customer proposition framework & customer management process

Framework for Building Customer Proposition & Customer Management Process

VentureBean Consulting Private Limited ©2015 VentureBean Consulting

Introduction Although, most business start with a desire to address some specific need of customers, they soon tend to start focussing on trying to “sell” what they “have”, rather than what customers “want”. Many companies tend to get fixated on their ini?al “proposi?on” and fail to quickly iterate their “proposi?ons” to figure out the best “proposi?on-‐market” fit. Most markets are fragmented enough for a decent “proposi?on” to experience “quick-‐success”. These “quick-‐success” tend to lull companies into believing that they have a “killer” product, promp?ng them to invest heavily into “scale-‐up” ac?vi?es, but the expected business “scale-‐up” con?nues to be elusive. OEen, companies “invest” heavily in customer acquisi?on ac?vi?es only to realise that they do not have enough “acquired” customers that really “buy”. Further, many companies don’t have a thought-‐through distribu?on strategy (online and off-‐line), thereby leKng go a large segment of customers to compe?tors. What is needed, then, is a be-er understanding by companies on building powerful “proposi:ons”, efficiently managing customers through their buying process and leveraging their strengths through both on-‐line and off-‐line distribu:on.

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Discretionary Purchase Drivers

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Utility Value + Emotional Value Buying Experience + •  Features •  Variants •  Flexibility •  Price

•  Aesthetics •  Exclusivity •  Fashion

•  Channel Experience •  Uniformity of experience across

channels •  Store ambience •  Post-purchase •  Personalisation •  Convenience

•  “Nano” seems high on U?lity Value while significantly low on Emo?onal Value and Buying Experience, while a “Jaguar” seems high on Emo?onal Value

•  “iPad” seems significantly low on U?lity Value but very high on Emo?onal Value and Buying Experience

•  “Bose” speakers seem very high on U?lity Value and reasonably high on Emo?onal Value

•  “Starbucks” coffee is all about Buying Experience

•  “Brands” help companies synthesise and easily invoke and convey their proposi?ons to consumers. Brands usually help companies posi?on the Emo?onal Value and Buying Experience in customers mind map

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A company’s choice to create value across the above drivers determine the “proposi?on” offered by its products. It is very seldom that a single proposi?on can appeal to a large segment of customers. For companies to scale, they should innovate their offering across the above drivers to create compulsive customer proposi?ons. Convenience Vs Personalisa?on is a paradox that many e-‐Com companies are struggling to manage. Consumer Analy?cs is helping smart e-‐Com companies to personalised Ads for their target customers. Personalised service is a significant purchase driver for many customers.

Utility Value + Emotional Value Buying Experience +

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Companies should focus on customers; not on compe?tors. Too much focus on compe?tors -‐ in either trying to do what compe?tors are doing or not do what compe?tors are doing – may lead to companies building proposi?ons that are not valued by customers. When u?lity value of proposi?on is almost similar to the compe?tor (air travel), companies can innovate across the other 2 drivers to build valuable differen?ated proposi?ons (Jet Airways Vs Indigo). Proposi?on of many e-‐Com companies so far has been aggrega?on of distributed sellers (airlines/hotels/bus bookings) or shopping convenience (clothes, electronics, groceries). However, these proposi?ons are easily replicable and hence result in downward pricing spiral. e-‐Com companies that can build proposi?ons across other factors are the ones that are more likely to sustain.


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So how does one know what factors are cri?cal to customers? -‐  Market research -‐  Focus group interviews -‐  Customer feedback -‐  Compe?tors’ offerings -‐  Intui?on -‐  Judgement

However, no amount of research and compe?tor scanning could have led Sony to invent the “walkman” and Apple to make “iPad”. So “intui?on” and “judgement” have a big role to play in building customer proposi?ons.


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Customer Management Process

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Acquisition Activation Retention •  Push

It is not sufficient to just have a great “proposi?on” for sustained growth. A company must consciously build strategies, ac?vi?es and processes to address the above 4 stages of customer management. Very few customers will manage themselves through all the 4 stages without any interven?on from the company. Most e-‐Com companies make the mistake of only focussing on high cost on-‐line customer acquisi?on when there are many cheaper ways of acquiring customers off-‐line.

Upsell / X-sell

•  Push •  Pull

•  Push •  Pull

•  Push

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Customer Management Process

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Acquisition Activation Retention

Many e-‐Com companies have very low ac?ve/registered customers ra?o as they have poor or no ac?va?on, reten?on and Upsell/X-‐sell strategies and ac?vi?es. There is no one ac?vity at each stage that will resonate with all customers. Companies should constantly ask themselves “what next” as they con?nue to build strategies and ac?vi?es that will move customers across the above path. Successful companies build philosophy, processes and abili?es to manage “AND” strategies and ac?vi?es rather than “OR” strategies and ac?vi?es for effec?vely managing customers through the 4 stages.

Upsell / X-sell

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Distribution Channel Choice

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Low start-‐up cost incen?vises many start-‐ups to focus only on on-‐line distribu?on. “Aggrega?on” convenience proposi?on does lend itself well to an on-‐line distribu?on model. Most e-‐Com companies trade-‐off low start-‐up cost and some?mes low running costs with higher customer acquisi?on costs and customer management cost.

On-line Off-line Vs

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Distribution Channel Choice

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Although, on-‐line proposi?ons are usually high on convenience, they are oEen low on buying experience and personalised service. Also, e-‐Com companies find it harder to manage the Ac?va?on, Reten?on and Upsell/X-‐sell stages of customer management. Pradoxically, there are “successful” companies in many industries that are either completely on-‐line or off-‐line

Lifestyle/Shopper Stop Vs Myntra Croma/Sangeeta Mobiles/Pai Vs Flipkart/Amazon Landmark/Crossword/Sapna Vs Flipkart

However, banks and securi?es trading companies seem to have managed both on-‐line and off-‐line distribu?on quite successfully.

On-line Off-line Vs

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Contact

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[email protected]

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Framework for Building Customer Proposition & Customer Management Process

customer proposition framework & customer management process

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