for results.
  2. Communicate the vision using every opportunity, including sales meetings, videoconferences, and the company’s intranet.
  3. Rebuild the team starting with a new vice president of sales who had integrity and judgment, and was willing to replace anyone on the sales team who could not adapt to the new culture.
  4. Realign sales support systems and rewards by overhauling the systems for recognizing and rewarding performance and creating accountability.

These four steps are a good starting point for any company seeking to recover from poor sales leadership.

Bad sales leaders can sometimes bring about change in a broken environment and make temporary gains. But they will wreck a sales force unless they are replaced quickly.