Seminar Understanding Customer And Prospect Needs

1
Seminar Understanding Customer And Prospect
Needs

• April 28, 2004

2
Seminar Objectives

• Introduce customer centered marketing
• Opportunity for more personalized marketing
• Provide a framework for
• Understanding the needs of your customers
• Marketing strategy and planning implications
• Provide insights and tools
• Opportunity for support

3
Ground Rules

• Participate, ask questions, share insights
• Listen and support others
• Confidentiality what is said here stays here

4
Introductions

• Your name, company and your role
• Interests leading to your participation

5
Understanding Customer Needs And Effective
Marketing

• Gain clarity on the needs of your customers
• A point of view potentially new perspectives
• Customer segments
• Customer research options
• Strategic and tactical options
• How to develop a marketing strategy plan
• Market sizing
• Competitive analysis
• Gaining clarity on your core capabilities
• External factor analysis
• Introduction to Personalized Marketing

Cover today
Other C3 Seminars
6
Agenda

• 200 introduction to customer centered marketing
• Mini-case Xerox Marathon
• What it means to be customer centered
• Basic marketing principles from a C3 POV
• 300 Break
• 315 Case What the hell is customer centered?
• 345 Customer and market research
• Segmentation
• Research and analysis
• Identifying market opportunities
• Customer imperatives
• 450 wrap up and workshop evaluation

7
Marketing Myths

• Most marketing is effective
• Most companies focus on what customers consider
  to be important
• You can sell just about anything if you work hard
  enough
• Customer decisions are always rational

8
Strategy and Implementation
9
Case

• Xerox Marathon Copiers
• Competitive Situation
• Do or Die
• Significant I.D.H.F. investments
• Four new products ready for launch
• Planned positioning Ease of use

10
Case

• Had done extensive competitive benchmarking
  (bottoms up)
• Features
• Reliability
• Economics
• Business functions
• Interviewed 25 customers (and non-customers)
• Wanted copiers that run (and run)
• New strategy and positioning (tops down)
• Marathon Copiers run and run

11
Market Positioning Framework
12
Role of MarketingResults from a 25 year MIT
study

• Marketing was central
• Begin with marketing orientation or evolve one
  early
• Focus on core technology and marketing
• Customer contact focused on their requirements

• Competitor awareness and assessment
• Separate marketing function
• Sales forecasting
• Formal market analysis and plan

Edward B Roberts Entrepreneurs in high
technology - Oxford Press
13
Introduction To Customer Centered Marketing

• A new mindset
• The objectives
• Build a valued relationship with current and
  prospective customers
• Every interaction is appreciated by the customer
• Provide superior value
• Align all company functions, objectives,
  reporting, incentives around driving the valued
  relationship with target customers

14
Consider

• Marketers generate 2,000-4,000 messages per day -
  to you
• How many of these messages are appreciated?
• How well have the marketing folks that
  communicate with you done
• Understanding your wants and needs?
• Addressing those wants and needs effectively?
• What would it take for 100 of the marketing to
  you to be considered to be effective?
• Doesnt it make sense for you to communicate with
  your customers in ways that are appreciated?

15
Customer Centered Marketing and Personalization
(Our Theory)
Significant Personalization
Degree of Personalization
Some Personalization
One to Many by Segment
One to Many
Marketing Effectiveness
16
PIMS Principles

• Define the market (small as practical)
• Market share
• 1 in MS is usually/often 1 in profits
• 2 in MS is usually/often 2 in profits
• 3 in MS often marginal in profits
• General Electric Fortune 500
• 1900
• 2003

17
PIMS Principles

• There is a relationship between marketing
  spending and market share
• Define the market
• Product/service
• Capital goods
• Consumer durable
• Consumer packaged goods
• Services
• Current market status
• Static, decline, growth
• Concentration
• Competition
• Customers
• Suppliers
• Channel considerations

18
PIMS Principles

• Identify strategic peers
• Companies that look like you
• Industries/markets that look like yours
• Determine the relationships between marketing
  spending and market share
• Sales and channel related expenses
• Advertising
• Sales promotion
• Other marketing
• Market research, marketing staff

19
Break
20
Case
What the Hell is Market Oriented?
21
Wolverine 1

• Describe the attitudes of
• Sales
• Manufacturing
• RD
• Finance
• GM Electronic Flows

22
Wolverine 2

• What defines market driven?
• Customer information broadly shared
• Consensus on customer decisions
• Incentives support customer focus
• Executions and Coronations

23
Wolverine 3

• What actions did Mgt have to take?
• Customer focus
• Competitive focus
• MIS
• Align incentives
• Issues large customers, align incentives to
  build teamwork

24
Customer Segmentation

• Buckets that enable customers to be grouped based
  on potential wants and needs
• Who they are
• Where they are
• What they have
• What they want or need

25
Segmentation Examples

• Demographics
• Industry (SIC/size)
• Application
• Current solution
• Affinity
• Culture

26
Critical Customer Questions

• Who are your customers?
• Why do they do business with you?
• Why dont they do business with competition?
• What benefits do they enjoy?
• What do they tell others about you?
• What is the probability that they will continue
  to do business with you?

27
Workshop Exercise

• Fill in the blanks
• My customers buy____________________
• From whom? ___________________________
• Why?_________________________________
• Where they buy ____________________
• How they buy _______________________
• When they buy ________________________

28
Need For Customer Research

• A brand is a relationship, not a product or
  Service
• Customers are more facile identifying rational
  reasons for liking a product/service than
  identifying emotional links with it
• Not conscious
• Not able to articulate the bond

29
Research Methods

• Traditional customer/market research
• Qualitative individual, group interviews
• Quantitative survey
• Qualitative before quantitative (usually)
• To learn customer language
• How customers define and categorize
• Key beliefs, values, attitudes
• Informs quantitative

30
Qualitative Interviewing

• Avoid leading questions
• Leading questions contain the answers
• Use open-ended questions
• Letting interviewee describe things
• e.g., What do you think about ?, how do you feel
  about ?
• Listening is important for developing rapport and
  getting inside the mind of the customer

31
Individual Interviews

• Length
• Typically an hour
• Number
• Typically 7-8 per market segment
• Saturation point
• Begin to hear the same things
• Data gets repetitive
• You realize youve got the cognitive map inside
  the minds of customers

32
Focus Groups

• Useful at the beginning of a research project to
  get a sense of what the issues and opportunities
  are
• Also useful when you have something for the group
  to react to or to verify findings
• Usually 10-12 respondents
• Usually paid
• Usually moderated by a MR pro 2 hrs
• Usually held in a specialized facility

33
Projective Techniques

• To get deeper into the minds of customers
• Gather data indirectly
• Not with direct questioning
• Using images and words
• For example
• Pictures asking customers what they mean
• Analogies -- asking customers about the metaphors
• Guided imagery asking customers to describe
  their experience

34
Quantitative Research

• Some investors/clients insist on statistically
  significant data
• Some on-line/low cost methods available
• Harris Interactive Quick Survey
• Zoomerang Survey Monkey
• Others

35
Do-It Yourself

• Interview
• 7 great customers
• 7 everyday customers
• 7 lost or rejecter customers

36
Do It Yourself

• Discussion guide parts
• Purpose of the research
• Promise confidentiality
• Background
• Larger category first
• Experience with the category
• Rational and emotional triggers
• How they evaluate brand choices
• What is the connection to your brand?

37
Do It Yourself

• Pattern analysis (buckets)
• Themes
• Range of variation
• Key beliefs and values
• Language reflecting attitudes
• Mindsets qualitative segmentation

38
Market Opportunity

• Does a market exist or do you need to create
  it?
• How well is the market currently covered?
• Are there market segments with little or no
  competitive coverage undefended hills?
• What is your strategy
• Rule maker
• Rule breaker
• Rule taker

39
RoadmapFrom Understanding Customer Needs To
Effective Marketing

• Gain clarity on the needs of your customers
• Identify customer segments
• Research/analysis
• Undefended hill / underserved market
• Customer imperatives
• Competitive SWOT
• Clarity on your core capabilities
• All within the context of the external factors

40
Summary

• Taking advantage of a market opportunity
• Understand customer segment
• How offering fits into their lives
• Helps them achieve their goals
• Providing superior value
• Offering meets customer needs
• Unique brand relationship
• Responding to customer imperatives
• Offering differentiated by attributes and symbols

41
References

• Good to Great Jim Collins Harper Business, 2001
• The Loyalty Effect Frederick Reichheld, Harvard
  Business School Press 1996 / 2003
• Qualitative Interviewing The Art of Hearing
  Data, Herbert Rubin and Irene Rubin, Sage
  Publications, 1995
• The Long Interview, Grant McCracken, Sage
  Publications, 1988
• The Focus Group Guidebook, David L. Morgan, Sage
  Publications, 1998
• Research Methods in Anthropology Qualitative and
  Quantitative Approaches, H. Russell Bernard,
  AltaMira Press, 2002
• Entrepreneurs in High Technology Edward B.
  Roberts Oxford University Press 1991

42
Appendix
43
Profitable Revenue Growth
Low Effective Business Model Hi
Low Customer Centered Hi
44
C3 Model
45
C3 Questions

• In the last year, how many customers did you
  gain? Why did they choose to do business with you
  and not your competition?
• How many customers did you lose? Who did you
  lose them to and why?
• What advantages do your competitors offer that
  attracted your former or potential customers?
• What is the value of a customer or customer
  segment?
• What is worth spending to acquire, keep and grow
  a customer or segment?
• How does your customer retention strategy differ
  from your new customer acquisition strategy?
• For your top ten customers, do your
  products/services play a critical role in their
  business?  If not how can they become
  indispensable to them?
• Does your product development strategy assure you
  of a compelling competitive advantage for the
  future?
• How well do you use customer information to shape
  and refine your day-to-day operations as well as
  your strategic planning?
• Are you using a CRM system? If so, is it
  hardwired into your business processes?

46
Customer Purchase Decision Exercise

• 1. Process
• Key manager input
• Keep simple and focused
• Identify information needs
• Research and review
• 2. Workshop format
• Identify purchase decision criteria
• Surveys and other research
• Customer interviews and discussions
• By key customer segments

• 3. Workshop session
• Determine overall customer criteria or
  particular segment
• Brainstorm all criteria for segment
• Refine and prioritize
• Select top 6 8 criteria for each segment
• Utilize in competitive analysis and positioning

47
Competitive Analysis Exercise

• 3. Basis of competition
• Principle decision criteria for customers
• Review or develop
• Prioritize
• 4. Company vs. Competitor Analysis
• Matrix competitors and key basis of competition
  factors
• Compare company vs. competition
• Market positioning

• 1. Process
• Key managers
• Keep reasonable, simple and focused
• Determine information gaps
• Research quick study
• Workshop
• 2. Identification of key competitors
• Strengths and weaknesses
• Objectives
• Key strategies

48
External Environment - Exercise

• Process
• Key managers
• Research and ongoing monitoring
• Focus on key influences - simplify
• Workshop format
• Identification of key external factors
• Brainstorm all influences
• Past, present and future
• Prioritize key factors major impact

• Analysis of external factors
• Description of factor
• Assess or measure factor how changing
• Impact on company
• Possible strategic responses
• Integrate into strategies and action plans
• Integrate into threats and opportunities

49
C3 Contact Information

• Mike Glesk
• mglesk_at_customercentered.com
• [phone]
• Doug McLaine
• dmclaine_at_customercentered.com
• [phone]
• Peter Waasdorp
• pwaasdorp_at_customercentered.com
• [phone]