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design & marketing blog

Straightforward design, marketing, and technical advice for making your marketing communications more effective.

Customer Level Marketing – Investing in the Bottom Up

April 27th, 2007

Earlier this week, I was engaged in a discussion with a colleague on the way corporations tend to invest their capital. The amount of wasted dollars thrown toward executive pet projects, productivity initiatives, cubical redeployments, senseless non-strategic advertising, and other non-sales generating expenditures is simply mind-boggling. It truly makes me wonder how many companies have ever taken the time to consider what the results would be if they were to redirect a portion of their SG&A expenditure to improving customer relations.

Okay, you’re probably asking “what the heck does Erik mean by customer relations?” To be honest, I’ve never worked with or for a company that has ever concentrated their resources at the customer-level of the organization; every company I know concentrates most of their salaries, bonuses, amenities, perks, and other resources at the corporate executive level. Think about it, how many large organizations pay their frontline employees, namely those who interact and serve the customer, more than keyboard jockey managers back at the office?

I remember the first time I was introduced to this concept during my undergraduate studies over in Finland. My marketing professor asked us to read a phenomenal book by Jan Carlzon titled Moments of Truth. Through the book, Carlzon focuses on his stint as CEO of Scandinavian Airlines (SAS), where he is widely renowned for resurrecting what should have been a dead dog company. The SAS Carlzon took over was destined for insolvency, yet his progressive approach to turning the organization upside down literally saved the company and made it a world force in airline transportation. His strategy was simple: slash resources and expenses at the top and invest heavily in the bottom. Within a matter of months, SAS drastically reduced corporate headcount, frivolous spending (such as corporate-level perks), and useless overhead all the while investing in customer service training, customer-focused sales strategies (in regards to ticketing, seating arrangements, and travel packages), employee bonuses based on customer satisfaction, and salary increases for frontline personnel.

Along with the reallocation of resources, SAS initiated a policy wherein all corporate-level employees were required to work at the frontline level for a designated period of time so as to gain an intimate appreciation for the ticket counter representatives and stewards/stewardesses and the customers they served. Furthermore, SAS adapted a progressive policy of promoting high-performing frontline personnel to strategic positions within the organization so as to help consult other service-oriented personnel with customer-relations. Despite the temporary moral downswing at the corporate level, the frontline employee moral shot through the roof as opportunities opened up for incentive pay and promotions. Guess who reaped the benefits of motivated frontline personnel … yep, the customer.

So as to not give too much away, I do encourage you to read Carlzon’s book and contemplate his advice on marketing to your customers through your frontline employees. In addition to the frontline, bottom-up approach, Carlzon provides great strategic insight to managing a successful firm. Here’s a link to purchase Moments of Truth through Amazon:
Moments of Truth

To conclude, it would be well worth your time to consider how your organization could reallocate its resources to building a stronger relationship with your customers. It might be time to consider how to incentivize those who deal with your customers the most.

Market Need Versus Market Want

April 1st, 2007

A major error many sales and marketing professionals make involves confusing a market need with a market want. In fact, marketers that have been around for a while understand all products and services eventually evolve into non-discriminate commodities over time. Make no mistake; understanding the difference between a market need and a want will decide the long-term success of a firm.

So, what is the difference? Namely, a market want is an immediate response by consumers to a service or product without knowledge of a better solution. In other words, a market want is derived through a quick fix, convenient and affordable means to solving a problem or desire. Market wants exist simply because they temporarily answer consumer’s expectations. An example of a market want would be a pre-industrial revolution candle that was used to light a room … luminescence. There was no knowledge of or accessibility to a better solution, therefore the market want settled on candles for light.

Conversely, a market need addresses a higher ideal wherein innovation and customer-directed service push market wants in perpetual progression. In theory, market needs can never be fulfilled since the market is in a constant state of evolution. Additionally, Market wants are actually a very important element of addressing a market need. In other words, we should view market wants (i.e. products) as incremental steps toward satisfying the demands of the consumer. Referring back to the candle example, gas lamps and eventually the electric light bulb replaced the candle as the primary device for luminescence, therefore eliminating the primary use of a candle as a device for light. Today, the candle is used primarily for ambiance rather than luminescence.

For a more practical application of this theory, let’s say your company is in the business of producing cellular telephones. Four years ago, the market want was to develop the smallest practical handheld device that was affordable and would pick up great reception. Today, with the introduction of GPS technology and devices like the Apple iPhone, the market want has evolved to include worldwide accessibility along with features such as SMS texting, GPS mapping, and Internet browsing. In fact, it could be argued that the market need is affordable instantaneous global communication through telepathic transmission … okay, that’s getting a little Star-Trekish, I know. However, the point being that consumers may not be able to express what their true need is, therefore they settle with wants. To my point; this is where the opportunity exists for your hypothetical cellular phone company; you can assume the role of an innovative customer-oriented firm by pushing your product and service offering toward a new ideal of market satisfaction. For example, what if your company could develop a true vid-phone so you could actually view the party on the other line? It’s only a matter of time and money before this technology becomes commonplace, and the first cellular phone manufacturer to do it will in effect push the market want closer to achieving the market need. Perhaps the market need is not a vid-phone, but the point is the iPhone in all its greatness will eventually be obsolete.

In conclusion, companies that focus on solving market wants will always be in a reactionary state, competing primarily on price. However, companies that focus on solving a market need however will be shaping their products and services toward answering the desires of their customers, helping to differentiate themselves from the competition while justifying a higher price per unit. In the real world, Apple is doing this with the iPhone, Target is doing it with virtually the same products as Wal-Mart, and FedEx is doing it with the same overnight delivery services as UPS and the United States Postal Service. Who’s to say your company can’t be the next Apple, Target, or FedEx?

Evaluating Low Web Development Bids

March 23rd, 2007

How much does a web site cost? We get this often and it’s a fair question. Regardless of all the sales and marketing propaganda about needs, emotional purchase triggers, etc., the cold hard fact remains that most purchase decisions are constrained, and often decided, by immediate budget parameters.

Our standard practice is to never throw out a price….it’s kind of like asking “how much is a vehicle?” Well the prices range from $250 for a used moped or $50 million for Caterpillar 797B 380 ton earth mover—it all depends on your
goals and the budget with which you have to work.

So what about low bids? They conjure up a conflict of emotion in most people—joy, greed, elation, then caution, suspicion, resentment. Well from an insider’s perspective as low bids relate to marketing and web development here’s my honest advice:

First, always be leery of companies that just throw out a low price without much encouragement. Be conscious that with web and identity design your purchasing a lens through which the image of your organization will be projected to the world. I doubt if many of us walk into Wal-Mart and buy the cheapest pants and shirt available to prepare for a big meeting. The same forethought should be given to any bids that directly reflect the image of your organization.

Assume the worst and prove your assumption false by researching the question, “Why is this bid the lowest?” There is a reason. Did they not take into account all your needs? Are they implementing a loss leader sales tactic? Is their quality sub-par?

A low bid is always relative, you must consider the qualifications of the other bidders. For example I could send out a web design RFQ here in the Treasure Valley and get responses ranging from $500 from a high school kid to $50,000 from a marketing firm with a big national portfolio. All bids would meet the same technical requirements but obviously there is a lot more to consider than that. To avoid the impossible task of evaluating too broad of options, take some time to qualify your pool of bidders before submitting your RFQ.

In a pool of comparable quality bidders, low bid is not always bad. The good reason that someone is a low bidder is because they’ve developed highly efficient repeatable processes and are that much ahead of their competitors. I don’t want to be so bold as to say that we’ve completely reached this idealistic state, but our entire business strategy is built around the concept of creating a new market; a market in which we have no competitors who offer our level of quality our price ranges. We can’t claim any credit for this strategy—it came out Harvard Business School and has been shared with us commoners in one of the best business books of all time, Blue Ocean Strategy.

So the important points are this—try to narrow the spectrum of your bid pool and spend serious time evaluating the proposals from the bidders you do choose. Base your decision on objective considerations instead of the more emotional price factor. Keep in mind, the lifetime cost-benefit of your choice and the image your contractor will reflect on your clients and prospects. Low bids are not always bad, they just have more to prove.

Focus On Your Customer, Not Your Product

March 16th, 2007

I’m in the process of designing a PowerPoint presentation for a major technology firm, it’s entertaining to discover how the company’s engineers are fixated on describing every little detail about a product. To begin my design process, I researched some internally developed presentations built by the engineers so as to gain an understanding of the product virtues … let me just say the slides had more flying bullets than a war zone. These presentations were product-orientated smorgasbord of technical diarrhea.

Although I like to rag on engineers and their linear approach to life, companies often fall into the same mistake of focusing on product rather than market value, on top of over-messaging attributes rather than building a brand by emotionally captivating the customer by relating a solution to their need.

As Doug and I continue to learn and grow with our business, we’re finding out that the customer doesn’t care about how big, fancy, and powerful our product is, they only want to hear what we can do for them in terms of making their life better. Unfortunately, I’ve learned the hard way that my audience doesn’t have the time or interest in learning why I’m so great. And who could blame them? Their lives are complicated and busy, they want to cut to the chase so I better be ready with a strong, precise message that is emotionally appealing, easy to understand, and beneficial in terms of solving a problem or issue.

Going back to the technical engineers, I’ll be ingrained in a lengthy battle to shape these presentations into concise messages that actually mean something to the customer. My job is simply to communicate the three pillars customers look for in why they should consider a product; namely that it is available, easy, and affordable.

P.S. One last tip … avoid talking above your customers’ heads and boring them by using vague and uncommon terminology, your attempt to look smart will probably lose you the deal. Trust me, I’ve learned this the hard way.

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