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I. S.P.I.E.D. a customer centric campaign

January 20, 2009

This oped piece was published in the January 2009 issue of Direct Marketing (www.dmn.ca)

I. S.P.I.E.D. a customer centric campaign – by Miro Slodki

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It’s a new year. The slate is clean. Staring in front us is the new budget and the last approved 12 month matrix of key projects and initiatives. The traditional way of organizing this activity centers on crafting targeted programs to deliver against the budget and its ROI metrics. But if you’re wondering if there is a better way to integrate relevance with customer centricity, then you might be interested in reading a little further.

In light of current events, I doubt many would argue that the need to promote offers has been ‘supplanted’ by the mission critical requirement of creating value for our customers and indeed that this path helps us achieve both relevance AND success.

The problem (as I see it) is the difficulty, if not impossibility, of managing value-based messaging in a campaign centric approach as these events are designed to trigger a response to short-term (typically price led) activities. The shift to ‘telegraphic’ messaging media (search engine, SMS, Twitter and mobile) further exacerbates the issue as the constraints of these media limits marketers to essentially BARGAIN-based messaging. In the end, there is a significant black swan risk that the actions taken by marketers can actually detract from the value they are seeking to create.

But we’re putting the cart before the horse.

Before you can attempt to create value for your customers – you first need to know what it is they want. As you would expect, there are any number of specialists that can guide your organization in defining and operationalizing the consistent delivery of customer value. But this shouldn’t stop us from moving forward on a smaller scale because some of the value components are marketing and not process, supply chain or design related.

I offer this basic framework in the hope that it helps guide you in where you might look for value creation and communication opportunities for your brand:

Iconic value – How desired the brand is

Societal value – What benefits it enables/supports in the community

Priced value – Purchase price plus installation, warranty, service, financing

Integration value – How it contributes to creating a greater value by being part of a larger system

Experiential value – How it enhances a shared experience

Design consumption value – How well it functions in solving the primary problem

Each of these I-SPIED dimensions will have greater or lesser importance in the value matrix the customer seeks, defined relative to some primary competitor. Relying on just one dimension undersells and gradually, inevitably weakens the brand making it increasingly necessary for sharper pricing to trigger a customer response. And as long-term events in the auto sector have shown, if the underlying value of the brand is eroded, sometimes no amount of pricing (or marketing) can help.

Leaving that basic overview, we turn to the implementation.

The first order is to have the current value (i.e., revenue, gross margin, net profit) segmentation of your customers at hand. The next task is to reallocate your marketing promotion budget against each of your key customer segments reflecting the relative investment and effort allocation. It is also important to understand how the enterprise was able to generate value both for and from its customers, in order to uncover the potential up-sell, cross-sell and frequency of purchase opportunities for the coming year.

Using the traditional campaign/task oriented approach we would see a series of programs (sometimes integrated) executed to accomplish the desired behavioral/transactional response across a spectrum of customers. All of the thinking however is centered on the campaign. Will it yield the X% response rate, generate the $Y we have budgeted? But, if we pivot this approach we get a customer centric orientation.

In the customer centric method, within the database, we strive to look at both the immediate and future needs and solutions our customers will seek. Rather than having “10x$10 transactional conversations”, we change the focus and instead have an ongoing $100 conversation (using as many of the I-SPIED dimensions) with our customers.

Doing so energizes the message we send our customers because we let them know we see them in a bigger context and seek to offer the value/solutions they need to address their ongoing requirements. This in turn changes the scope of our activity from simply messaging to effectively communicating, which then requires the coordinated management of a broader expanse of communication (C), experience (E) and offers (O) to support the value of the relationship. We mustn’t forget that the value management of the relationship is a bi-directional flow, just as we see the $100 customer; the customer must look at our brand and see it as the $100+ “GO TO” brand for solutions.

Putting it all together yields a simple equation (Purchase (P) = xC + yE + zO), which I have elaborated and created some CRM calculations you can perform within a basic spreadsheet.( see here)

This is not news to large portions of the B2B world that routinely function in this manner. As a result of their extended purchase cycles, multiple stakeholders and more complex value chain requirements, they have been forced to learn how to effectively manage their customer acquisition/retention processes using a variety of touch points. For them, establishing value comes before pricing it.

Knowledge of value communication is tantamount to helping brands understand how to effectively manage going forward and answering questions like; are there different sequences that will be more effective or less costly, is the communication reinforcing the value AND the price? The B2C world seems to take for granted that pushed messages have no/little adverse impact on their brand, that consumers are resigned to irrelevant noise.  This is why a customer centric value communication approach is so important in what is like to be a protracted recovery period. The traditional campaign bargain-based messaging approach will still work and generate sales – but in time will fall behind in creating the longer term value that is needed to sustain viability. Unless of course, you happen to be one of the few that are too big to fail….

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