Book Notes: The Hidden Wealth of Customers
Author Name: Bill Lee
Author Bio: Bill Lee is President of Lee Consulting Group. He is also CEO of the Customer Strategy Group, which organizes industry-leading conferences, including the Summit on Customer Engagement, Customer Reference Forum, Summit on Customer Communities, and CAB Exchange Summit. For eight years his organizations have provided educational, research, and consulting services to many of the world’s top firms, such as IBM, AT&T, Apple, Microsoft, Wells Fargo, CA Technologies, Dell, Salesforce.com, and others.
Chapter 1: The Coming Customer Revolution
Customers can create value beyond just buying products. They can help with sales, marketing, and product development.
Shortcomings of current customer advocacy programs:
- Companies work hard to create promoters but still don’t extract additional value beyond selling them products and services. Example: Even though SAP had an NPS, it found that they had taken customer references from those who had self-identified themselves as promoters.
- The program is handled by junior staff: They have little understanding of corporate strategy. Mostly, they are providing support to sales and marketing teams. Thus, they acquire those references that are rarely needed.
Changing Customer Value Proposition (Figure 1.1 and 1.2)
Customer engagement practices by Salesforce
- Marc Benioff iterated the initial product based on frequent interactions with prospects to refine it.
- A button was created inside the product to enable users to send product ideas and bugs directly to SFDC.
Sales and Marketing:
- In its initial city tours, it brought customers together with prospects, analysts and the media. The events were filled with energy. 80% of the prospects who attended the event became customers.
- The Salesforce website was designed to highlight the company’s rockstar customers.
- In 2008, it developed its own social media platform called Chatter to allow Dreamforce attendees to engage with each other, form their own groups, arrange conference meetings, and exchange knowledge, including ppt decks.
Chapter 2: Return on Relationship
Customers can act as Advocates, Influencers and Contributors. (Figure 2.1)
Example of capturing customers’ value for calculating return on relationships:
For instance, a customer with a high net promoter score engaged in the following activities for the company:
- Customer video
- Spoke at events
We can give both partial as well as full credit to the customer on these activities:
- Blog: Full credit
- Webinar, offline events and customer video: Partial credit based on increased % in close rates
- Referrals: Full credit
Return on relationship can then be calculated based on either new revenue or new profit generated.
Note: Similar metrics can be applied to product development to calculate value generated by customers. This helps in the identification of high potential customers.
Chapter 3: The Most Powerful Salesforce
Marketers can undertake 2 activities to leverage customers in the final stages of the deal:
- Increase representation of customers in events
- Build a customer referencing program
Building an effective customer referencing program:
Shortcomings in the current process
- Getting caught up in legal agreements
- Building a reference pipeline that is divorced from the corporate strategy
- Not knowing who the happy customers are
Keys to building an effective program
- Uncover existing self-identified promoters (May or may not have given references/case studies earlier)
- Create a value proposition for promoters. Some key value propositions: Network with other industry leaders and exchange ideas, Brand building
- Build a business model around the program
- Expand your model to support strategic initiatives such as entering a new market, launching a new product, etc.
Chapter 4: The New Marketing Machine
Current marketing activities (Figure 4.1)
Creating a framework to introduce customers in these marketing efforts (Figure 4.2): Customers need to start from the left and low involvement activities and then gradually move to the right and more intimate activities.
Practices followed by some notable companies
Eloqua: Key strategy is to showcase its customers, their knowledge and their experiences
- Markie awards for awarding best marketing practices in 20 categories
- Playbooks containing best marketing practices followed by its clients
- Theme-based customer stories and focus on business communication
- Invite customers to live events
Microsoft: Key objective was to tap into local market influencers
- Created the Most Valuable Professional (MVP) program — Originally designed to provide customer support but has turned into an important marketing vehicle.
- Traits exhibited by MVPs:
- Understand local requirements and share it with Microsoft
- Share Microsoft news and information
- Act as beta testers of new features and products
- Contribute content: whitepapers, webcasts, etc.
Chapter 5: Harnessing the internet
Current shortcomings in a company’s web presence
- It is “all about us”
- Difficult to have an understanding of customers and what they value
- Difficult to keep pushing fresh and relevant thought leadership content
Overcoming the shortcomings
- For web pages, feature customers and their stories, both in text and video format
- Provide access to peer communities and high-value content across all channels
- Create joint thought leadership content with customers. Share all content on all channels: web, blog, FB, LinkedIn, Twitter, etc.
- Way to automate content from customers: Post-delivery survey of 8–10 questions. Hitachi uses this strategy to understand customers’ requirements and post customer impact at scale.
Chapter 6: Building Customer Communities in a Networked World
Communities can help build a brand, create marketing gravity, generate leads, improve strategy and innovation, and substantially offset the loss of control of the conversation created by the internet and social media.
Things to keep in mind while building a community:
- Organize around a shared purpose
- Embrace member empowerment over hierarchy
- Value education over tradition
- Welcome diversity as a source of creativity
- Provide many forms of regular affiliation and relationship-building opportunities
- Have strong community leaders
- Value quality over quantity: Prospects, influencers, and advocates
- Communicate value proposition as a natural part of the conversation
Note: Social media is not community building. It is just one of the tools/channels. (Figure 6.1)
Case study of a community’s impact — National Instrument
Product: Robotics software platform
Challenge: Small market share vis. a vis. competitors
Solution: Created a community with a higher purpose of helping kids to learn rapidly and build their passion for science and technology. It undertook the following activities:
- Robotics competition
- Online training, workshops, and VIP events
- Featured teams on the website
- Collaboration opportunities with mentors
- Knowledge bases and discussion forums
Chapter 7: Customer Enhanced Strategy
The hidden wealth of the c-level is extraordinary, both in terms of quantity and quality.
Understanding the c-level agenda:
- Grow revenue
- Optimize costs
- Create better customer relationships
- Achieve technological superiority
- Improve innovation and new product development
- Manage volatility and complexity
The only way to unlock the c-level wealth is to help them with their agenda
Chapter 8: The Most Innovative Designer
Innovations can be difficult to monetize. In the traditional set-up of understanding customer needs through market research, focus groups and customer interviews, it can be difficult to understand, communicate and develop around customer’s real needs, particularly when their needs are heterogeneous.
2 ways to tap the customer’s wealth to develop better products and services
First: Enable customers to share information (knowledge, resources, etc.) with each other.
Answer these questions to create this network of exchange:
- What would customers like to learn from each other
- What valuable data, information, and resources contained in the community can we marshal?
- How would our community members like to engage with each other?
- What services might the community offer its members?
- What else can we add to the community to create value?
Second: Inspire customers to share their internal innovations and product improvements with you.
4 steps to make your company a design platform:
- Let customers create their own experience. Example: Apple store
- Build communities around the customers’ co-creation process. Example: LEGO
- Rethink your core capabilities and allow for customization on top of it. Example: Salesforce provides its own platform to enable customers to create apps on top of the platform.
- Pay attention to customer-created apps and see if they can be made for other companies.
It’s important to prioritize engagement with lead users, one who is at the leading edge of industry trends.
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