Value Add -er

Value Add-er

Too many people interpret value in the context of price. Especially in the economic environment we are working in today. But if value is in the eye of the beholder, so to speak, is that beholder a consumer, a customer or a user?

There are value ranges in supermarkets which is the basic no frills own label products. There are take away food offers which offer ‘all this’ for £6.99 – with the emphasis on the price. These products are treated as a transaction. These supermarket goods and take away meals are consumed and it makes sense to treat them as a transaction led by price for those consumers.

Many companies have customers, not consumers, who use the service themselves or provide it for their own customers. The worry is that many businesses, when dealing with suppliers, are using heavy procurement processes and tough tenders that also focus on the cost as the most significant differentiator in a decision to award a contract. These processes focus on price as it’s an easily compared metric. But these businesses are not selling a product that is quickly consumed but a service that is used.

This service is experienced by their customers and their staff. This experience has many elements in the customer journey that sends signals of understanding the customer (& the staff) that add or take away value to the service. These small elements and traits are not always so easy to measure. Procurement can miss them. But customers and users don’t. These elements of satisfaction can have metrics. Preference and word of mouth are measureable.

Designing the service from the customer’s point of view and getting the staff on board to highlight those stories that illuminate the customer’s needs will differentiate that service over and above a price led transaction.  Those that use the service will prefer it over and above other similar services if it feels the most in tune with their needs; is most helpful; if it “gets them”. That is derived from regular dialogue with them and needs great listening and being able to interpret insights. It’s important to be sure to use all the company’s people, who touch the customer journey or can influence word of mouth, to be able to tell the same brand story and then subsequently share their own insights back to the company – so as to continually learn and further hone the service.

Value added service for customers and users allow businesses to not only grow ahead of their competition but also to do so at a higher price. Profitable growth.

Tesco. A brand new story needed. What will 2020 hindsight say?

Tesco. A brand new story needed. What will 2020 hindsight say?

Tesco hit the headlines today having had a big wakeup call over Christmas with a significant fall in Sales.  Are Tesco losing their way or taking their eye off the ball?

The globally successful retail giant, revered abroad and reviled by some here at home, saw like for like sales fall of some 2.3% in the 6 weeks before Christmas – while its competitors saw growth. Much blame was put on a misleading “Big Price Drop” campaign, but it’s clear that Phillip Clarke, Tesco’s new CEO, understands the issues are strategic rather than tactical. These surprising results, along with disappointing profit forecast, caught the City out – a 16% fall in share price that also hit their competitors. Mr Clarke’s statement yesterday signalled that Tesco had taken their eye off the ball.

They’d been running UK stores “hot” for too long – boosting productivity by under investing in staff and service – in order to keep the international expansion going strong (under Mr Clarke for recent past) and keeping analysts happy at continuous quarterly growth messages. The core business suffered as Sainsbury’s, Morrison’s and the others got their act together and improved their own offer – the service, the location, the choice – and everybody competed on price. Low prices have become cost of doing business rather than a differentiator for supermarkets, which means customers acknowledge these other elements of the offers to help decide and choose to shop.

Where the “Big Price Drop” made a mistake was the decision to reduce the clubcard points on offer to loyal shoppers, in order to pay for some of the price discounts. The Tesco Loyalty scheme has been hugely successful, but to deliberately reduce its effectiveness has had the opposite effect for Tesco than it had hoped. Rather than bring in new customers alongside its loyal customers, it has swapped them. Some Tesco loyalists have become disillusioned and tried out the competitors. For some this may be terminal. Price is not a differentiator. Clubcard points are.

By under investing in UK stores, Tesco has exacerbated the perceived value of their competitor’s over investment in raising their offer. More staff who better informed, fresher produce which more regularly replaced, good reward programs – some of which were pioneered by Tesco but improved by competitors.

Mr Clarke knows this. He says he will increase staff levels quickly. He says they’ll reduce their Hypermarket growth plans too. Tesco’s locations are pretty much ubiquitous for most of the core UK market anyway. If Tesco’s in store experience and service improve then this could be a positive pivotal point in Tesco’s history. If this is lip service, and the in store experience doesn’t improve to better Sainsbury as a minimum, then the pivotal point may be much more negative.

The core Tesco UK business experience – from the different store formats, to the digital offer, to the environments and different categories of offer and, vitally, to the communities they serve – must become the prime focus for Mr Clarke. His old remit of International must not effect investment decisions at home.

The Tesco brand can help. My friend, Robert Jones, tweeted yesterday that “Tesco needs a big brand rethink – one that’s too big to fail.” He’s right. But the knee jerk reaction is not to start this by launching a new master advertising campaign like “Every Little Helps” or looking at a new set of guidelines that shift colours and packaging and periphery collateral. The Tesco brand must aim high – and stand out again. It must stand for the best experience of UK retailing. This experience will be delivered by real staff, who are interested and knowledgeable in store. The products in store must be the best value not simple the best price. The store experiences must be positive as judged by the communities it serves. No easy fix. No single answer. But the brand must become strategically grounded in the core UK businesses for the next 2 – 3 years. This isn’t in rapid growth via new stores. This isn’t in low price tactical campaigns. Customer loyalty must be earned and re-earned not bought by discounts. The brand effort must start inside first. Staff and customers must be intrinsically involved in building and testing this experience positively.

The next few months will be interesting for one of the UK’s biggest organisations. How they reinvent themselves for their customers will be a huge case study in 2020. What we don’t know is whether it will be a positive or negative story. We just know it starts this week!

 

The need for speed

The need for speed

Get creativity into your organisation: change for the quicker – change for customer.

Turning round your business is tougher than for years – customers are more demanding, more cautious, more reactive.

Businesses are under increasing internal pressure from budget cuts, higher expectations (more for less) and increasing uncertainty.

Clients themselves have reduced their own teams and are trying to achieve the same tasks. Time & focus are their most precious resources.

And everything must be delivered more quickly.

Expectations for quality improvements & for better value can increase the pressure for being faster. Businesses rely on quarterly reporting periods to satisfy shareholders & use leadership models that rely on management by objectives to ensure conformity and consistency rather than change. Short cuts and new innovation are stifled by bureaucracy.

In the risk-driven inertia that many businesses are in, decisions take longer and tend to be safe – often familiar and repeated from past. Falling budgets can result in shaving a bit off everything rather than a refocus on doing just one or two things really well. Silos have built up internally, with a sense of protectionism leading to poor internal communications and mistrust.  This can be replicated externally with too many agencies focused on their own specific disciplines – with each agency duplicating similar processes in dealing with the client – so adding to further delays.  These pressures also sour culture which in turn causes delays and further inertia.

However, quicker is the norm for many businesses and organisations especially those influenced by new technology – where the use of creativity is ingrained in their business models. Fantastic crowd sourced content is uploaded every minute and quickly spread to people who look for their recommendations on social media. Millions of apps and upgrades are beta tested and rolled out every week on technology we already cannot live without. News is delivered 24/7.

If customers are demanding better experiences and best quality on one side of the value equation, price differentials are getting narrower on the other. Price comparison sites and supermarket price wars mean the price isn’t a differentiator but a similarity. Premium prices are harder to justify.

So how can creativity in business be applied to help speed things up, to unleash new initiatives for customers without compromising quality so building trust rather than losing it?

Creativity in its purest sense is forming a new solution from existing elements. Therefore it is always good to start by interrogating exactly what is happening inside the business, breaking it down into small discernable elements and reconfiguring them again into a simplified, customer focused approach. Ask the organisation direct questions (some are illustrated below) to get the answers that bring these elements to light.

The solution will come from being bold in questioning what’s working and why as well as what’s not. Collate the answers into groupings that can be reassembled. Prioritise the answers to ensure they are  relevant to each part of business and importantly to each business leader.

  • Is everyone in the business clear about what we do & why? Is there clarity and conviction about the purpose of the company?
  • Is our own story inside the business as clear as it is when we communicate outside?
  • Are we all about the customer or all about ourselves? Do we think inside out or outside in?
  • Do we have a dialogue with lots of our customers – daily not annually, sentences not tick-boxes?
  • How can we simplify everything…and after ask again, can we simplify further?
  • Do we share & train each other in what works?
  • Do we regularly work together outside of our own internal teams – on behalf of the customer?
  • When we undergo performance reviews for our leadership and staff, are there consistent KPI’s about collaboration & the customer?

By understanding the answers to these types of questions, you can creatively develop new initiatives, new processes & new teams. Restructures don’t necessarily have to mean redundancies – they can mean new responsibilities.  By simplifying these processes and ensuring each is strictly evaluated on a customer focused basis, things will get faster. Today, it is cost effective to use real time customer feedback in developing and spreading these initiatives – online dialogue is flexible and rewards the customer who expects their voice to be heard.

Once they do the results on culture will be positive. As a few directions become clear, it will be wise to quickly try out a few small tests – start with manageable, realistic goals, ensure leaders support these teams overtly and that failure is supported as much as success – to ensure a do/learn/do approach to learning is invoked – and when these tests work, roll them out & start a few new initiatives. Taking action quickly via business creativity creates actions that break inertia, break silos and start a road to growth.

So while many companies use creativity to communicate to their customers, they can start to seed creativity into their business structure, planning and processes too – with valuable outcomes such as improving speed to market, rewarding customer experiences and an improved internal culture.

Experience Happiness

Experience Happiness

Having worked in Dubai and in Latin America, I’ve seen many migrant workers living abroad in poor conditions, but toiling incredibly hard to provide for families and loved ones in their native countries. Indeed, these migrant workers are usually happy and positive people, because they are doing good. They are rightly considered heroes in their homes & villages. They give back to their communities and are respected at home. If they are lucky, they’ll be respected in their country of work too. In Dubai, two friends stood out as heroes – Raffa and Eleanor – respect!

 
Coca Cola and McCann in Manila have taken the global “open happiness” campaign to new heights in recognising the selfless behaviour of these heroes. An emotional film that is bang on the button when it comes to being on brand.

So much more than “open happiness”…this is “experience happiness”. Great work.

 

Brand 3.0: Feed your users.

Brand 3.0: Feed your users.

Digital marketers and social media champions are taking brand thinking on at a pace that threatens to leave traditional brand thinkers behind. As brand thinking develop new tools and descriptors for the Brand 3.0 version, one shift that intrigues me is in how as brand “ownership” has shifted from inside an organisation to those outside.

In a few short years, how organisations think of their customers in brand terms has changed (& is still doing so). Since Mad Men’s glory days, they were treated as “viewers” where messages were delivered from the company via TV, radio, print media – and in broadcast thinking, brand was measured mostly in Awareness measures. Agencies were full service and could do everything in house to keep those messages flowing and tell the brand story.

Some of the biggest broadcast brands were consumer products and the thinking evolved into speaking to the “consumer” and the marketing communications industry added more means & more skills to deliver more messages to help consumption. Militaristic language of campaigns, positioning, defending vs. the competition were boosted by short term tactical efforts (such as shopper marketing, coupons) to balance the strategic efforts (long term advertising ideas and corporate identity driven guidelines) to keep a brand at number 1. Brand ideas were based on great consumer insights. Emotional brand stories were still important. Specialist agencies grew and media separated from creative houses. Budgets began to become fragmented. Sales began to be measured in a direct relationship to the activity undertaken and ROI measures hatched.

This product led brand thinking didn’t work that well for service companies and with an increasing focus on understanding the customer journey, the brand focus moved onto “customers” and how they experienced the brand throughout the journey and how & when they learn about the value/benefits of the service. The ROI measurements of different touch points became important indicators in balancing the marketing mix and an integrated approach to the customer was demanded.  Brand had to work inside the organisation with their people/staff (as well as with the customer) and involved more than simple internal communications to become brand behaviours. These complexities needed a holistic approach from both inside an organisation and outside with their agencies. Marketing teams grew along with the many discipline specialists. ROI thinking and detailed analytics helped measure impact of the brands efforts and most importantly, the customer became part of the process – not simply via insight and understanding, but bands began a rudimentary dialogue with the customer. Customer care efforts grew and were rewarded with customer loyalty when it was recognised consistently. This customer thinking seeped into consumer thinking as the Nineties became the Noughties.

The latest thinking today recognises the power of today’s digital landscape. People now don’t spend time waiting for advertising to inform them of new offers or new services. They learn about these things online in real time – actually on the products and services that have become the world’s biggest brands – Google, Apple, Microsoft. They are “users” of brands, products and services. People are individuals rather than audiences. They have peer groups and friends that are communities. These users have the ultimate power of “use” – to use more or less. To stop using. To recommend the usage to others in their communities. Use is about experiencing that usage. The brands that understand this best are the real brand winners – this user thinking is faster, focussed, looser, innovative, frequent, rewarding, value not price, individual, action orientated. It’s about utility not about ideas or campaigns. And brand utility as judged by the user. To deliver these actions, brands need small, creative teams, focussed on that project or action & who are happy to start small in a “do-learn-do” methodology in order to test and capture success before rolling it out or starting again. This way of collaborative team thinking exists in Silicon Valley, in Bangalore, in Shoreditch but it’s not always apparent in brand thinking.

Brand 3.0 thinkers need to ensure this jump is quickly made and feed their users.

 

Brand as communications. Fail. Brand as service. Win.

Brand as communications. Fail. Brand as service. Win.

Image by Econsultancy in association with Foviance

Brand spending is different to brand experience. A brand that concentrates of providing a positive experience will always do better than a brand who simlply promises (= only communicates) such an experience.

Econsultancy published a survey this week on the most important tenets for retailer brands to focus on. The most important area for retailers to focus on – whether that be online or in physical stores or across the whole journey – is the quality of service. The prime influencer, even in these tough times, is not price. It is not communications or advertising. It is not even quality or products. It is a positive customer experience.

Equally critical to note is that a positive customer experience then leads to almost three quarters of consumers to recommend a retail brand.

A customer journey for retail has many touchpoints to influence customers & reinforce the overall experience. The danger of 20th Century brand thinking is that the brand is thought only in terms of communications, in terms of image, of logo, of website design and as a tactical weapon to stimulate consumers.

Brand is vital throughout the journey – in ensuring the whole experience is positive and consistent. The brand story starts with the staff, from the board to the support people; from  those on the retail floor and on the phones to those in after sales care. The brand should be in the performance appraisals with the same KPI for the CEO, the CMO, the CIO as well as all the people who actually meet, talk to and actually deal with customers.

Brand is not simply about communications anymore. Brand cannot be how something is executed.  Brand experiences are designed and planed to influence the whole customer journey. Marketing understand this but not all management do. Marketing’s influence on other departments like Sales, IT, HR, Supply Chain is decreasing. Too many departments act as silos, and create their own KPI’s to keep their own departments on message. The trouble is that is only part of the overall message. The brand story is about the customers’ experience throughout their journey with the retailer. A brand led KPI system that focuses primarily on the customer experience can help bring these silos back together.

The Econsultancy survey makes clear the importance of good service = good experience. It demonstrates how communications are increasingly less important. However, they limit their description of brand to communications and consistency. The best retailer brands are all about a positive experience. One that is promised and delivered throughout the customer journey and as rated by the customer not the retailer’s specific, separate departments.

 

Utility Companies: prioritising relationships with customers not shareholders.

Utility Companies: prioritising relationships with customers not shareholders.

British Gas & E.On both announced this week that they are changing the way they have a dialogue with their UK customers.

Quite right.

Energy markets are relatively straightforward – companies buy the product and supply their customers. Their customers use the product and pay for it. There is variability in price of the product  that the suppliers pay (usually in advance) and different ways the users can pay (before, during & after use).

However, by chasing increasing returns for shareholders, utility companies have over-complicated the market and lost the trust of their customers leaving them confused and, increasingly, disillusioned. Their biggest sins being

  • Ridiculously complex tariffs – 400 different ones – and complicated bills
  • Aggressive cross-selling
  • Inconsistent & apologetic messages

The relationship between company and customers have eroded significantly over the past few years as the economic slump hits our pockets, 21st Century branding offers clear guidance for regaining trust for service companies and these big energy companies have got great advisors. One of them would have a chance to take a competitive lead in their market by improving their relationships with their customers – by providing better experiences, by building trust via simplicity and transparency.

But it has taken their regulator Ofgem to mandate such change! “As part of urgently restoring confidence we are calling on all suppliers to get behind Ofgem’s reforms to deliver what consumers tell us they want – a simpler, more competitive energy market,” said Ian Marlee, of Ofgem.

So 2012 should see relationships improve. We will be looking for honesty, transparency, simplicity and a proper dialogue with customers. Let’s see. 21st Century brands depend on a consistent rewarding experience from the customer’s point of view – not raising profits for shareholders at their expense.

Phil Bentley (British Gas MD) made a good start last night on the BBC. He announced they “hadn’t made it easy for customers to trust them” – Honesty. He also admitted they had subsidised some tariffs in order to get to the top of comparison sites.  He said their customers should have 2 tariffs, variable or fixed – simplicity. British Gas had also secured a deal with Norway’s Statoil that could help insulate against future price volatility.

Mr Bentley spoke clearly and positively, He was believable and honest.  A good start. He said he was “committed to having an honest conversation with his customers” – that sounds like start of the dialogue the company needs. But it’s a start. Everything that touches their customers has to now reflect it.

The proof will be found out in a year or so when the changes are embedded and if his customers begin to trust British Gas again. If they do, they will steal a march on their competitors. E.On says they need 6 months to review everything in order to change. That may be too long.

Conscious Commerce & Brand Choice: preference will be for the future rather than a habit of the past.

Conscious Commerce & Brand Choice: preference will be for the future rather than a habit of the past.

A very good debate run by Unilever and Guardian Sustainable Business today asking a panel of experts  how to close the gap between concern and action – the panel was made up of Unilever’s CEO, Paul Polman, the CEO of Havas, David Jones, Tensie Whelan the President of the Rainforest Alliance and Malini Mehra CEO of the Centre for Social Markets.

Unilever is taking a bold leadership role with their Sustainable Living programme – in which they are changing their business model towards conscious commerce. The debate was inspiring and a the tone positive and optimistic.

The debate looked at the cooperation needed between business, individuals and government in order to grasp the nettle to change the way the world behaves to match the growing attitude of concern for the planet and our future. Interestingly, the positive tone was in the absence of government in the debate.

Some nuggets stuck in my mind after watching

  • David Jones calling Unilever’s Paul Polman, a pioneer of green blooded capitalism
  • The different attitude of growing up in the West top “have more” vs in emerging markets “to be more”
  • For companies to offer consumers choice based on their values rather than simply shareholder value
  • Politicians could (but won’t) legislate for the future as their electoral terms are short term – much like companies who only focus on their shareholders are focussed on quarterly performance not future effect
  • Brands remain important tools for future consumption, but the offers they make and provide (or those that their holding company do) must give back to the wider community
  • That the younger generation – because of digital connections of social media, are the most knowledgeable, most powerful and most responsible of all time
  • But the future will be changed via inter-generational cooperation as well as the axis of conscious commerce being the preferred choice
  • Small actions, long term outcomes – Don’t stay in the sidelines, it comes down to people making small actions to make a difference

Really worth catching up on the discussion on the Guardian sustainability site or follow #sustliving on twitter

Like a Virgin. Still like a bank?

Like a Virgin. Still like a bank?

It will be interesting to see how the Virgin brand trickles into the new Northern Rock. The UK’s Chancellor George Osborne said: “The sale of Northern Rock to Virgin Money is an important first step in getting the British taxpayer out of the business of owning banks.” Quite right.

He then threw in “It represents value for money, will increase choice on the High Street for customers, and safeguards jobs in the North East.” Err – not so sure. The Value for money is debatable – Virgin may agree and jobs are indeed saved.

Key will be whether it will be a choice on the High Street. High Street Banking is in need of a boost. It needs to change – but most commentators are demanding the change reverts back to old school, safe, risk averse, boring banking. That is not Virgin.

Virgin will add a bit of fun, of freedom – customer service & easy, simple forms & processes and the like. Certainly, this will be differentiation from some of the dreariness we’ve witnessed since 2008’s collapse. Virgin have secured a big infrastructure, they’ve bought the backbone & the book to bring their upbeat philosophy into play without being niche. Virgin Money’s bank will be about 10% the size of the UK High Street duller offerings. Small enough to be flexible but big enough to make a noise and attract new customers.

They have a chance to test out what will work quickly before rolling out over the whole country – talking to their customers while developing the Virgin version of daily banking. Creating a different brand experience for banks. They will I’m sure take a positive view of lending to smaller entrepreneurial firms that the Bigger Banks are ignoring. That will make them stand out quickly – more than a new facia and interiors that will replace of the Rock.

So good news I hope – the sector needs it. We all do.

Hailey’s Comet – innovate the brand rather than cut off the tail

Hailey’s Comet – innovate the brand rather than cut off the tail

When Best Buy shut down UK operations yesterday, a John Lewis spokesman got it right when saying :there was no gap in the market. Today, Kesa shed itself of Comet for £2 to a group of companies under the name “Hailey” advised by retailer turnaround specialists OpCapita.

Hailey’s Comet – geddit?

Kesa have invested £50M into Hailey and covered the staff’s final salary pension fund. Hailey’s Comet will burn for at least 18 months (they “promised”). The goal is to sell it on then or after for £70M+ assuming the chain has indeed turned around. Kesa had already been fighting the downturn by shutting down 17 stores and was “right-sizing” more. Hailey will no doubt be fast tracking this faster and deeper to drive profitability on declining revenues.

Which makes one wonder what the future of these bigger out of town operations? Especially for infrequent big ticket purchases? No doubt people will still buy what the big Electrical Outlets offer – once a year or less rather than what was twice a year or more.

But with everyone becoming savvier in online research and the importance of recommendations, what will drive people into the stores that they do not pass frequently? Smaller High Street stores work for smaller electrical and tech offerings (Carphone Warehouse’s skills not Best Buy’s) or offer an all encompassing experience (Apple Store) that will draw more regular visits without a desire for specific purchase. Argos has cracked its digital search app brilliantly to order & reserve before going to store to pay & pick up – and use GPS to make it yet more relevant.

How can Hailey turnaround what Kesa couldn’t? Cost optimisation will not be enough. The Comet Brand Experience will need to be reinvented – and that cannot start with price promotion advertising but with innovations on the whole customer journey. Innovations that should include a new digital dialogue or friendly & rewarding search and information applications and then through to expectation beating in store experiences. The aftercare option cannot be confined to selling expensive and unwanted product liability insurances.

There are enough Comet stores that Hailey can test out different experiences on different customer journeys – and then accumulate the total learning into the whole group. Such a programme could and should lead to turning around revenues as well as whatever Hailey decides to do with cutting off its tail.

If they fail, there may well be a gap in the market – the real Hailey’s Comet is due back in our solar system in 50 years…what will be happening in retail outlets then?