Digital customer growth - a framework
A business model based on customer experience
How to build a strong customer experience
Using digital transformation to build a customer centric organisation
Creating a roadmap for digital customer growth
Digital customer growth: Engaging customers in digital channels
1. IMAGE BY CHERRYGARCIA / FLICKR
LEADING AND
ENGAGING
CUSTOMERS
DIGITAL CHANNELS
IN
- GROWING VALUE THROUGH
PERSONALIZED EXPERIENCES
This report is solely for the use of client personnel. No part of it may be
circulated, quoted, or reproduced for distribution outside the client
organisation without prior written approval from Avaus.
TOM NICKELS
TOM NICKELS
WWW.AVAUS.FI
WWW.AVAUS.FI
2. digital
Sales or revenue is the foundation upon which
every business is built. All sales come from your
customers.
customer All companies face challenges of growing and
growth
retaining customers as interactions and
relationships move to the digital space.
The only way to differentiate and create value
for your customers is by delivering a better
customer experience than the competition.
To do this, you must listen to customers and
interact with them as individuals. Digitally.
This requires many changes within the
company: new services and distribution
channels, new ways of organizing, better data
management, new flexible technologies and
new metrics.
3. 1
Digital customer growth - a framework
2
A business model based on customer experience
3
How to build a strong customer experience
Using digital transformation to build a customer
4
centric organisation
5
Creating a roadmap for digital customer growth
4. 4
We combine strategy, analytics
and design with technology
and outsourcing services.
DRIVING
BUSINESS
Focus areas:
• Digital transformation
• Customer growth
• Digital sales and B2B Lead
management
• Business model & service innovation
• Business process efficiency
5. SOME GREAT COMPANIES WE WORK WITH:
100 SPECIALISTS
OFFICES IN HELSINKI, FINLAND
AND WROCLAW, POLAND
REVENUE 10+ MILLION € (2012)
6. FOUNDATION
1
Digital customer growth –
a framework
8. Google,
Amazon,
Apple and
Facebook set
new
standards
for what
consumers
expect from companies
9. But most old
companies are
stuck with
their legacy
Slow decision making
Legacy IT systems
Old distribution channels
Wrong competencies
Company politics
Fear of cannibalization
10. CREATING A
COMPETITIVE
ADVANTAGE
BASES FOR
DIFFERENTIATION
It’s difficult to differentiate based
on price or product characteristics.
It might work for a while, but UNIQUE
usually competition catches up.
PRODUCT
However REALLY KNOWING
YOUR CUSTOMERS and serving
them based on their individual
needs will set you apart.
COST ADVANTAGE
CUSTOMER
INTIMACY
11. In the beginning
- companies created the product
Without a good product
companies are not in the
game. But the core
product has already some
time ago become just a
hygiene factor for
producing a great
customer experience.
12. THEN COMPANIES
STARTED TO ATTACH A
LIFESTYLE
TO THEIR PRODUCTS BY
INVESTING IN BRANDING.
What does it say about me if I
wear Nike or drink Coke?
This report is solely for the use of client personnel. No part of it may be Now there was a context for
circulated, quoted, or reproduced for distribution outside the client the product, a context that
organisation without prior written approval from Avaus.
added some value to
customers.
13. ”We have these “We have these
products, where do customers, how can
we find customers we serve them while
for them?”
making a profit?”
14. Shoes
Clothes
Sensors
PRODUCT Apps
Devices
NOW COMPANIES Set goals
Find routes
ARE ADDING SERVICE Track activities
MORE CONTEXT
services &
THROUGH
content
It becomes easier. Educational.
Fun. Something to share with
friends. It multiplies the value of CONTENT
the product.
Workouts
Music
Voice prompts
Training tips
COMMUNITY Sharing
Events
Challenge friends
15. The next
battle-field
for context
- is the battle
between
ecosystems
Customer needs are fragmenting. At
an increasing pace. No company alone
in any product category can produce
solutions that satisfy the range of
needs now on the market.
The ultimate way to add context to
products is by opening up and
allowing others to build upon your
product and make it suitable for a
whole range of users and needs. In
most businesses this war is just
starting.
16. IF YOU CAN ADD SERVICES
AND CONTENT TO LIGHT
BULBS YOU CAN DO IT IN
ANY
BUSINESS
This report is solely for the use of client personnel. No part of it may be
circulated, quoted, or reproduced for distribution outside the client
organisation without prior written approval from Avaus.
17. CONTEXT
TIME
PREVIOUS BEHAVIOR
LOCATION THE HEART OF
CUSTOMER LIFECYCLE CUSTOMER
INTIMACY IS
NEEDS AND
MOTIVATIONS
= RELEVANCE
PREFERENCES
HABITS
LIFESTAGE
ATTITUDE
18. 1
BUSINESS Customer
Loyalty Sales
MODEL experience
Grow sales and
profitability
per customer
RELEVANCE
2
RELEVANT
CUSTOMER Identify Listen Customize Interact
ENGAGEMENT
Treat each customer as
an individual
3
Data & information
ORGANISATIONAL
CAPABILITIES Experience design
Move from product
centric to customer
Organisation & processes
centric organisation
Technology
19. BUSINESS
2
A business model based
on customer experience
20. Customer Customer Sales
experience
loyalty
Customer
Useful Recommends Customers growth
Easy Buys more Revenue per customer
Pleasant Will not switch Retention
The business logic of customer growth
22. 1 000 000
Customers
X 20€
Average
X 6
Purchases
= 120 mil. €
purchase per year
Aktiivisten Keskiostos Ostouseus
asiakkaiden
määrä
23. Segmenting customers based on
purchase frequency
4. Passive
1. Sporadic
2. Regulars
customers
3. Best
customers
Purchase
frequency
per year 1
5
18
0
24. How much revenue and profits
do different segments bring?
1. Sporadic 2. Regulars 3. Best 4. Passives
Frequency 1
5
18
0
Customers 400k
400k
200k
600k
Avg purchase 20€
20€
20€
20€
Sales
8 m€
40 m€
72 m€
-
Total revenue from all
customer segments
120 m€
25. What is the best way to grow sales?
1. Sporadic 2. Regulars 3. Best 4. Passives
Frequency 1
5
18
0
Growth in
frequency 1
5,5
20
0
132 m€
Sales
Total
growth
12 m€ = 10%
26. …
Customers Purchases Loyalty
All Store Internet Telesales
CUSTOMER BASE - FEBRUARY 2012
• Total number of customers: 852030
• Marketing permissions: 754044 (88%)
• New customers this month: 5713
• Average purchases per customer: 2,3
12 MONTH TREND
Existing customers New customers Revenue per customer
Products per customer Share-of-wallet Customer life time value
27. ENGAGEMENT
3
How to build a strong
customer experience
31. THE
CHALLENGE: IS
NOT REALLY ME
THIS IS WHAT YOU SEE, BUT IT
A LOT OF THE CUSTOMER INFORMATION
COMPANIES CURRENTLY USE ISN’T REALLY FOCUSED
ON GETTING TO KNOW WHO THEY ARE AND WHAT
THEY NEED.
AND ABOVE ALL IT DOESN’T TELL MUCH ABOUT
WHAT THE SITUATION – THE CONTEXT – OF THE
CUSTOMER IS RIGHT NOW.
32. THE HEART OF CUSTOMER Products/
INTIMACY IS
services in use
RELEVANCE
Customer
lifecycle
Purchase
history
IS HELP FROM THIS
COMPANY RELEVANT
IN THE NEAR FUTURE?
Contact DAYS TO
history
MONTHS
Web searches
RELATIONSHIP
IS THIS SOMETHING I
NEED RIGHT NOW?
CONTEXT
REAL-TIME
Visit to webpage
Purchase
IMMEDIATE
CONTEXT
Expressed
PERSONAL needs
Call to CC
CONTEXT
Area of
Weather
residence
Location
Preferences
YEARS
Lifestage
IS THIS IMPORTANT
Attitudes
TO ME IN LIFE?
Social
connections
33. understanding context
+
CUSTOMER REAL-TIME
PROFILE DATA
BEHAVIORAL DATA
Contextual marketing is about understanding not just who someone is but where they are, what they
are doing, and what they are likely to do next. It’s about combining the right information about a
customer and the context to deliver the right services and communication at the precise moment it
offers the most value.
34. INVEST IN
DATA
0010011001010011101001100100011001100111001100011001
100101001001100101001110100110010001100110011100110001
00101001001100101001110100110010001100110011100110001
Good data is like the ears of a sales man. Without it you
100101001001100101001110100110010001100110011100110001
have no clue what the customer needs.
Integrate traditional customer profile data with real-time
behavioral data from all channels in order to
UNDERSTAND the need and REACT
to the context .
36. MARKET
VALUE
NEED
CONTEXT
IN WHICH MARKET HOW CAN WE GROW WHAT SHOULD WE HOW SHOULD WE TREAT A
SHOULD WE INVEST?
LIFETIME VALUE?
OFFER?
SPECIFIC CUSTOMER?
SEGMENTING ON A MARKET SEGMENTING BASED ON SEGMENTING BASED ON SEGMENTING BASED ON
LEVEL. FOR INSTANCE CUSTOMER VALUE. FOR DIFFERING ATTITUDES THE SITUATION OF THE
CORPORATE CUSTOMERS VS INSTANCE HIGH-VALUE, AND NEEDS. FOR CUSTOMER. FOR INSTANCE
CONSUMERS.
CHURN-RISK VS UNPROFITABLE INSTANCE TASTE, VISITED WEB-SITE, ORDERED
CUSTOMERS.
CONVENIENCE, OR COST.
SPECIFIC PRODUCT OR IS AT
LOCATION X.
Different approaches
customer insight
37. THERE ARE MANY WAYS TO IDENTIFY CUSTOMER
CONTEXTS – USING ONLY ONE IS NOT ENOUGH
BUSINESS NEED
Personalisation / Value Proposition
Targeting
management
development
CONTEXTUAL INDICATOR
RECOMMENDATION
ENGINE
TRANSACTIONAL /
VALUE
BEHAVIORAL
PROPENSITIES
DEMOGRAPHICS /
GEOGRAPHY
LIFECYCLE
ATTITUDINAL
NEEDS
Useful
Sometimes useful
Not useful on its own
38. Segmenting customers based on
value
Most valuable
customers: Retain
Most growable
customers: Grow
Marginal customers:
Business as usual
Unprofitable customers: Dismiss
or lower cost
Cost to serve
Customer value segments
Current value
Potential value
Image: Peppers & Rogers group
40. PROPENSITY
WHICH CUSTOMERS ARE LIKELY TO BUY
SOMETHING, LEAVE OR DO OTHER
SIGNIFICANT THINGS?
THROUGH PREDICTIVE MODELLING TARGETING CAN BE
MADE MORE EFFICIENT. THIS HAS A POSITIVE EFFECT ON
BOTH THE BOTTOM LINE AND ON THE CUSTOMER
EXPERIENCE.
41. Developing customer
STRATEGIES
CUSTOMER ISSUE
BUSINESS CHALLENGE
with reasons to stay
Understand me and provide me ion)
Retain high value customers
act
g. Loyalty recognition, Next best
(e.
purchase more
Provide me compelling reason to rs, Remarketing)
Broaden the relationship
ge
g. Next best action, Behavioral trig
(e.
t, competitive offers
Understand me and make relevanMatching customer type)
Acquire the right customer
, risk
(e.g. Exclude high defectors, Debt
Improve margin of Can I be satisfied with less
to self-service, Raise prices)
(e.g. Identify, Communicate, Steer
unprofitable custmers
42. ANOTHER
PERSPECTIVE
ON CUSTOMER VALUE
ENGAGEMENT
Interactions
€
€
€
€
CUSTOMER VALUE
Money spent
44. Different needs and motives
drive the development of customer offerings
AtoB
Status
Convenience
Lifestyle
Green values
”I need a car to get ”I have money and ”I need to be able ”The car goes along ”I appreciate
from one place to power, and I want to to trust my car. It with my lifestyle. I have ecological values.
another”
show it to others. always functions the my own personality My car does not
Everybody admires way I wish.”
and I want to pollute the nature.”
my car.”
experience
it through my car.”
45. Managing lifecycle
Prospect > New customer > Developing Stabilized Good customer > Recommending
customer > customer > customer >
Newsletters Renewing contracts
Rewarding, Recommending program
Ensuring satisfaction
Activation of service consideration
use
Communication
Triggered added
sales Service
messages Resigning
Analytics based Passivity…
actions
Targeted Saving the customer
campaigns relationship
Guidelines on how to use
Tempting the customer
products and services
back
manual
Potential customer
Welcome program Passivity scenario
Churn…
Recognizing interested automatic
customers
triggered
Abandoning shopping Strengthening the
Customer basket Up-sell and service Strengthening Customer
acquisition > Welcome > cross-sell > experience> loyalty > recommends >
46. TIMING HAS A BIG EFFECT ON RELEVANCE
WHEN?
Knowing when a product or service is relevant
to the customer is one of the hardest things to
do. But one that potentially pays of big time.
Identifying the right customer behavior that
SIGNALS THE MOST PRESSING
CUSTOMER NEEDS and triggering
communication based on that may increase
relevance and sales SIGNIFICANTLY.
47. FOCUS SALES EFFORTS ON THOSE THAT ARE
READY TO BUY
The different situations of customers and prospects should be recognized. Some are just doing
initial browsing, while others are seriously thinking about buying. To optimize sales results we need to
distinguish between customers in different phases of the buying cycle. Automated lead nurturing
programs can be used for customers that are not quite ready yet. That allows us to focus scarce sales
resources on customers most likely to buy.
Image: www.smallbizwithkids.com
48. Scoring leads in order to find
customers that are ready to buy
”Lead scoring is a sales and marketing methodology for ranking leads in order to determine their
sales-readiness. You score leads based on the interest they show in your business, their current
place in the buying cycle and their fit in regards to your business.”
Image: Marketo – The definitive guide to lead scoring
49. SIMPLE REACTIONS TO CUSTOMER ACTION WILL MAKE THE CUSTOMER FEEL THAT
YOU RECOGNIZE HIM – IT HAS A CLEAR FEEL-GOOD FACTOR TO IT.
(and it affects sales)
50. Example of Dialogue Model: New members
Business goals / aim Description: Rules:
• Activate customer • After joining the customer is encouraged to • Trigger valid for all new members that have
• Ensure customer satisfaction utilize her membership not yet used their card
• Also strive to gain more customer knowledge • Once the card is used, the goal of the
through updated profile communication flow is met and this flow is
Customer experience
ended
• ”I get benefits from” • Updating or changing profile information is a
• ”Great offers and benefits” added sales trigger • Communication will also be stopped if the
• ”Let´s check out the newest products” customer does not activate within 360 days
• Product offerings should include only
products that are not often updated
51. PERSONALIZE
MAKE COMMUNICATION
MORE RELEVANT BY
ADAPTING IT TO THE
NEEDS AND CONTEXT OF
THE INDIVIDUAL
CUSTOMER.
52. NEW SERVICES
NEW PLAYERS FOCUSING ON ADDING VALUE TO THE
CUSTOMER CONTEXT ENTER OLD MARKETS.
+
”runtastic Roadbike is your comprehensive bike app for your
smartphone. The integration of heart rate, cadence, and
speed sensors lets you get more precise tracking and analysis
of your biking”
53. my network
THIS IS
What value can it bring to
products and services I use?
How can companies facilitate
that value?
55. REMARKETING RELEVANCE
TAKING REALTIME RELEVANCE ONE STEP FURTHER - KEEPING UP
WITH THE CUSTOMER CONTEXT ONLINE
Company User leaves
website
Popular sites
Web user
CLICK
User returns
”Remarketing is a feature that lets you reach people who have previously visited your
site, and show them relevant ads when they visit other sites.”
- Google
58. ”The world’s finest
department store
brings the greatest
international brands to
iPhone.
In-store, navigate your
way around 4,000 of
the world’s most
premium brands over 1
million square feet and
7 floors.”
59. CHANGE
MANAGEMENT
4
Using digital
transformation to build a
customer centric
organisation
61. ”Newswe
ek has
announce
that it is g d
oing
DIGITAL
ONLY
bringing
an end to
magazine the
’s 79 year
history in
print.”
62. What is at stake?
Successful vs
unsuccessful change
After iPhone changed the game
Samsung was able to convert its
portfolio to smartphones while Nokia
failed to do so.
Market demand can steer you in any
number of directions, but a vision of
a future should provide the compass
for making the big bets.
63. Nokia’s first
bold
move
Probably the most important
strategic change in Nokia's
history was made in 1992, when
the new CEO Jorma Ollila
made a crucial strategic
decision to concentrate solely
on telecommunications.
65. Google: we created
Android to stop an
Apple-dominated future
"If we did not act, we faced a draconian future
where one man, one phone, one carrier was the
future," he said. "That's a future we don't want.”
66. Four dimensions of
managing digital
customer growth
1. Managing
Are you actively developing and delivering consistent positive
Customer Experience
customer experiennces in all channels?
2. Managing
Do you have an accurate view of customer needs and
Customer Insight
behaviour that is based on data and facts?
3. Managing
Do you know the value individual customers bring and are
Customer Lifetime Value
there systematic programs in place to increase that value?
4. Managing
Are all employees committed and motivated to create value to
Customer Centric Culture
customers and serve them based on their individual needs?
68. The volume of In 2002 digital
data surpassed
information non-digital for
the first time. By
is growing 2007 94% of all
information on
exponentially
the planet was
digital.
69. All companies are now in the
information business
Make existing products and services more valuable to your customers by building in
more data and information. In B2B this is obvious. Sharing data is a key way for adding
value to products and services. But it applies to B2C as well. Apps for smart phones.
GPS for cars. Smart TVs. Recipies on food packages.
70. Information
drives a superior
customer
experience
Amazon is the grand master
of using customer insight
to improve the customer
experience.
And results are impressive.
Amazon is the most
recommended company*
with 82% of customers
saying they would
recommend it.
*Source: Temkin Group Q1 2011 Consumer
Experience Survey
71. IF SOMEONE CAN REINVENT THE
LIGHT
CUSTOMER EXPERIUENCE OF A
BULBTHE ANYTHING CAN
BE REINVENTED
This report is solely for the use of client personnel. No part of it may be
circulated, quoted, or reproduced for distribution outside the client
organisation without prior written approval from Avaus.
72. Information drives value
old
10-f
price m
iu
prem
PHILIPS HUE
VS.
GENERIC LED BULB
59,95 €
5,95 €
Philips Hue is a great example of a product where information information adds
context to product usage. Contexts adds customer value. By increasing customer
value Philips can charge a price premium for a product that otherwise would be
generic. Information thus has become a key driver for profitability.
73. Geckoboard
Real-time information has become one of the most valuable management tools
around. We need to know what is happening right now – are customer buying, are
competitors responding, are we making profits – in order to make smart decisions.
74. management
Data Managing data
Data collection Data cleansing Data enrichment Data security Data usage
repository
360 degree Using data to
Data
view of drive insight and
customer
Marketing
interactions
database
Data sources
Inbound Campaigns and External
Demographics Purchase history Web history
contacts responses datasources
76. CREATE
BIG
EMOTIONS
“ I've learned that people will forget what you said, Apple. Zappos. Net-a-Porter.
people will forget what you did, but people will never
forget how you made them feel. ”
Maya Angelou, american poet
76 avaus.fi website
81. ”Being simple isn’t as simple as it used to be. IKEA is
growing, and growing fast. Today, it takes strategy to be
simple, but it must be that way. It can be hard to find
simple in a complicated world but it is the IKEA way.”
Hansi, Ikea employee on Ikea.com
82. Nowadays, customers don’t want just
function. They want pleasure — good
products that are aesthetically appealing.
83. Starbucks is
to the age of
aesthetics what
McDonald’s was
to the age of
convenience.
Image: homedsgn.com
84. AESTETHICS DRIVES DESIGN OF
PHYSICAL
PRODUCTS
This report is solely for the use of client personnel. No part of it may be
circulated, quoted, or reproduced for distribution outside the client
organisation without prior written approval from Avaus.
88. continuous
Introducing digital
activities should not
be seen as an
individual project
Digital is a
continuous
process…
…bringing new
ways of working,
communicating and
marketing, serving
customers
process
89. Digital first
Change your mindset for marketing to ”digital first”. Calculate
the ROI for marketing. Digital channels are (almost) always more
efficient than traditional channels.
90. Inspire people
Terry Leahy set an inspiring vision for Tesco’s entire staff: ” Give people a purpose, give them
1) Become the leader in grocery retail 2) Create a new concept big exciting things to do.”
for consumer goods retail 3) Go international. All of them came
Sir Terry Leahy, former CEO of Tesco
true.
91. Marketing & All marketing activities should
be connected to sales.
sales as one
Sales data tells you what your
customers value.
It will show you what works and
what doesn’t, and which
marketing investments are worth
making.
AWARENESS
All Names
Recycled
Prospect
Engaged
Sales
Lead
Lead
Opportunity Customer
&
Collaboration with sales
Marketing Sales
92. crawl – walk – run
Becoming a digitally transformed organization or function does
not happen over night. Change happens step by step.
Start with the basics, like managing data and communicating in
digital channels. Connecting web data from the customer
interface with your own data assets, and using that insight for
business decisions comes after a year or two.
99. market for
I think there is a world
“ puters.”
may be five com
Thomas J. Watson Sr., then-president of IBM, made an apparent
misjudgment of the PC market’s potential.
Under Watson’s leadership, IBM — which invented the PC — didn’t
have a vision as to how big the market could become and let others,
especially Microsoft, get the lion’s share of the value creation.
101. DIGITALISATION CAUSES
SPEED OF
THE
CHANGE
TO
ACCELERATE
VOLUME AND
DISTRIBUTION
OF INFORMATION driven
by digitalisation
MORE INFORMATION =
FASTER CHANGE
This report is solely for the use of client personnel. No part of it may be SPEED OF
circulated, quoted, or reproduced for distribution outside the client CHANGE
organisation without prior written approval from Avaus.
103. Are you
ready for
game changers
being introduced in
your industry?
This report is solely for the use of client personnel. No part of it may be
circulated, quoted, or reproduced for distribution outside the client
organisation without prior written approval from Avaus.
104. Make mistakes
- success comes from learning,
learning comes from trial and error
Mistakes are a requirement for learning. They will point you in the right
direction. Organizations where people are punished for mistakes
will lead to fightened organizations. Fear makes people passive.
The biggest success stories include a lot of sidesteps that later proved to be
mistakes. But which all had their part in pointing those companies in the right
direction.
106. ROADMAP
5
Creating a roadmap for
digital customer growth
107. Strategy and hands-on execution in parallell
DATA CUSTOMER
CUSTOMER CREATIVE
STRATEGY MANAGEMENT
INSIGHT STRATEGY DESIGN
Strategic
CHANGE MANAGE-
REPOR-
MENT
design
AUDIT CONCEPT
TING &
ANALYSIS
DESIGN
Vision
Roll-out
Optimize
CONTENT PRODUC- DATA
Hands-on
PLAN
PILOT
IT ARCHI- TION MANAGE-
MENT
TECTURE
execution
EMPLOYEE CAMPAIGN
EXECUTE AND ENGAGEMENT & TECHNICAL MANAGE- TECHNOLOGY
EVALUATE TRAINING DEPLOYMENT MENT SERVICES
PILOT
CROSS COMPETENCE TEAMS
STRATEGY DESIGN TECHNOLOGY ANALYTICS PROCESS MGMT
108. Defining customer strategy
Why?
Who?
Vision and Customer definitions and
Customer insight objectives, KPI’s selections, Customer
lifecycle
What?
How?
Moments of truth, Offering, Culture, Business Piloting and
Service channels processes, Development implementation
areas and roadmap
109. Example: Digital transformation program
Three year roadmap for Digital Customer Growth
2012
2013
2014
1. Data and
technology
Key data management
New website Online sales development
2. Customer
dialogue
Production of
Mobile services
digital contents
Online customer service
3. Customer As is
Resource and channel
analysis
processes
Process automatisation optimization
4. Service Development of new digital services
innovations
Direct customer dialog
Knowledge
5. Organisation management
New working methods
and culture
New job descriptions and
10 avaus.fi website organization
110. The winners are those
organisations that can
learn new things and
unlearn old things at an
ever increasing speed.