This discussion actually raises a link between the potential for
customer-centric enterprises and the Gini coefficient.
Let's assume that customer-centric enterprises are more costly
item-for-item than cutthroat capitalist exploiters of the
downtrodden workers and consumer masses. (Or something like that...
<g>)
On that theory, in order for most folks (as opposed to "the 1%" as
they were called here in the US for a while) to enjoy the benefits
of a customer-centric vendor, they have to be both willing
and able to pay more for the superior experience.
It follows that the more skewed the income distribution in
favor of the 1%, the harder it will be for customer-centric vendors
to survive, because the pool of people with sufficient
above-subsistence income to spend, even in part, on the service
inherent in customer-centricity will be smaller.
Hmm.
Chris S.
On 2/18/2013 5:55 PM,
">
wrote:
Hi Katherine
I would like to shop at customer-centric companies too. And
sometimes I do. My local coffee shop just over the road from
my banking client in Bishopsgate for example. But as a recent
article in Booz & Cos Strategy+Business points out, most
consumers choose value over values when push comes to shove.
We all love to work with superior clients. Superior in
their customer-centricity, superior in their offerings and
superior in their profitability. But most of the companies
with most of the money are none of these things. Or at best
only in one. Trader Joes, Whole Foods and Zappos are tiny
squibs in comparison with the behomeths Safeway, Walmart and
Tesco. All of these dominate their sectors due to core
competencies other than their customer-centricity.
If VRM is ever to become a force to be reckoned with, it
will have to offer a superior and proven economic model than
the ones offered by companies like these, not to the
interesting B-School case studies like Trader Joes.
Best regards from Cologne, Graham
Gesendet: Montag, 18.
Februar 2013 um 21:30 Uhr
Von: "Katherine Warman Kern"
"><
>
An: "'Graham Hill'"
"><
>,
"'Iain Henderson'"
"><
>
Cc:
">
Betreff: RE: [projectvrm] Multifunctional Advertising
+1 Graham.
Iain, as a consumer, I vote with my
wallet. I want a business who is customer-centric
to succeed and hire more or better people to
continue to improve their service. I have no
problem with this business making a handsome
profit.
But if a business profits at the
expense of others – even if their profit is marginal
- I will vote against them. I use a local
community bank, for example.
I know of a company who launched
before FEDEX in the express mail business. They
invested in a lot of great people and infrastructure
all over the world, but could not maintain that
human resource and infrastructure and compete on
price with FEDEX. Instead of cutting costs they
changed strategy by serving customers who could take
advantage of their superior human resources and
infrastructure. This company grew beyond the
founder’s wildest expectations and he shared the
profits with all those people he held on to instead
of cutting because they made the strategy work.
As a marketing consultant, I prefer
clients who make a product which is superior for
customers and customers are willing to pay a premium
for it. It doesn’t take as much effort to come up
with great ideas. The media costs are lower because
it doesn’t take a lot of frequency to get the
message out and see a result in the cash register.
So I make more money too. Everybody wins.
K---
From: Graham Hill
[
">mailto:
]
Sent: Monday, February 18, 2013 12:49 PM
To: Iain Henderson
Cc:
">
VRM
Subject: Re: [projectvrm] Multifunctional
Advertising
Hi Iain
It doesn't take much thought to
show that if you put the customers needs ahead of
the Co's then it will in all likelihood be less
profitable. In the circumstances you quote - not
selling something if you think a customer does not
need it or could get a better one elsewhere and so
on - the Co might even be unprofitable and
ultimately, go out of business.
I would describe this as the
extreme customer-centricity position. It is
overwhelmingly a liberal moral philosphical position
rather an economic one.
If you look at the wealth of
customer value management articles in marketing
journals, for example, the work of Day, Reinartz,
Kumar, Donkers, Johnson, Selnes, etc, (references
available on request) they all demonstrate that
managing the customer for value to the Co is a
significantly more profitable approach for the Co
than managing them for the customer's value.
This is the normal Co-centricity
position. It is not any less morally acceptable than
the customer-centric position, but it is a much more
economic one.
If there is so much more money to
be had from managing customers for value, why would
any sane Co executive want to risk that by managing
customers any other way. This is the economic
challenge you have to overcome.
There is also a middle position
that delivers more to each party that I may explore
in another email.
Best regards from Cologne,
Graham
PS. I have delated the names
other than yours and the Project VRM group. I
assume that stops those people(other than you)
getting teh emails twice.
Am 18.02.2013 um 18:07
schrieb Iain Henderson:
Now there's a question
Graham….. The answer to that could be
book-length, or a couple of paragraphs
with a link, thankfully I only have time
for the latter.
What I personally
would mean by 'customer-centric' would
be to put the needs of the customer
ahead of the needs of the organisation.
Simply put, that would mean not selling
a product to a customer if I believed or
knew they either did not need it, or
could get it better elsewhere. Or it
could mean not charging a premium rate
number for customer service, when I know
full well that this would really p***
off the customer.
Clearly many
organisations call themselves
customer-centric, but are actually
shareholder/ stakeholder-centric, with
possible some account taken of customer
needs in the decision-making process.
In that respect,
customer-centricity goes back way more
than 20 years; its the classic local
shop model (know your customers and
their needs and set yourself up to
service them). 'CRM' originally set out
to try to replicate that, before the
accountants and call centre folks
grabbed it.
If I was looking for
more sophisticated insights into
customer-centricity, i'd use something
like this framework, or
its predecessor CMAT (Customer
Management Assessment Tool). These are
models of good customer management
practice which take into account real
organisational practices. In that
assessment mode, customer centricity and
product centricity are seen as a
tangible set of business processes that
can be measured and improved. In that
case, product-centricity over
customer-centricity is no bad thing, so
long as it is a conscious choice.
Right now i'm not
pitching customer-centricity to any
business; I was using the term to refer
to past examples. As per Doc's post, i'd
use customer driven to explain/ pitch
more of a VRM style approach.
On 18 Feb 2013, at 16:33, Graham Hill
<
"
target="_parent">
>
wrote:
Hi Iain
The notion of customer-centricity has
been around for more than 20 years. It
goes all the way back to the infamous
TARP studies in thea early 80s.
But what exactly so you mean by
customer-centricity? It means many
things to many people; from always
putting customers needs first, all the
way through to managing customers for
maximum profitability for the
business.
And why do you think your definition
of customer-centricity should appeal
to businesses that have done pretty
well whilst not being particularly
customer centric?
Best regards from Cologne, Graham
Am 18.02.2013 um 15:59 schrieb Iain
Henderson:
And a couple more
metrics.
Average tenure of a marketing person
in the same role - 2 years
That is to say, long term customer
satisfaction/ value is someone else's
problem.
Average tenure of a CEO in a large B2C
organisation - 3 years.
I've had several consulting projects
about customer-centricity that hit
road-blocks at CEO level; the simple
and openly stated issue being that
whilst they recognise the logic, they
know that to make radical changes
(from typically a product-centric
strategy to a genuine
customer-centric) will cost them money
and competitive positioning in the
short term. There are ways to get a
good blend of customer and
product-centricity, but most
organisations don't have the data, the
top-level buy-in or the patience to
pull that off.
Iain
On 18 Feb 2013, at 14:04, Doc Searls
<
"
target="_parent">
>
wrote:
One additional
point: most of the time we aren't
buying anything, or even considering
it. That also narrows the windows of
"now."
But there are
times we are shopping or buying — or
dealing with issues of ownership.
Then what? Well, VRM should be there
to help with that.
Doc
On Feb 17, 2013,
at 11:01 PM, Chris Savage <
"
target="_parent">
>
wrote:
Well, a couple
of things that build on this.
1. I read of a
psychological study that found
that the subjective experience of
"now" lasts about 3 seconds. That
is, if you ask people about
whether some stimulus or whatever
the researchers were looking at
was happening "now," the general
response was "yes" as long as the
thing occurred plus or minus 1.5
seconds or so of the time of the
asking.
2. This
actually can be converted to a
measure of how much attention
people have in a day. If at each
quantum of "now"-ness a person can
only effectively be attending to
one thing, then in a 24-hour day,
if we assume 16 are conscious and
available, that's roughly 19,200
"moments" of "now" a person has
each day.
3. Advertisers
well know how to command
(literally, as in, what we are
hard-wired for) our attention:
loud noises, quick movements,
flashes of light, attractive women
(to get male attention) etc. So,
on the "tragedy of the attention
commons" I was postulating
earlier, what we have is a large
but non-infinite number of
opportunities for folks who want
our attention, to grab it.
By going from traditional print
to the Internet, we have created a
lot more opportunities for that.
There are 19,200 "nows" per day
per person, that can input either
signal or noise. Increasing ads
(including directed ads) means
more noise and less signal, net.
Key point: The pool of available
attention is very limited. (Note:
if it's really 3.2 hours per week,
that's only about
3,840 moments-of-attention
available.) That very limited
pool is what more and more
advertisers are trying to
colonize. So it's no wonder, it
seems to me, that people are both
building taller defenses and
getting more exhausted in
maintaining them.
4. There are
some behavioral economic studies
being done by a guy at MIT that
analogies the lives of people in
poverty that indicates that their
choices are harder to make than
non-poor folks, in an analogy to
what is called the "suitcase
problem." Suppose you are packing
for a weekend trip, and you have a
very large suitcase. Packing is
easy: you put in stuff you
know you'll need and stuff you
might need. Very little mental
effort. Now imagine going on a
one-week trip and all you are
allowed is one carry-on-size bag.
Now you have a hard problem:
you have to decide what is
essential and what isn't, what has
to go in first in order to make
sure everything will fit, etc.
It's a harder mental task (which
various studies have shown truly
use up biological energy). The
MIT guy points out that the entire
task of facing the economy is, for
a poor person, like trying to pack
for a week-long trip with too
small a suitcase: the suitcase is
their money, and the clothes,
etc., to go in, are their needs.
Every day is mentally exhausting
for poor people, because poor
people actually have to do a lot
more mental work to get through
a day than does a middle-class or
rich person.
5. A similar
phenomenon occurs with the issue
of allocating our attention.
Figuring out what is signal and
what is noise takes work, and it
takes more and more work the more
noise there is -- like listening
to your favorite radio station as
you drive further and further away
on the long-distance highway. It
gets scratchier and fuller with
static, but if you keep listening
harder (interesting idiom
there...) you can still hear what
they are saying. With more and
more informational static being
thrown at us for our 19,200 "nows"
per day, it takes lots of mental
work just to try to keep focused
on what actually matters in a life
(kids ... job ... spouse ...
spiritual practice ...
hobbies/interests). Fitting all
of that into the mental time
suitcase can be really
hard. Adding all the noise makes
it harder.
Do advertisers
ever think in terms of their
effects on a limited, shared
resource, aka, my brain cycles?
Chris S.
2/17/2013 5:07
PM, Iain Henderson wrote:
Thanks
Katherine, your point re number
of hours in the day reminded me
of a key quote sent to the list
a few months back (by Richard
Bates, Consumer Focus, UK).
“Consumers
are however pressed for time and
spend on average only 3.2 hours
a week on all consumer tasks. To
ensure that consumers remain
empowered in the face of the
growing information overload and
increasing lack of time for
shopping, new shortcuts and
comparison tools need to be
found.”
That quote
came from a research study
across more than 55,000
individuals, so pretty robust.
European Commission Staff
Working Paper (2011): Consumer
Empowerment in the EU (SEC
[2011] 469 final), Brussels:
European Commission – http://bit.ly/J45aRl
Add to that,
one of the main effects of The
Internet on the individual being
that they typically have an
awful lot more supplier/ service
provider relationships to manage
than they did before, and you
therefore have a huge volume of
'permissioned' advertising being
squeezed into what amounts to a
very small amount of time.
In that
respect, our job is to build
tools that help get a better
return out of those 28 minutes,
and maybe even one day
increasing the time spent
because the return on it is much
improved.
Iain
3.2 hours a
week is 192 minutes, or almost
28 mins per day.
On 17 Feb
2013, at 15:28, Katherine Warman
Kern <
"
target="_parent">
>
wrote:
Sylvan and
Chris,
As a
practicing planner who takes
pride in being a trusted
advisor, I'd like to share
some insights from the
perspective of my clients.
The reality
the consumer has an
overabundance of choices and a
marketer has an overabundance
of tools to choose from.
But the
number of hours in a day to
make those choices has
remained exactly the same.
As the
number of choices have
increased, the odds that bad
choices are made increases.
Share of
Voice, as many measuring
sticks, is flawed from the
start because there is no
truly accurate way to measure
or project it. One marketer
can spend the same amount of
dollars much more effectively
than another. And since few
marketers publish their
mistakes, no one really knows
what really happened. In fact
most published accounts of
marketing case studies have
very little resemblance to
what really happened.
I continue
to be shocked that no new
entry capitalizes on digital
technology and social media to
offer an improvement over
Nielsen to monitor integrated
marketing in real time.
K-
Katherine
Warman Kern
www.comradity.com
@comradity
203-918-2617
On Feb 17,
2013, at 9:37 AM, sylvain
willart <
"
target="_parent">
>
wrote:
This
"tragedy of the commons"
made me think when you first
posted about it.
The sheep
example you mention is
well-studied in economic
game theory,
and there
are some writings as well in
Public Economics sudies
dealing
with
scarce resources,
But I
very rarely read this kind
of thinking in
advertising/marketing.
Only
perhaps in "Store Wars"
(Corstjens & Corstjens ,
90's). Actually,
the
hypothesis of the consumer
brain being a scarce
resource is
sometimes
discussed, but never
measured. And media planning
relying
heavily
on measures and metrics,
this hypothesis does not
well fit in
traditional
approaches.
Moreover,
you can expect people to
protect scarce natural
resources
(even if
they loose direct advantage)
for the sake of a "bigger
cause"
involving
altruism (a long studied
effect in game theory); but
who
really
cares about the exhaustion
of conusmer brain? there is
nothing
here a
good night of sleep can't
fix... (the consumer himself
may be
the only
one to care, hence the
importance of VRM tools
IMHO).
Media
planning is also competitive
by nature, and while
planning you
have to
care more about your
competitors' expenses than
your
consumers'
ability to process all those
ads. An important metric in
media
planning is for example the
"share of voice" (your
expenses
divided
by the market expenses),
perhaps the dumbest metric
ever
invented,
as it is known from long it
is not robust at all
(meaning it
can lead
you to make stupid planning
choices)
The
entropy hypothesis however
may be quite appealing, and
this metric
is often
used in other field of
marketing (for measuring
variety of
assortments
for example). I'll try to
dig into it to see wether it
has
been used
in advertising/intrusiveness
research.
Sylvain
2013/2/17
Chris Savage <
"
target="_parent">
>:
Sylvain,
Thank
you, this is very helpful.
I will ponder a bit more.
I have
mentioned, perhaps on this
list, my sense that there
is a "tragedy of
the
commons" effect going on
among those who would sell
me stuff. Just like
in the
Garrett Hardin story where
each shepherd looks at the
common field
and
thinks, "Oh, letting one
or two extra sheep from my
flock graze won't
e-mail:
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twitter:
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