Book – Challenger Customer

bookExcellent book for marketers!  I would recommend to buy a physical book, which can be easily reviewed later and shared with a colleague.  Audible version, which I purchased, is fantastic to listen while walking in a park (I listened twice), but not as convenient to take notes and share.

The book describes changing of the buying process (buying now includes more diverse groups of people) and sales/marketing strategies that can increase number of “high quality sales” – premium solutions rather than minimum options.

Surprising discovery: finding correct stakeholders boosts the probability of a successful sale by 4%, but positioning the solution for each individual stakeholder reduces the probability of a successful sale by 4% also.

4-percent

Tailoring to the needs of individual stakeholders more hurt the quality of the deal.

big-groups

What are the main points of disagreement in customer buying groups?

  1. problem definition
  2. solution identification
  3. supplier selection

cours-of-actions

Companies needs to concentrate on buyer group agreement on the solution regardless of a supplier.  Decision on the supplier is an easier one for a buyer group.

consensus

Example: 

Medical supply company used to sell their instruments to surgeons.  Now the company is selling to a group of surgeons, CFOs, hospital administrators, etc.  The question is not which supplier is chosen for the surgical instruments, but what needs to be done for the benefit of the business in general, including buying new surgical instruments or building a parking garage.

The disagreement in the buying group is most intense at 37% into the purchase (well before the company will start reaching to any suppliers at 57% into the purchase).

57-percent

Diverse buying groups would not easily agree on anything disruptive and ambitious.

Customer buying group profiles:

  • go-getter (interested in organizational improvement and known for getting results; will be interested in “how” and not “why”)
  • skeptic (focuses on “why” – weary of complicated projects, concerned that the costs will be higher and the benefit lower than expected – needs a lot of convincing)
  • friend (accessible, can connect with others, happy to talk, though may not get much done)
  • teacher (wants to understand the big picture “Blue Ocean Strategy” person)
  • guide (information dealer – will share internal processes of the organization, though may not get much done)
  • climber (focused on personal gain)
  • blocker (wants to avoid change for a variety of reasons – might designed existing solution or had been burned by suppliers in the past)

stakeholders-test

Top reps target customers who can build consensus and drive change, disregarding their title or budget authority.  They target “mobilizers” or “challenger customers” – go-getters, teachers, skeptics.  Average reps target guides, friends, and climbers.

stakeholders-value

What needs to happen for a successful sale?  The supplier needs to teach, tailor (for consensus buying decision), and take control.

Teaching (or, more likely un-teaching)

The organization needs to have “commercial insight” – generating commercial insight is an organizational capability rather than a skill of an individual sales rep.

commercial-insight

As teaching the most effective before the prospective buyer is contacting the sales rep of any supplier, a supplier can do it through marketing content.  The effective content that changes customer’s perspective does not have to be easily accessible or easy to find,  it does not have to have interesting facts or anecdotes, it does not have to be easy to understand.  The content does not have to have a smart perspective.

Effective content must:

  • teach customers something new and compelling about their business
  • provide a customer a compelling reason to change their course of actions

In general, the content needs to illustrate that the cost of inaction is greater than the cost of change.  Thought leadership is not an insight.  The insight provides an implicit message: “you are doing it wrong” – and a reaction – “I need to change my approach.”

32:52 – 39:20 – Explanation of the Commercial Insight (though the entire video is very entertaining and helpful for anybody working with content marketing).

A-B

Commercial insight content should take the customer from point A to point B.

  • A – current state
  • B – future state

Suppliers typically explain how good B is.  However, suppliers need to explain the “pain of staying with A” first.  The customer seeing adoption of B as “pain of change,” the supplier needs to show that “pain of same” is greater.

4 questions to build commercial insight:

  1. What are our sustainable unique strengths?
  2. Of those unique strengths, which ones are currently under-appreciated by our customers?
  3. What are the customers fail to understand about their business that leads them to under-appreciate our unique sustainable capability now?
  4. What would we need to teach the customer about their business, that leads them to value that capability more then they do now?  OR – how we can credibly break down their A and build their B?

Example:  Dentsply

The company produced light weight, cordless, ergonomically designed instruments.  Though the dentists agreed that the instruments were superior to what they used currently, they did not want to make an investment into “nice to have” instruments.  Dentsply (with the help of hiring a knowledgeable dentist and a consultancy) found a different positioning for the instruments.  They look at what was important for the dental practice in general – and found that absenteeism and turnover of dental hygienists is a significant problem.  Better instruments to keep hygienists from work-related strain could reduce their absenteeism and cost of operating a dental practice.

“Don’t lead with what makes you unique – lead to what makes you unique.”

Un-teaching – the supplier explains that hygienist absenteeism cost more to dental practice than dentists realized.

Example: Xerox

School districts were printing a lot, but in black and white.  How to position color printers (better margins) at the time of shrinking school budgets?

Understanding customers broadly – not only IT who buys tech, but superintendents, lead teachers, etc.  Xerox focused on student performance rather than printer performance, and discovered that vibrant color improved focus and retention in students.  As Xerox printers of that category were low cost on the market (unique competitive advantage), the supplier was able to focus the customer’s attention on the improving students performance with color materials, rather than “buying printers.”

Commercial Insight sparks a new kind of conversation with customers—one that doesn’t start with you or your latest “solution.” It lets you start by teaching the customer something new about themselves. Below, one Xerox business unit that provides solutions to the K-12 education marketplace flipped the script from feature-centric customer interactions to Commercial Insight-led customer interactions.

xerox

Content

All content should lead to the commercial insight.  Spark > Introduce > Confront

Spark – a counter-intuitive fact (possible in a sales tweet)

content-leads-to-insight

Customer testimonials can be centered on A too.  For example a customer can talk about discovering that the company’s approach cost more than they realized, galvanizing the other stakeholders, and eventually solving the problem.

drivers-changing-behaviour

Example: Smart Technologies 

Who is the most important person for the collaboration software decision?  Facilities?  CIO?  The answer was  – a person who sees the benefit of it in the organization and can champion the case by connecting other stakeholders.  The company targets this persona.

Lead scoring can be adjusted from sale readiness to mental model disruption.

When a commercial insight is ready, who should be approached with this information?  Bad contact in the organization might be worse than no contact at all, as new ideas can be associated with the reputation (unfavorable) of that person.  It is important to connect with a mobilizer, who can play different role in the buying decision.

Possible concern – climber.  If a person talks about personal benefit the solution can bring rather than group or organizational benefit, the person might be a “climber.”  The colleagues of this person already recognized it, and the new idea coming from this individual might not be perceived positively.

Taking control of customer buying process – helping the customer to create a functional buying group.  Important role of group learning.

Getting customer buying group to learn before buying results in 2/3  increase in probability of buying a premium solution.  It also boosts probability of buying additional future offering by 23%.

Collective learning is not getting stakeholders into one room, but getting them interact with each other in a certain way.  Facilitation of customer buying group  debate became more important than presentation.

Important: finding the common languages between different functions of the buying group and use common messaging.

Example: Sisco 

Sisco realized that a new executive is participating in technology purchasing decisions – the CMO.  Sisco used social listening to understand what aspects of technology are important for CMOs and how are they discussed in the industry.  Then, these conversations were compared to conversations generated by (and targeted to) CIOs.  When the common ground was discovered and messaging that addresses concern of both functions was created, the messaging has been tested in social media also – what was picked up and which terminology has been used.

Mobilizers need to be equipped with tools to help build the consensus in the organization – how to talk to other functions about the category of the solutions in general.  

The content can come from existing sales materials, but it needs to be vendor-neutral.

Examples are Marketo and SkillSoft.   

skillsoftMarketo provides a comprehensive guide explaining Marketing Automation solutions in general with instructions for marketers how to discuss this type of solutions with sales and IT, which arms the mobilizers with materials to use at the early stages of the sales cycle.  

SkillSoft created an un-gated guide explaining elearning that can be used by mobilizers and very useful by itself.  The guide has multiple links for additional, gated, content, which helps the company to generate leads.

Social selling

How do top sales reps engage with the potential customers early if the customers contact the organization at 57% of sales cycle, when the type of the solution has already been determined?  These sales reps go where prospects learn… including social media groups and became facilitators of learning, without mentioning their own solution.

Collective learning decreases probability of encountering a blocker by 20%.   There is 35% increase of probability of high quality sale, if collective learning is happening in a stakeholder group that has a blocker. In general, blockers reduce probability of a high quality deal by 47%.

Companies need to shift to supporting the customers’ purchase process. Rather than “How to help our sales people better sell…” the companies need to think “How our sales teams can help our customers better buy.”  Shifting forecasting from sales activities to “customer versifiers” increased accuracy of sales forecast of one organization by 70%.

Explanation major concepts – more from the sales side.

More useful materials on the topic are available on CEB page dedicated to the book.

Excellent book!

Book – Marketing Above the Noise

bookExcellent book – an explanation of what has changed and what has not changed in marketing.  While the book describes case studies using social media (the shiniest of all shiny objects 😉 ), the author puts new marketing tools in perspective, explaining that medium is not the message and each business needs to understand where its limited marketing dollars should be spent more effectively.

Marketing strategy rightly remains the foundation of marketing.

Another fundamental (and rarely understood) point is the need for internal alignment and minimal level of marketing resources to be effective.  No matter how brilliant the idea and dedicated the marketing team, positive impact on the business can not be realized if resources are insufficient and alignment is absent.

The author outlines several points of alignment needed; it is probably first time when I saw all of them emphasized, what makes complete sense.

marketing

As we have been discussing marketing and sales for a long time, and marketing and IT conversations in a few last years, product development relation to marketing was somewhat understood, but the idea that executive support AND all of other alignments are needed for marketing to succeed is often missed.  Every marketer probably has more examples of when particular alignment was not working than examples when everything worked perfectly 🙂

Particularly interesting points:

  • Companies are focusing on broader customer life-cycle, including customer’s experience after the initial sale.  In some organizations the CMO is replaced by CCO (Chief Customer Officer)
  • Think which marketing programs you can cut out.  A few strategic programs done well are more valuable than many initiatives adding to the noise…
  • In the five stages of the purchase process (Awareness > Consideration > Purchase > Preference > Loyalty) – the purchase is the middle step, rather than a final one

mountain

Moving forward with a marketing program without taking the time to outline a solid strategy is like going mountain climbing without understanding which mountain it is you are going to scale

  • It is impossible to build a successful strategy without understanding the vision and goals of the overall organization.
    • Is the corporate focus on growth in terms of revenue or new customers?
    • Is the business looking at maintaining or growing its business in existing markets, or expanding into new markets?
    • Is the focus on customer acquisition or on improving margins?
  • Organizations that rise above the noise solicit customer input, good or bad, and they act on it to improve their performance and drive their marketing.
  • Sun Microsystems: original customers were the same as the producers of the product – the engineers.  When the product became popular on Wall Street, the target audience was generally the same “but they dressed better.”  When Sun moved to business and commercial space, the audience became different – different goals and objectives and different experience level.  “We had to ask customers what they wanted, because they were no longer us.”
  • Customers will be more open with a third party consultant when discussing the company’s products and services.
  • Many campaigns run effectively for three to four years before being replaced.  Marketers have to understand that their fatigue with a marketing campaign doesn’t necessarily translate to consumers.
  • Discounts:  Bed, Bath and Beyond cut its margins by 20% with aggressive discounts.  That may work for this company’s business model, but may not be beneficial for others.
  • New Digital Divide: companies who use data effectively and companies who do not.
  • Internal communication: a company provided a brand guidebook for employees when branding changed.  A few years later, when this organization merged with another one, employees were asking for the new brand guidebook.
  • Excellent new employee orientation experience stays with the employee for 7 years (maybe longer; it was the extent of the research).
  • There is no ideal definition of employee engagement; what works in one organization, may not work in another.
  • At one point marketers believed that web design and programming (to produce a good web site for the company) needed to be in-house.  Now, the feeling is that web strategy is what is key, but the web design and programming can be outsourced.

You will meet people who believe that today’s marketing decisions should start and stop with data.  The problem is that we can’t abdicate decision-making responsibility to the analysts.  … Even with great insights, we still need people with the right judgement and business acumen to make decisions.

Coursera – An Introduction to Consumer Neuroscience & Neuromarketing

neuromarketingVery interesting introductory course!  The course has just enough deep explanations of the brain structures not to intimidate an average marketer, and plenty of curious examples of experiments.  Discussion about ethics of neuromarketing is also fascinating – this subject is still little known even in the marketing industry.

Consumer neuroscience is located in the middle of the intersection of Neuroscience, Economics, and Psychology. It is interesting to see other new development in the field – behavioral economics in a relatively close proximity.  As the field is increasing in popularity, more interesting subjects will probably populate the triangle in the future.

triangle

Thought marketers know that people are influenced by advertising, if we ask consumers, they will typically say “non, I am not influenced by advertisement…” The example below shows eye tracking related to a specific product.  control group have not been exposed to the advertisement and the test group was.

paint

Test group also bought more product.  However, everybody in the test group said that the advertisement had not effect on them 🙂

Neurovision – a tool allowing to determine what people will see automatically, without trying to pay attention to anything specific.  The tool is 85% accurate; based on science and validated eye tracking. Relatively inexpensive, DIY tool.

neuravision

screenshot

Linking… is stronger for simple positive association compared to factual association

liking

How do people look at the financial reports when they evaluate companies?  People state that they look at the bottom – revenue numbers.  However, the eye-tracking study indicates that they are looking at key profit numbers more 🙂

financial-reports

Eye-tracking experiment showed that when people are asked to look at the abstract art, they will be distracted by pictures of food (more if they are hungry).  However, the images of high-calorie food are very tempting, but the healthy food not so much.

food-art

Advertisement:

Typical approach: a problem > a resolution > brand exposure

This approach might be not the most effective as from the perspective of the human brain, the resolution might signify a “conceptual closure;” or “mental door” from one memory “room” to another.

Ad below was analyzed in its impact on memory formation.  At the point of the transition to the product (screen turns white) – neuro-scientists saw a dramatic drop in memory encoding.  “…It was classic conceptual closure…”  The ad was very popular, but sales went down for Avian brand that year and the brand lost market share.

If the popularity of viral video could result in any behavior changes, it would be reasonable to expect an increase of the interest to the brand, and the drop in market share would probably not happen…

Memory encoding for advertisement depends on the environment where the advertisement appears.  If a high-level emotional ad appears in the TV program where people are expected to pay attention to details the impact will be less compared to a situation where the ad matches the environment.

journalExcellent class – highly recommend for any marketer!

Book – The Art of Explanation

explanationThis is one of the books, where every idea seem to whisper “take me to a meeting tomorrow…  your meeting will be much better.”  Ah, dear idea, you are right!  I should take you to a meeting tomorrow – and, definitely, my chances of seeing a favorable result of the meeting will be much higher 😉

The author suggests to concentrate on the “Forrest” before starting to talk about the “trees,” to explain major concepts before diving into specific points.  (Hm…  European educational system I experienced as a child was based on this principle – and math was considered easy while history was considered hard 🙂 ).

Another interesting point (which does not come with any educational system, I guess) is the nature of the question “What is it?”  The question is not “What is it?” but “How can it help me?”  A person who is asking “What is RSS?” does not want to know how RSS functions, but rather how useful can it be for his or her life.

Why is it difficult to explain basic things?  The curse of knowledge…  (Ubiquitous tune tapping experiment) – a new person joining the company often does not hear the tune of company culture and process, but just “tap.. tap… tap.”

In most situations requiring explanations, the target audience is somewhere in the range of understanding the topic.  Low understanding is A, and high understanding is Z, and the range of the understanding can be represented by an alphabet.  The goal of the explanation is to move the people at A further to the direction of Z; we can not start explaining from L if majority of the target audience understand the problem somewhere around C.

understanding

How to move your audience from A to Z?

1. Agreement

Statement that is obvious for the audience (we can all agree that gas prices are rising)

2. Context

Moving the points we agreed upon into specific context (more of your hard-earned income is going to pay for transportation)

3. Story

A person who is experiencing a change in perception (Met Sally, she is tired to pay for gas and looked for alternatives; look what she found…)

4. Connections

Analogies and ideas that people already understand (Sally could see that taking a bus was like multitasking – she could commute and work at the same time)

5. Description “how” – Sally saved $20 a week

6. Conclusion – summary – next step  (next time gas prices increase, remember…)

The author’s company Common Craft produced a very interesting collection of “explanation videos” that explain complex topics in a very understandable terms.

Explanation of social media on a ice-cream analogy

 

Augmented reality explanation

Book – Brandscaping

brandscapingBrandscaping appeared to be a more insightful book than I expected.  The main premise of the book is the advantage of partnership between brands and content producers that use the products to achieve popular objective.  A movies about dogs can increase preference of pets of certain breed, a health-related documentary can increase demand for juicers, and promotion of the idea that chickens can be excellent pets can increase sales of pet supplies.

Brandscaping suggests that brands can gravitate to other brands targeting the same audience similar to mall structure.  Whole Food store at the mall would attract different type of businesses compared to Target.  The book has been created to be not “how to” book, but “how to think” book – what makes sense after finishing it.

101 dalmatians and Finding Nemo  increased total demand for dogs and fish  – what kind of advertising budget you need to do the same?

Instead of advertising (branding), Bank of America partnered with History channel to produce America’s story – where branded content was interwoven into the content and most “commercials” were watched by the viewers of the episodes.

America-story

 

Another brandscape example – a documentary producer (and a star) asked a company for a free juicer to use in his documentary devoted to the topic of health and weight loss (nothing specific about the juicer).  The general interest to the “juicing” as a concept increased.  Juicers used to be sold around new year when people were hoping to start new healthy habits. With the release of the documentary, interest to juicers was related to the popularity of the film.  The company started to buy advertisement for the documentary rather than advertising its own products.

fat

Interesting: searching for “fat sick and nearly dead juicer” produces a lovely option to buy it 🙂

juicer

Stop putting your product first – the movie is about changing life..

Companies that found themselves in crowded markets can promote its brands better targeting niche audiences.  The book suggests “fractal marketing” – infinitely devise-able audience.  How to find a niche?  Look for content void in your industry (trade publication) and test if this niche appeal to your target audience.

Book – Tilt: Shifting Your Strategy from Products to Customers

tiltExcellent book!!  I suspect many markets would be happy if their top management took interest in the book 🙂  The book’s site positions the book as a “A Powerful Antidote to Product-centricity” – and it is so wonderfully correct.

My notes (though it was hard to take reasonably concise notes – so many concepts a excellent by themselves and deserve attention):

  •  For many companies the product is their business (building a better product is the path to a less competitive future… is the perception)
  • HarvardHowever, the answer to the question “Why do customers buy from us?” is answered usually not based on the product, but on the “downstream” values.
  • While customers buy because of the downstream values, most of the resources are concentrated in the “upstream” product area.
  • Firms have goals “increase revenue by X” and use strategies how to create value for customers, what may not be concentrated on a product, can include service, emotions (piece of mind, etc.).
  • Firms seek “competitive advantage” – building a way of creating value for customers that competitors can not easily duplicate.

Where is your company’s competitive advantage or “center of gravity” – upstream or downstream?

  • 20th century: competitive advantage used to be in upstream (production lines, teams of engineers, etc. Walmart network).  However, upstream competitive advantage is disappearing as production, logistics, design, and innovation can be outsources.
  • Downstream tilt:
    • Competitive advantage tilts downstream
    • Activities that add value
    • primary fixed costs in the business
  • Why is it happening?  Commodization – anybody can re product the product relatively quickly.
  • Importance of “downstream” example:  pharmaceutical companies at one point offered significant price reduction for the AIDS drubs to African countries, but the countries were not interested.  There was no infrastructure to distribute the medications and monitor the use.  “almost free” product had no value…
  • Parity in products still important, but to “win” a company has to have a downstream focus.

In the 21st century markets are maturing faster than managers

  • Upstream costs are becoming variable, as outsourcing becomes possible
  • Downstream costs are becoming fixed (and increasing)
    • customer acquisition
    • customer satisfaction
    • customer retention

The question is not “how much more of what we make can we sell?”  but the question is “what else our customers need?”  Transition from the economy of scale to the economy of scope.  Manufacturing cost is not a smaller percentage of the product price; downstream costs have increased.

Example: computer game to help 7-19 year old ADHD patients developed by a pharmaceutical company as part of “beyond the pill” initiative.

Identifying customers’ costs and risks:

Example:  Vine in UK seem to be too intimidating for the customers to select – too complicated product.  Solution was a simple limited collection of Vines with easy to understand color-coding.  UK vine consumption increased.

Example: Honda during recession.  Why customers do not buy cars?  They are afraid to loose their jobs.  Offer: you can return a car if you loose your job.  Sales double, while the rest of the industry saw sales decline 37% (2009).

Example: explosives for the quarries – a commodity with practically no switching costs; competition on price – commodity product.  Solution to escape price competition was to reduce the risk of the customer  in buying the product.  The customers (quarries) needed “crushed” rock rather than the explosives.  The risk of the customers were very high – if the blast was unsuccessful, the rock might be too large, what will require additional efforts or the rock might be too small, and their customers won’t buy it.  The explosives company started charging the quarries not for explosives, but for “crushed rock” guaranteeing that certain percentage of the rock will be proper size.  The company used its extensive blast data to guide quarries in proper use of explosives and was able to sell premium and highly differentiated product.

Book – Decoding the New Consumer Mind

bookThe book clearly encourages marketers to perceive their audience from a more “human” perspective and understand the reason for the changes in the consumer behavior that the entire industry has been observing during last years.

As “we are generally designed for survival, not quality of life,” humanity struggles with some modern challenges.  Has technology caused it?  The general answer is no, but both the recession and technological changes that amplified some human traits, helped.

Five Psychological Shifts:

  1. Innovation optimism
  2. Consumer empowerment
  3. Faster way of thinking
  4. Symbol power
  5. New ways of connecting

Interesting psychological phenomenon:  just association with the innovation and technology itself can increase people’s desire to by a product that might look more “modern” than before.  Examples: a restaurant offered vine menu on iPad instead of a paper and sales increased.  Adidas added virtual footwear wall in some of its stored – sales in those stores where the wall was added increased.  The article includes quite interesting video of the “wall.

shoe

  • One second delay in a web page loading results in 7% purchase reduction 
  • Gen Y are the most sensitive to waiting – they are the heaviest users of same day delivery
  • Increased numbers of Facebook friends has no impact on general sense of well-being.  However, increase of real friends from 10 to 20 has a positive emotional impact similar to 50% increase in salary.
  • One third of people has feeling of dissatisfaction after using Facebook, particularly envy
  • The more people use Facebook, the more they are dissatisfied
  • College students: more mobile phone use correlated with lower grades and more anxiety
  • As our human “tribe” grows, fame is associated with survival by younger generations… Fame is the top of desires for tweens.
  • 1950 – less than 10% of Americans lived alone; now it is 28%
  • Increase in loneliness in recent years – up to 35%
  • In US trust, support and happiness are in decline
  • Social activity such as belonging to a club increases happiness comparably to doubling your income
  • Associating emotions with the brand – feeling of amazement before being introduced to a brand – extreme sheep video  – Samsung logo.  Samsung has highest emotional engagement in its category.

  • People are more isolated – 25% do not have a single confidant
  • Rising rudeness have not been created by technology, but technology is accelerating the trend allowing people to be less connected
  • Recession resulted in loss of sense of security
  • Increase of number of narcissists and narcissistic tendencies in the population
  • Narcissists like exclusive products, special service, etc.
  • Highly stressed shoppers prefer trusted brands and easier shopping
    • inertia – buying without thinking or not buying at all
    • rely on trusted experts to reduce the number of options
    • rationalize impulsive purchases
    • rely on feelings more and sensitive to complexity
  • Marketing: all channels need to be integrated and not in adversarial relationships.  Macy has an “omni-channel officer” – a senior role in the organization.

Marketing examples:

  • Old school marketer – champions the brand
  • New school marketer champions the consumer, who then champions the brand

Kleenex campaign as an example of “new marketing” approach:

kleenex

  • Very old school marketing: get a list and send a free tissue sample to potential customers (who many not care)
  • Old school marketing: advertise free samples in the media and invite potential customers to the web site to request the sample (potential customers feel smart after getting a free sample)
  • New school marketing: during the flu season promote an option for potential customers to send a box of tissue to their suffering friends.  Because the tissue is send by friends, it feels softer than it is (warmth of the offer).

Ketchum motivated consumers to share one million free Kleenex products with their friends through the Kleenex “Softness Worth Sharing” program, resulting in a 925% increase in traffic to the Kleenex website and a 6.2% boost in in-store sales.