by Cindy Barnes
Buying is typically made up of two components: the rational and the emotional. In large businesses, there is a third: socio-political. By far the greatest component in decision making is emotional: after that, individuals ‘rationalize’ their decisions. So if a customer is unhappy with a supplier, then price and offering are far less important than making the customer happy again. In the case of this financial services company, its retailer customers were very unhappy with how they perceived they were being treated. This unhappiness led them to make business decisions that seemed irrational to the supplier. What was needed was a major behaviour change on the part of the company (and changes to some of the underlying business structures and processes) in order to placate customers. The in-house researchers had wasted five years by focusing only on the rational and asking the wrong questions.
Today, there is a high degree of dissatisfaction with large corporations among their customers. Most of these businesses have no idea how they are ‘getting it wrong’ from their customers’ perspective. Either they don’t know or they don’t care. But they should. Very unhappy customers (or employees or suppliers) will go to great lengths to change their supplier, or even set up in competition to the offending companies. At best, as soon as there is a viable alternative, these people will leave – and that is the best-case scenario. The worst case is that these disenfranchised customers will be seen as an opportunity for competitors or new, disruptive businesses, who will use them to enter into the market. In both cases, the traditional large businesses lose.
Understanding different customer behaviours is also critical when moving into new and foreign markets. US businesses often make the mistake of believing that European customers – both consumers and businesses – think and behave as they do in the United States and that Europe is just a 51st state with a variety of accents. Nothing could be further from the truth, but many US companies take this approach. Europeans should not be smug: they make these mistakes too.
One European services business spent 1–2 per cent of its annual turnover in order to enter the Chinese marketplace. This company did all the usual rational investigations around market size and growth and, on this rational basis, invested in setting up a Chinese business. Then the executive team travelled to China to ‘do business’. Intellectually they knew that China was a different country with a different culture, but in terms of business behaviours they acted as though they were selling in their own country. Understanding how your own behaviour differs from your counterpart’s behaviour is vital. The senior management team did what they did in their native country. They wined and dined their senior counterparts in China, shook hands and left. And nothing happened. While this company did its quantitative research, it did not undertake qualitative market analysis or cultural research before making the investment. The result? It lost a lot of money and withdrew from China after spending millions trying and failing to enter the market.
Whether focusing on existing customers or new markets, the lesson is clear: include customers – both their rational and their emotional drivers – in any design or go-to-market activities. A lot of businesses are spending money on research, but usually it is the ‘wrong’ research, which doesn’t provide the answers they need. Real insight and innovation comes from:
understanding the customers’ views and experiences – from rational, emotional and behavioural perspectives;
determining what the customers value, as well as what annoys them;
developing an overarching marketing strategy that incorporates this value as well as a realistic business aspiration;
innovating products, services and solutions;
redesigning business processes, structures, measures and behaviours to deliver value at every customer interaction.
Carried out properly and with integrity, these changes will deliver an authentic and valued experience for the customer.
To survive, companies must adapt. Everything needs adjusting around the customer:
sales;
marketing;
customer service;
talent management;
and, above all, corporate behaviours.
So far, this book has looked at how today’s customer has changed and how most companies respond to these changes inadequately or too late. It has highlighted how corporate behaviours have disenfranchised not only customers, but also suppliers and employees, all in the pursuit of profit and at the expense of people. But it is not all bad news. Overall the world is richer and people are still spending money – lots of money. So there is a big opportunity for customer-oriented, authentic businesses to grow and take market share at the expense of previous market leaders. This situation has also opened a path for disruptive businesses whose offerings satisfy customer need in a radical, new way.
What can a large, traditional business do?
Some companies have already started to include their customers and suppliers in their business ecosystem. Many have made early, tentative steps at developing their value proposition and then tried to implement the necessary changes in their businesses to exploit it. The rest of this book will cover the value proposition, sales and market positioning and include an examination of market strategy, customer service and talent management. Throughout, it will look at behaviours, structures and what needs changing.
In times of business crisis and falling revenue, sales leaders and sales teams get blamed for the falling sales. But, for most large businesses, it is not a sales problem: it is a company-wide issue and should be tackled accordingly. The whole company supports the value proposition and the process of becoming customer-centric, and it plays a role in supporting the sales process that flows from this ‘customer-centric’ approach.
References
Booth Sweeney, Linda (2008) Sustainable Wisdom: Living stories about living systems, SEED, USA
Kharas, Homi (2011) [accessed 7 June 2016] The Emerging Middle Class in Developing Countries © Brookings Institution [Online] http://siteresources.worldbank.org/EXTABCDE/Resources/ 7455676-1292528456380/7626791-1303141641402/7878676-1306699356046/Parallel-Sesssion-6-Homi-Kharas.pdf
Snyder, Tamara (2015) [accessed 15 November 2016] The 2015 State of Employee Engagement [Blog] Edelman, 28 August [Online] www. edelman.com
Sustainable Brands (2016) [accessed 28 July 2016] Half of Employees Won’t Work for Companies that Don’t Have Strong CSR Commitments [Online] http://www.sustainablebrands.com/ news_and_views/organizational_change/sustainable_brands/ half_employees_wont_work_companies_don%E2%80%99t_hav
Wizdo, Lori (2015) [accessed 7 June 2016] Myth Busting 101: Insights Into the B2B Buyer Journey, Forrester Blogs, 25 May [Online] http://blogs.forrester.com/lori_wizdo/15-05-25-myth_ busting_101_insights_intothe_b2b_buyer_journey
02
Why businesses need a value proposition
The good news is that many of the businesses suffering from the symptoms discussed in Chapter 1 have made the changes necessary to adapt to the new market conditions. It is important to note that these changes really are possible. Not all companies are in distress. Those that are thriving have taken steps while business is good and invested in new strategies and approaches to their marketplace.
A road map for success
So what is it that these successful businesses are doing? How are they weathering the changing market? The answer is that they are engaging with their customers and studying customer behaviours, new buying patterns and trends, and then adjusting their entire business accordingly. The fast-food company McDonald’s, following the resignation of its CEO in 2015, hired a new leader, Steve Easterbrook, who revealed his new strategy for the business. He is quoted as saying that he ‘planned to strip away layers of management, focus more on listening to customers, and act faster to adapt to consumers’ changing tastes’ (Peterson, 2015). Winning businesses will adapt while those that do not will find their financial performance slowly declining.
For declining businesses, the first step is to acknowledge that there
is a problem. Once this is acknowledged, the next step is to follow a more customer-centric road map to success. By shifting the focus to the customer, a company-wide value proposition provides the foundation for business resilience and growth. This approach follows the:
2nd Law of Value Proposition Selling: the customer is a part of the business system.
It all starts with the customer
Bringing the customer into a business’s ecosystem is the critical first step. When businesses were smaller and less global, when there was less technology and people dealt directly with customers, this process was easier. Today, engaging with customers in a meaningful way is far more challenging. Specialist techniques, skills and a methodology are required to obtain genuine insights. But these insights are valuable – like gold – and fill a treasure chest for the participating company. These treasures provide the basis of the value proposition. As Ian Bolger, Joint Managing Director of Bolgers Engineering, says: ‘Strengthening our value proposition was pivotal in the turnaround of our fortunes. Customer interviews provided us with extremely rich feedback and the interpretation of the findings also gave us a road map for future growth.’ The immediate impact of this work was an increase in revenues of 25 per cent within the first six months.
So what is a company-wide value proposition? How does it differ from other options and how can it help a business adjust its structures, processes and behaviours to enable success?
Since Creating and Delivering Your Value Proposition in 2009 (Barnes, Blake and Pinder, 2009) explained what a value proposition can do, this term has captured the imagination of many. But it has also been misappropriated and misused. Various people have chosen to use the phrase ‘value proposition’ to mean a wide variety of different things; the most common misuse being to treat ‘value proposition’ as synonymous for ‘sales proposition’ or simply the ‘packaged product’. So the next few paragraphs will clearly spell out what a value proposition is and what it enables a company to do.
First, the definition: a company’s value proposition is:
Figure 2.1 The definition of a value proposition
The value proposition is a blueprint for the whole organization, market entity or business unit, which enables the business to deliver genuine value to its customers. The value proposition helps a company to become more customer-centric. It is not a sales message, or a packaged offering, or a smart marketing story.
A company’s value proposition provides the foundation for creating powerful sales propositions: sales stories and commercial offerings directed right at the heart of customer issues. In most instances, these will be aimed at individuals within the prospective customers who have issues to be resolved or needs to be met. Often, value proposition work will mean deploying a different sales approach as well as a new, underlying market strategy. Other business processes and behaviours will also need to be adjusted or transformed completely in order to support this new sales approach.
6th Law of Value Proposition Selling: ensure that all business processes support the market positioning.
How to achieve Law 6 will be outlined in greater detail in later chapters.
The wider business ecosystem
First, to understand how to sell to a customer in a way that harnesses the power of the whole company behind the sale, organizations need to broaden their view of the sales process.
The value proposition extends the boundaries for businesses so that the ecosystem includes customers, suppliers and the whole value chain as part of the business rather than being external to it. This approach enables even the largest of businesses to become customer-centric. It extends the customer analysis beyond interactions with sales and customer service to focus on the ‘total customer experience journey’.
A customer experiences a supplier from every interaction – from purchasing through to delivery, payments and aftercare. So a road map for customer success depends on every single person in the business, not just the sales and marketing department. Mapping this journey from the customer perspective is key to understanding their entire experience journey (Figures 2.2 and 2.3). This company-wide perspective supports the first law of value proposition selling.
1st Law of Value Proposition Selling: the whole company plays a role in supporting the sales process.
Selling should be a team sport. Each business area and function has a role to play and all parts must be orchestrated towards a desired outcome. This approach does not mean that everyone goes out and sells directly to customers. But it does mean that each person knows what he or she can do to support and promote the company. Most importantly, everyone must believe in the company’s value to customers and the problems they can solve. If this belief is not genuine, customers will sense the insincerity and begin to question the honesty of the business.
An example of lack of orchestration towards a desired outcome is that of the purchasing department of a large organization that had been targeted with bringing down the costs in all areas of the business. Reduced costs were that team’s key metric. However, when members of a sales team urgently needed to fly to a potential customer on a long-haul flight, the purchasing team only allowed them to buy an economy, multi-leg trip. The tired and irritable sales team were not in peak condition to negotiate effectively with the customer, who was eager to buy but drove a hard bargain. The sales team lost out and negotiated a very poor deal for the company. For a few thousand dollars more, the sales team would have arrived refreshed and in peak condition. If they’d been allowed to fly business class direct, they would have been able to negotiate a more profitable deal for the company. Every team within the company needs to be pointing in the same direction.
Note: In Figures 2.2 and 2.3, the customer experience journey is mapped out, including the order of key transitions, central questions and elements in this process. Having a clear understanding of these phases is crucial in producing a coherent path for the whole organization and its customers to traverse together. This understanding enables the various parts of the company to know and play their role in supporting the sales process.
* * *
Figure 2.2 Customer experience mapping – components and process
SOURCE © Customer Alignment Ltd, 2016
Figure 2.3 Customer experience journey
SOURCE © Customer Alignment Ltd, 2016
When properly directed and working together, teams can produce an impact greater than the sum of their individuals. Edwin Hutchins, in his book Cognition in the Wild (Hutchins, 1996), tells the story of the bridge crew of the aircraft carrier USS Palau. Together, the crew could dock this enormous ship but no single individual could describe how it was done. Many teams have this underrated and generally unrecognized group-based ability. Imagine the power of a company that can act with conviction, as a genuine team.
Pulling together
As a next step, a company needs to engage everyone – suppliers, customers and all employees – with clearly articulated market positioning. Behaviour change and communication is critical in order to gain traction with employees, customers and suppliers. When everyone understands the bottom-line objectives against which a business measures itself, then it is easier for everyone to pull together and work as a team to achieve those objectives – just as the bridge crew knew their objective was to successfully dock the aircraft carrier. When the objectives are customer-oriented then the whole business is on the right path to serving its customers.
Agreeing a market position, vision, values and setting objectives is, however, simply not enough. The business also must understand what needs to change so that everyone can ‘walk the walk’ and authentically bring this vision to life in the business, day in and day out.
For example, the top management of National Vehicle Distribution (NVD), the company we first met in Chapter 1, invested time and effort in repositioning the company in the marketplace and in the minds of its customers, away from Components positioning and towards a Co-created value positioning on the Valu
e PyramidTM (see Figure 3.3, page 68). NVD also developed its new vision and, after much deliberation, came up with the phrase: ‘We keep the world moving.’ All the management of this business now believe in this vision and have undertaken a programme to design all the business processes and structures to underpin it. Above all, NVD genuinely believes that behaviours should reflect the company positioning, vision and culture and it is seriously working on learning how to engender the right behaviours in all parts of the organization, from the lorry drivers who deliver the cars, to the customer service department.
Why start with a value proposition?
Why not just concentrate on developing new products to gain more customers or to increase sales? After all, this response has worked for some businesses in the past. Won’t it still work? Recent market surveys suggest not.
The Gallup report, A Guide to Customer-Centricity – Analytics and Advice for B2B Leaders (Gallup, 2016), indicates that a company’s products and services are not enough to gain customer commitment; they merely give a business entry to the playing field. Customers are people, and people are loyal to other people, not to things or systems. This conclusion is not radical, but it is an indication of how far removed from the human element many businesses have become. To gain customer loyalty means ongoing engagement at a human-to-human level.