This is one of a series of what we hope you will find to be
informative articles about improving operations and the Customer experience by applying the principles of Operational Excellence.Delivering Value to the Customer, Profitably
The Three Foundations:
We’re all in business to make money (even non-profits have to pay the bills), and the foundations are:
- Our customers – the recipient of our value
- The processes – the work and tools that deliver that value
- Our people – the skills, minds, and hands that perform that work
This series will explore typical situations in each foundation and discuss how to apply the principles of Operational Excellence to ensure that you are delivering stellar value.
Today’s topic is “Our Customers – the Recipient of Our Value” (who, oh, by the way, pay for that value)
“Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.”
W. Edwards Deming
We’re all looking to improve the lifetime customer value, and the key is to improve customer loyalty to where their passion for you supersedes a willingness to even consider alternatives.
This deep-from-the-heart type of loyalty is not only the most valuable as it pertains to business, but, as you may expect, it is also the most difficult to achieve. Before you earn the right to your customer’s heart, they will transition through two other types of loyalty.
• Hand Loyalty: recognize and purchase your products and services (and stay with you / demonstrate loyalty)
• Head Loyalty: advocate your wine and winery (bring a friend / recommend to others / be an evangelist for the brand)
• Heart Loyalty: insist on your brand, engage with you (brag about you / deep emotional connection with the brand)
Building heart loyalty requires passion and is won over time through consistent, every-day delivery of what you promise.
A key Operation Excellence principle: Data and information
An Operational Excellence approach is to develop, with data, an understanding of the dynamics of the guest experience on business outcomes. This data-driven understanding leads to identifying and prioritizing opportunities and actions required to ensure an extraordinary customer experience that drives guests along the lifetime loyalty chain.
A key tool: the Customer Journey Map – a simple depiction of the adventure the customers experiences as they discover and engage with your products and services. There are numerous words and phrases used to depict the journey, some from your point of view and some as the customer. My preference is to phrase it from the customer’s perspective. An example:
Need/Awareness => Research => Visit/Purchase => Advocate/Engage => Complete
The spine of this journey map is based around the conventional sales funnel (awareness, research, purchase), but then adds another step: Advocate/Engage. This is when the customer develops the desired deep emotional connection with your offerings.
Note that the journey is often not linear. For example, someone may jump straight from awareness to purchase because they are not inclined to do research and they come with a strong recommendation from a friend. Of course, another would-be customer may spend a long time spinning through iterations of the research process, in particular for an expensive purchase.
The spine is just the starting point. The valuable data is what’s happening at each stage. A useful framework based on four categories of information is:
• Actions: What is the customer doing at each stage? What actions are they taking to move themselves on to the next stage? (Don’t list what your company or retail partners are doing here. That will come later when we look at touch points.)
• Motivations: Why is the customer motivated to keep going to the next stage? What emotions are they feeling? Why do they care?
• Questions: What are the uncertainties, jargon, or other issues preventing the customer from moving to the next stage?
• Barriers: What structural, process, cost, implementation, or other barriers stand in the way of moving on to the next stage?
For best results, populate your journey map with data collected through direct customer research, preferably including in-depth ethnographic-style interviews and in-context observations. Ask customers to map out their journeys for you, while you are visiting with them for the research.
Surveys and focus groups tend to gloss over too many details that are critical to really understanding the experience, and relying on “expert” opinions (including anecdotes from your associates) is fraught with risk. (Why rely on generic consumer information when you’re trying to differentiate yourself from the pack?)
The next step is to overlay this map with the “touch points” – those instances where the customer can form critical impressions about your products or service (often called “Moments of Truth.”) As you identify your customer touch points, consider:
• The effect of those touches on the customer’s journey
• The probability that some important touches are missing
All of this information will define the actions required (or to be avoided) to guide and manage these customer journeys to increase their lifetime value.
Reminder that we’ll address Process & People in future articles
We’re firm believers that the customer experiences both the processes inflicted on them and the behaviors of the people serving them. Those are topics we’ll will address in future articles:
• The processes – the work and tools that deliver that value
• Our people – the skills, minds, and hands that perform that work
Thanks for reading!