The Art & Science of Retention – Part 6 – Disruptive Innovation, Innovation and Resilience, Conclusion

Retention – Disruptive Innovation – Owning the cost of entry

Growth from retention is harder than acquisition growth – but the carry over benefits …well to paraphrase American Express “Retention has its Benefits”.

From a strategic perspective – a retention bias has a greater propensity of keeping the enterprise alert to understanding the drivers of the brand’s value chain, of ensuring those links are evaluated against the target segments and perhaps most importantly – developing a compelling evolutionary path for the brand.

An even more powerful form of retention is a strategy of creating disruptive innovations, of finding how to make the brand part of the customer’s life style by understanding their needs, wants, attitudes, emotions and aspirations. For those able to identify and implement disruptive innovation – will come to own the cost of entry into their self-defined category as evidenced by the stellar revival at P&G with such disruptive innovations as Swiffer and at Apple with iPod/iPhone.

Every touch point that keeps the brand within the competitive set, every value-add that can give it an advantage needs to be continually scrutinized. Ideally a development plan for the brand has been created charting its likely future course viz product, packaging, design, service and ecosystem enhancements. The Brand Promise does not mean nor does it come about by simply lowering the price point, running consumer promotions or additional sale events.

With a strong customer retention program, a brand gains business from internal organic growth. Indeed many corporations are now reporting back to shareholders on their progress in obtaining organic growth. This means that increasingly your competitors will be looking to lock-in their customers – many of whom are likely shared with your brand.

The Link Between Retention, Innovation and Resilience

As we have seen to this point an inner brand focus on retention and relevancy naturally leads to a stronger brand evolution program. These innovation skills, according to Patrick Reinmoellere and Nicole van Baardwijk, are crucial to helping an enterprise become more resilient in the marketplace.

The research shows that resilient companies continually orchestrate a dynamic balance of four innovation strategies: knowledge management, exploration (internal research and development), cooperation (acquisitions, alliances and other relationships) and entrepreneurship. The authors conclude that focusing on one innovation strategy to the exclusion of others may produce innovation, but it will not lead to resilience. PAID SUBSCRIPTION

Conclusion

At the end of the day and by whichever means – an enterprise succeeds when it is able to generate profit. In the past this was achieved by controlling costs while maximizing revenue. Today the new currency of success comes about by maximizing the return on investment the enterprise makes to enhance/extend the value of its assets at the core of which is the brand value chain (the brand, the product, the relationship, the support). A sea change shift from a product to a customer centric viewpoint and approach – the end of which creates heightened value for both parties built on a relationship that can grow over time.

While B2B’s have a longer history of relationship management along with a relatively easier ability to personalize the brand value chain for its key customers, the B2C sector is now entering this arena with the onset of the new capabilities embedded in social media, mobile and the internet. The other side of the coin is that these enhanced capabilities are giving rise to a more demanding customer.

To handle this, enterprises will need to rethink how they identify, manage and deliver customer value.

The traditional functional department structure is simply not able to keep the different value propositions aligned with customers throughout the enterprise. Specialization has created complicated matrix teams that focus on meeting the project requirement with potentially little/limited ownership of its impact on the customer value delivery. Each component of the brand value chain is optimized locally from a department/production standpoint and not from a global/holistic customer perspective.

Perhaps what is needed in this new realm are more customer-centric brand stewards held accountable for understanding and evolving the brand value chain promise that their profitable customers-partners are seeking. Higher level general managers with the authority to manage the customer’s brand promise from a global optimization standpoint, taking the CRM capabilities that are outwardly deployed for revenue generating initiatives and turned inward to manage the value chain delivery.

In the past an enterprise was essentially configured to be a product, price or service provider (Treacy & Wiersema, The Discipline of Market Leaders), those ‘stuck in the middle’ being hollowed out by the periphery. Perhaps the new structures of the future will enable the enterprise to align itself along the brand promise dimension configured to deliver that bundle of product, price and service the customer is seeking putting back into play all sides of the field.

This is a significant change, to transform the organization and bring in the technology, processes and people to make the initiative work. Perhaps its too much of a challenge for an established enterprise, so perhaps it will be adopted by new startups who create an ingrained customer centric viewpoint/structure established from the very outset and with it stand to become the corporate giants of tomorrow.

Those who understand this will be able to move forward, the rest will compete in a flattened world.

Thank you for readership.

I look forward to your comments.