Outline of different customer behavior and market drivers that should be understood from behavioral economics and marketing driven commercial management perspective.
LPC Warehouse Management System For Clients In The Business Sector
Customer insight framework working paper
1. Confidential 1
Working paper (draft)
CUSTOMER CENTRIC MANAGEMENT
PLAYBOOK
Tools and insight as a framework for management, marketing, strategy, portfolio,
channel, ICT, and operating model development
8/2019
Author:
Toni Keskinen
CustomerExperience Business Director
ToinenPHDOy
Toni.keskinen@toinenphd.com
Helsinki,Finland
2. Confidential 2
Contents: Page
1. INTRODUCTION 3
2. PART 1: “The laws ofnature” - Analyzingthe market and behavioral logic in it 5
2.1 The marketdynamicsmap: The brand andcategory behaviorlogic 5
2.1.1 The role of intensity
2.1.2 The role of awarenessanddemand
2.1.3 The funnel type
2.2 The markethype and adaptation 9
2.2.1 The technology adoption lifecycle
2.2.2 The hype cycle
2.2.3 Insightsaboutthe combinationof hype &adaptationcurve
2.2.3.1 New& emergingstage
2.2.3.2 Growth stage
2.2.3.3 Growth plateau
2.2.3.4 Decliningmarkets
2.3. The customerrelationshiptypes 13
2.3.1 One partner– single transaction
2.3.2 Multiple partners –multiple transactions
2.3.3 One partner– multiple transactions
2.3.4 Multiple partners –continuousrelationship
2.3.5 One partner– continuousrelationship
2.4 The customersegments 16
2.5 The level of activityinthe market 18
3. PART 2: Customer Journey 19
3.1. The path to purchase 19
3.1.1 Brand as a platform
3.1.2 Initiation
3.1.3 Choosingandbuying
3.2. The experience path 20
3.2.1 orderto delivery
3.2.2 Use or deliveringaservice
3.2.3 Loyalty,re-purchase,end-of-agreement
4. PART 3: Strategy and implementationguidelines 21
4.2 Takeawaysformarketing 25
3. Confidential 3
Introduction
Customerjourneyanalysisanddesignhave becomehottopicsdue to the growingadoptionof
behavioral economics, service design, designthinking,agile- andleanprocessdevelopment.
Whenmarketers andgeneral management understandthe underlyinglogicbehind consumer
behavior,it’smucheasiertooptimize pathstopurchase anddesignexperiencesthatmatter
and drive sustainablebusinessgrowth.
What isbehavioral economicsthen? AccordingtoWikipedia: “A method of economicanalysis
thatapplies psychologicalinsightsinto human behaviorto explain economicdecision-making”.
As a science BE (Behavioral Economics) hasbeencriticizedaboutlackof coherenttheoryand
lack of natural science type of predictability.Well,we inmarketingknow exactly how thatis.
Eventhoughthere are nouniversal answersto everything, andwe needtoplaywith
probabilitiesinbothworlds(BE&marketing),BEand researchaboutdecisionmakinghas
producedincrediblyefficienttoolkittouse forcreative planning.Eg:
If we take a lookat the veryfundamentsof marketing,brand-,portfolio-,pricing-,channel-,
and anyother developmentalongthe customer’sjourney,it’sall aboutBehavioral Economics
and choice architecture. However,notall markets,products, orsolutionsare createdequal
and itsimperative tounderstanddifferentstages/contextsanddifferentrolesthatexistin
differentcategories,brandsandportfolios.
Mr. RichardThaler,Nobel prize winnerandco-authorof “Nudge”hassaid:“People are
predictablyirrationalinwaysthatdefyeconomic theory”andDanAriely,the authorof
“PredictablyIrrational”wrote anentire englighteningandfunbookaboutit.What makesBE so
valuable forcustomerexperience andmarketingplanning,isthe predictabilityandavailability
of alreadymade testswith resultswhich advise us aboutwhere tolookforanswersandwhat
kindof mental mechanismsmightbe involvedinaspecific brand,productor situation. BEis
not a single theory;itoffersatoolkitandwe justneedtoknow whichtoolstouse for which
purposes.Incase we lookat marketingandbrand experience development,the successof a
brand isactually basedonmultitude of micro- andsmallerexperiencesalongthe wayat
individuallevel.Suchlevelof nuance isoverwhelminglydifficulttocope with, whichiswhyitis
importantto be able to recognize the mainforcesatplay a.k.a.“lawsof nature”inthispaper
4. Confidential 4
JosephB. Pine andJH Gilmore wrote the book“CustomerExperience Economy:workisa
theatre andeverybusinessastage” in1999 and They described customerexperience planning
witha Theatermetaphor(selectedamong100 bestbusinessbookseverpublished).I’vebeen
practicingthe art of customerjourneyanalysisandplanning since 2004 and developedtoolsto
analyze the marketset-upandplanthe rolesand storiesaccordingto the surroundingcontext
and status.Practical work has been the foundation,when I’ve triedtocreate anddevelop this
theory to be as universal andaccessibleaspossible andthencombineitwithBEtheories.
Togethertheyare quite powerful.
Theaterisa greatmetaphorand alsoemphasizesthe twomainpaths:1) Pathto purchase and
2) The experience path.Intheater,youknow the maincontextandthe broadideaaboutthe
playwhenyoubuythe tickets.However,what make aplaygreat are the un-expected
surprises,twistsandturns,the thingsthatmake the playworthrememberingandsharing.
These experiencesexceedexpectationsorotherwise differfromthe expectations(statusquo)
positivelyandtheyare the importantexperiences thatmake orbreakthe brands too.
It’sa well-knownfactthatwhena companyfailssomehow andgetsreclamations,the well-
managedreclamationprocessbrewsthe happiestandmostloyal customers.It’saherostory
inwhichthe customer’sexpectationsare failedandthe customerfeelsneglectedand
betrayed.Whencustomerservice people contactthe customer,care aboutthe customer’s
challenge andsolve it,perhapseven offersome sortof consolationorotherbenefit,they
become the heroes inthe story.The customerservice personisthe face of the company that
cared andsolved the problem.Thatiswhythe customercan relyon them, ishappyaboutthe
relationshipandstayloyal.
Thisprocessis veryimportant,butyoucan’t actively cause problemstocustomersinlarge
scale justto offerthemthe hero-experience.There hastobe otherwaysto write the storyin a
way,which makesitmeaningful andprovides somethingworthrememberingandsharing.
I lookat behavioral economicsasa wayof findingoutwhatare the natural forcesthat shape
the way how majorityof people behaveandmake choices. It’slike we wouldhave aninternal
GPS inside uswhichsteersmajorityof people behave inacertainway and make choicesthat
are predictable andonce uncoveredandunderstoodalsosomethingthatcan be influenced
and changed.If I use the theatermetaphor,Ihave realizedbyanalyzingcountlesscustomer
journeyswithresearchandanalyticssince 2004, that the storygoesin a rather same wayfor
majorityof people althougheachof themismakingindividualdecisionsindependently.
Behavioral economicsisaway of uncoveringthe playwriter,the underlying“lawsof nature”
and influencingthe storyatthe writingorat leastat the directingorrole performance levels.
We,the marketershave beenoveremphasizingthe pathtopurchase at the expense of the
post-purchase experiencepath.Asinplays,alsoinreal life whenpeople buysomethingthey
use certain criteriato make the choice,butlaterlearnwhat reallymakesthemhappy. In
marketingwe are creative,butevenwe can’tchoose the startingpointwhere the company
and itsproduct layto beginwith.That’swhere thiscombinationof analysisandBE research
can help, itstime toshedsome lightonthe big picture andlearnaboutthe toolshow to
understandthe set-upandthe stage.
Thispaperis my attempttopull together “the lawsof nature”and the differentinfluencers
that dictate howthe story goes,howmajorityof customersbehave orhow the invisibleGPS
steerspeople andgive some insightsabouthow touse these toolsand insightasa framework
5. Confidential 5
for management, marketing,strategy,portfolio,channel,ICT,andoperatingmodel
development
PART 1: “THE LAWSOF NATURE - Analyzingthe market and behavioral logic init
(understandingthe set-upand stage)
The market dynamics map: The brand and category behaviorlogic
Picture 1, Source:Toni Keskinen
It isimperative tounderstandthat eachcategoryandeach brand hasits positiononthismap
and eachsituationisunique. Letslookinmore detail how the intensityanddemandcanbe
recognizedbasedondifferentdatas.
The role of Intensity
The path to purchase decision-makingintensity isimportantespeciallybecause of the time
factor. Whendecisionsare made instantlyinsecondsorhabitually,we canonlyinfluence the
decisioninadvance orat the pointof decision.In decision-makingthesesectorsare strongly
ledbyautonomoussystemandun-conscious decision-making.These choicesare alsonot
consideredtobe thatimportantand oftenthe relatedinvestmentisalsonominal.
Due to the verynarrowwindowof opportunity,the twolowersectorsare verystronglybrand
and impulse drivenmarkets,inwhichNudgesandchoice architecture canreallyworkwonders.
Evenif the decisiontakesminutesandcustomerssearchonline,we wouldhave more
opportunitiestoinfluence the customer’sdecision.
6. Confidential 6
Picture 2, Source:Toni Keskinen
Whenwe increase intensityandlookatthe top-2 categories,we are enteringthe worldof
consciousdecision-making.Inthese categoriescustomers’are willingtospendmore time,
probablyinvestmore moneyandconsiderthe decisiontobe more importantforthem
personallyorprofessionally. Inthese categoriescustomersatleasttryto act rationally,
althoughtheyprobablyhave some preferredbrandof anchorintheirminds,orspecificrange
on optionstheyare considering. However,inthese categoriescustomers’are willingtospend
time,searchonline,considerandcompare,whichmeansthatwe have varietyof toolsand
meansto engage withthem.
The role of brand awarenessand demand
Veryeffective toolsforustouse in orderto define how the brandandit’sdifferentproducts
positionintermsof demandare brandresearchand tracking,marketshare data and online
searchvolumesbybrand,product,categoryand relatedtopics.
Picture 3, Source:Toni Keskinen
The more rightthe brand’sor products positionrepresentsinthe map,the more profitable
theyare likelytobe.Whencustomers’wantsomething,know itandpreferit,theyare more
likelytospendmore onit.Inbehavioral economics terminology thispositionmeansstrong
7. Confidential 7
availabilityheuristicsandbeinginthe anchorpositionforcustomers.Thisiswhata strong
brand meansintermsof market positionandfinancialvalue:the brandsmarketinghasmuch
higherROMI (returnonmarketinginvestment),strongorganicsalesatgoodmargin,shield
againstcompetitorsanda lotof perkslike differentpartnershipsandotherbonus
opportunities. The rightside of the matricshasto do witha lot of thingsinBehavioral
Economics,inwhichwe behave predictablyirrationally. Thisside alsorepresentstatusquo,
sure and knownoptions.
The brands and productsonthe lefthandside are lessknownorthere are brands that are
new.The categorycan also be new,whichmeansthatthe brands andproductsin itare likely
to be un-knowntoo.If the brand isthere,the brandmust capture customer’sattentionand
has the burdenof proof to convince the customerthatit’sthe bestoption.Because people are
naturallydrawntowardsmore knownoptions,the challenger’sbestchance istoget the
customer’sconsciousconsiderationandprove itscase ina waythat it getsthe deal.Because
sellingonthe leftside requiresalotmore effortandinvestments,the marketingROMIis
naturallylowerandthere isverylittle tononatural demand.The strugglingfromlefttoright
takesoftena lotof time,effortandmoney,butitis specificallythe factthatisoften
overlooked:The longtermimpactof marketing. If we considerthe brandsthatare currentlyon
the right,many of themare decadesold,veryfew brandsgetthere ina matterof few years.
Creationof a strong brandis by nature more like marathonthana sprint.
If we place some of the keyBE conceptsandtheoriesonthe Market dynamicsmap,itlooks
somethinglikethis:
Picture 4, Source:Toni Keskinen
The funnel type
Consideringthe variationinmarketdynamics map,itisclearthat there are verydifferentpaths
to purchase dependingonthe intensity,awarenessandcategory’sfamiliaritytothe customer.
To make it as simple aspossible,Ihave broken the differentpurchase funnelsintothree main
types:
8. Confidential 8
Picture 5, Source:Toni Keskinen
If we considerintensity,the “pre-determinedoptions”and“learningnew path”journeyscan
bothbe highintensityjourneys, buttheirnature isverydifferent. Habitandimpulse journey
can onlybe lowintensity.Lets lookdeeper:
Habit, impulse buying:
Characteristics: Verylittle tonoconsiderationpriortomakingchoices.Thesedecisions
are oftensmall andlowcostdecisions.
Drivers: Habits,impulses,nudges,defaultoptions
Opportunities:Sometimes,whenacustomerismakingother,biggerandmore
importantdecision,itispossible toattachthiskindof impulse decisionsas part of a
biggerdecision.Inecommerce itisa commonpractice to presentotherrelated
products,accessoriesetc.alongthe biggerdecision.Because these decisions are not
subjecttorational decision-makingscrutiny,nudgingcustomerstocertaindirectionis
quite easyandapplicable solution. Anotherapproachtoconnectingdecisionsisto
applydefaultoptionsaspartof the customerjourneyandpositionsmall impulse
decisionsinside acustomerjourney.Greatexample of theseare Airplane ticketsand
travel ingeneral.The travel marketisstronglydrivenbyaggregatorslike hotels.com,
booking.com,trivago.cometc.Thisiswhythe brandsmustlooklike cheapatthe
surface and inputadditional revenue driversinside the bookingprocess.Inairline
ticketsitisnow default,thatthe airlineroffersyouachance to selectyourseats
alreadyat bookingstage,bookluggage,buycancellinginsurance etc.These decisions
are offeredasdefaultsforcustomersandare small decisionsatindividual level but
representmajorrevenueandprofitshare in the bigpicture.
Pre-determinedoptions:
Characteristics: The customerisfamiliarwiththe marketandkeyplayersinit.When
the customersare searchingforinformationaboutthe options,theyare usingbranded
keywordsandproductnamesmore oftenthancategoryor interestareakeywords.In
termsof adaptation,these marketsare familiarforthe customersandtheyfeel
comfortable navigatinginthem. Aspeople are familiarwiththe options,italsomeans
strongvolumes,mainstreammarketsandoftenhigherbuyingfrequency
Drivers: Brand awareness, preferences andhabits.Customershave poolsof potential
optionsandthese poolsandpreferencesformanchorsorlensesthatthe customers
use to view options.Dependingonthe marketthe behavioral patterns andpriorities
couldcircle aroundcertainbrands,service providersoreg.Retailers.Itisimperative to
understandthe natural rolesof differentmarketinfluencersthathave the powerto
steercustomers.Insome marketsthe mainstreamretailersoraggregatorscouldbe
9. Confidential 9
the oneswhoown demandandbrandsare forcedto fightfortheirshare of customers
inside these channelsthatoftenalsodictate the choice architectureincludinguser
interface andcomparisoncriteria(eg. Amazon.comorbooking.com)
Opportunities:Behavioral economicsoffersmultiple toolstouse forconversion
optimizationanddevelopmentof choice architecture.These marketsrepresent
mainstreamhigh-volume behaviorinwhich small differencescandrive significant
boostsinconversionandprofitability. Inmanycasescreationof strong ownchannels
and directaccessto customershasmade itpossible toimprove salesefficiency,
capacityto succeedbetterinsearchtrafficvolume generation,influencecustomer
relationshipsdirectlyanddecrease externalchannel costs.Thisisoftenthe most
significantreasonforcompaniestodevelopownchannelsandofferloyaltyprograms
and/ordirectrelationshipswiththe brands.Directrelationshipallowscompaniesto
learnmore abouttheircustomersandofferbetter,personal experiencesandmore
value forthem.Suchexperiences also create longtermbrandvalue.
Learning a new path:
Characteristics: The customermightnot feel secure orcomfortable aboutthe areaof
decisionmaking.The areaof interestcouldbe new tothe customer,the solutionsand
brandsin the marketare notfamiliar,the price levels,characteristicsof the available
optionsare new.Thiskindof situationmightrepresentanestablishedmarket,butthe
customerisjustlearningaboutitor thiscouldrepresentamarketin whichcustomers
onlybuyveryrarely. Inthese journeyscustomersmostlysearchbyusingkeywords
aboutthe need,categoryof subjectareasolutionterms(eg.Mortgage insteadof the
bankname)
Drivers: The customerrecognize aneedor challenge andislookingforasolution.
Making iteasy,accessible,convenientandsecure will offeragreatcustomer
experience thatalsosell efficiently
Opportunities:Content- andinboundmarketing are veryvaluableinthiskindof
categories,because the customersare notreallycertainaboutwhattheyshouldknow
and howtheyshouldmove forward.These customerjourneysare stronglyabout
customerempathyandhelpingthemtocome toconclusionsandmakingsmart
decisionstheycanfeel goodabout.
The market hype & adaptation
Hype curve + adaptationcurve as a combinationisagreat strategictool to unlockinsights
aboutcustomerbehavior,customertypesandmarketlogicingeneral. Youmightthinkthat
these curvesonlyserve technologyandsoftware companiesandtheirmarketinsight
development.Thatwastrue whenthese modelswere developed,butincurrentsituation
technologyanditsapplicationsinfluenceeveryone’s’everydaylife.Thesemodelsandtheir
value have grownoutof theiroriginal bubbleintogenerallyapplicable toolkitthatwe needto
understandincase we want tounderstandourcustomers.
Adaptationof newideasalsohasto dowithmany otherareasoutside technology.The same
curve alsoapply to them.If we lookat the currenttrends,eg.Plantbaseddietandmoving
away fromanimal productisverystrong trendwithincrediblylarge impactsoneconomy,
society,healthof general populationandenvironmentingeneral.
The TechnologyAdoptionlifecycle
10. Confidential 10
Picture 6: Rogers’bell curve
Here’swhatwikipediatellsaboutthe adaptationlifecycle history:The technologyadoption
lifecycle isasociological model thatdescribesthe adoptionoracceptance of a new product or
innovation,accordingtothe demographicandpsychological characteristicsof definedadopter
groups.The processof adoptionovertime istypicallyillustratedasaclassical normal
distribution or"bell curve".The modelindicatesthatthe firstgroupof people touse a new
productis called"innovators",followedby"earlyadopters".Nextcome the early
majority andlate majority,andthe lastgroup to eventuallyadoptaproductare called
"Laggards" or "phobics."Forexample,aphobicmayonlyuse a cloudservice whenitisthe only
remainingmethodof performingarequiredtask,butthe phobic maynothave an in-depth
technical knowledge of howtouse the service.
The demographicandpsychological (or"psychographic") profilesof eachadoptiongroupwere
originallyspecifiedbythe NorthCentral Rural SociologyCommittee,Subcommittee forthe
Studyof the Diffusionof FarmPractices,byagricultural researchersBeal andBohlenin
1957. The reportsummarizedthe categoriesas:
innovators – hadlarger farms,were more educated,more prosperousandmore risk-
oriented
earlyadopters – younger,more educated,tendedtobe communityleaders,less
prosperous
earlymajority – more conservative butopentonew ideas,active incommunityand
influencetoneighbours
late majority – older,lesseducated,fairlyconservative andlesssociallyactive
laggards– veryconservative,hadsmall farmsandcapital,oldestandleasteducated
The model hassubsequentlybeenadaptedformanyareasof technologyadoptioninthe late
20th century.
The hype cycle
Wikipedia:The hype cycle isabrandedgraphical presentationdevelopedandusedbythe
Americanresearch,advisoryand informationtechnology firmGartnertorepresentthe
maturity,adoption,andsocial applicationof specifictechnologies.The hype cycle providesa
graphical and conceptual presentationof the maturityof emergingtechnologiesthroughfive
phases. Anexample of ahype cycle isfoundin Amara's law coinedby Roy Amara,whichstates
that “We tendto overestimate the effectof atechnologyinthe shortrun andunderestimate
the effectinthe long run.”
11. Confidential 11
Picture 7. Source:Gartner (Wikipedia)
Gartner’shype cycle has alsomet criticism, butitdoesgive ratherpractical advice abouthow
youshouldunderstandwhere yourcompanyis,how customersbehaveateachstage and what
can you reasonablyexpecttohappenovertime.Hype curve isonlyrelevantincase there is
hype,if the innovation isrelevantenoughtoraise hype. However,whenthinkingabout
companies’strategydevelopmentandshareholdervalue,theyneedtohave one footinthe
future andthe otherinthe operatingefficiencyandbottomline productivityinordertobe
successful andcreate sustainablegrowth. Hype hasitsownvalue asa strategictool.
Insightsabout the combination ofhype & adaptation curve
As a marketingandbrandingspecialist withstrongemphasisoncustomerinsights Ifinditto be
especiallyimportant tocombine the hype curve and the adaptation cycle curvesandlookat
themat once.
Picture 8. Source:Combinationof Rogers’Bell curve andGartner’shype cycle
12. Confidential 12
In the combinationpicture there’salotto learnintermsof how the adaptationandhype cycle
dictate howthe marketbehave andwhat kindof “lawsof nature” shouldbe recognized.
NEW AND EMERGING STAGES:Technologytrigger,Peakof inflatedexpectations andthrough
of Disillusionment,innovators:
Characteristics: Thisstage is aboutcreatinga future,whichmeansalot of investments
and little tozerorevenue.However,there couldbe alotof attentionandpublicity
relatedtothe subject.Inthisstage companiesare valuatedbasedonexpectations
insteadof theiroperatingefficiencyandturnover. Majorityof investmentsare related
to R&D.
Customerinsights:In the earlystagesthe target groupsare verysmall andvery
specific. The characteristicsof the customersegmentsemphasizecuriosity,willingness
to investtime andinterestintosomethingnew,acceptingthatnew isalsoexpensive
and doesn’tnecessarilyquite workasexpected.Inthese verynew areasthe customers
are highlyinterestedandengagedwiththe productsorservicesandalsooftenwilling
to contribute tothe developmentwithfeedbackandadvices.Intermsof customer
journey,these peopleare willingtoinvesttime andeffortbuttheyare few in
numbers.
Risks: The veryearlystagesof anynew area are risky.Successcouldcreate incredible
growth,but the likelihoodof successisslimandrequiresdeeppockets.
Opportunities:If the companydecide tobe an active playerinthe hype market,itcan
positionasa fore runnerina new andemergingfieldwhichcouldalsohave apositive
impacton the othermore establishedofferingareasandshareholdervalue.If we look
at the bigpicture andhaloeffectsof the publicityinthe othermore established
offeringareasandbrandvalue,the investmenttoveryearlystage innovationsand
hype couldbe profitable evenif the subjectareawouldfail.
One importantaspectof dedicationtocreationof new isthe highlyengaged
community andinfluencers aroundthese new innovationsandnatural interest
towardsthem.Whena companyactivelyengage with customers, theycreate organic
social mediaandcommunityaroundthem.Sometimesthe communitybecomesmore
valuable thanthe companyas suchand the community’sfeedbackandbrandvalue for
example inrecruitingcouldprove tobe immenselyvaluable.
GROWTH STAGE: Slope of Enlightenment,earlyadopters andearlymajority
Characteristics: The technology,serviceorsolutionmaturityreachalevel of
sophisticationthatenablegrowthandscalability.There isalreadysome proof aboutits
value andit lookslike there are otherswillingtotake the solutioninuse andscale it.In
consumermarketsthiscouldmeanthatthere are alreadygreatnumberof users,but
little tonorevenue andit’snow time tocommercialize the service.
Whenit becomesobviousthatthere isgrowth,the competitionaboutpositionand
marketshare couldbecome fierce. InvestmentsinR&Dgive wayto investmentsin
marketinginvestmentsandoperatingcosts. Companiesstartusingmass-mediato
promote theirservices.
Customerinsights:The numberof customerswhogetinterestedincreasesrapidly
while companiesuse mass-mediaintheiradvertisingandfightforcustomers’
attentionandinterest.Basedondifferentcustomercases,the customer
characteristics thatplaymajor role ingrowthstage emphasize eg.Highereducation,
youngerage but withcapacityto spendmoney(unlesswe are lookingateg.Free social
media),interestandwillingnesstotrynew stuff amongthe firstonesin theirpeers,
general interestinstayingtuned withwhatishappeninginthe societyand world,
13. Confidential 13
creativity, positive attitude towardsinternationalcommunityandcultures, open
mindnessandtolerance.
Risks: If the newoffering,technologyorsolution hasthe powertodisruptthe market,
missingoutonit couldhave dire ramificationsforthe company inlongterm.Itis
imperative toconstantly monitorwhichtechnologies,trendsandsolutionshave the
potential tobecome mainstreamandbydoingsoreplace the establishmentandover
turn statusquo.
Opportunities:Asthere isalreadyproof aboutdemandandpositive marketfeedback,
investingatthisstage issmart.The riskis low butpotential towinrevenue atboth
short andlongterm are clear. Incase the strong playerinthisnew growthmarketare
small venture capital basedcompanies,it’squite standardpractice forbigcompanies
to buythemand incorporate intheirbrandand offeringportfolio.
GROWTH PLATEAU: Earlymajority,reachingStatusQuoand part of the establishment
Characteristics: Atthispointthe playersinthe marketare knownand theirmarket
sharesare quite stabile. The marketsannual growthrate hasstabilizedanddoesn’t
grow withdouble digitsanymore.The price competitionentersthe marketandset
newrequirementsforoperatingefficiencyandproductivity.
Customerinsights:The earlymajorityrepresentthe active workforce whohastobe
somewhataware aboutwhatis happeningaroundthemandlearnfromtheirpeers
and surroundingsocietyaboutwhatisthe new normal andwhatare the “safe” and
obvious,mostcommonproducts,brands,servicesandsolutions.Earlymajorityis often
slightly inclinedtowardsthe customertypesthatare emphasizedingrowthstage.
Risks: The fightovermarketshare couldresultinun-healthyprice fightandingeneral
the requirementsforoperating efficiencybecome important.Anotherimportantriskis
that the companiesfall asleep,getcomfywiththeirmarketsharesandlose sightabout
the alreadybrewingnewdisruptivesolutions.Instabile marketsthereisoftenlittle to
win,butpotential to lose big.
Opportunities:Innovatinginside alreadyestablishedcategoryandoffering,re-
positioningbrandsanddisruptingthe establishment.(Note:Overthrow Iand
OverthrowIIor “Eat the bigfish”are greatbooksgivingincrediblygreatadvice about
whatkindof strategiesworkbestinchallengingthe marketleadersandstatusquo)
DECLINING MARKETS: Late majority andLaggards
Characteristics: Atthispointit isobviousthatthe market has peakedandmight
already be indecline andnew solutionsare alreadyinthe marketandgrowing.If the
companyisin thismarketpositionandhasno positioninthe growthgame,itisalso
likelythatthe company’sfinancialpositionstarteroding,profitabilitydecline must
alreadybe visible, andthe internal senseof urgencyshouldbe obvious.
Customerinsights:Whenthe adoptionreachlate majoritythe attitudesandcustomer
profileschange.Customercharacteristicshave overrepresentationinolderage,lower
education,lessinterestininternational andmore focusonlocal,lowerincomes,less
use of publicandneutral newsmedia,lesstoleranceandwillingnesstolearnnew in
general,theyare more price anddiscountdrivenandmore passive ingeneral.
Risks: Decliningfinancial positionandprofitmargins.Highlevelof customerdefect
(negative churn) andlowlevelsof new customeracquisitionwithgrowingcostsand
decliningarpu’s(averagerevenue peruser).The biggestriskisnottodo anything,
because itwill certainlyresultindeath.
Opportunities:Incase the marketas such isnot decliningbutthe brandhasa declining
position,itispossibletorevitalize the brandand make a Brand Turnaround.(Note:
KarenPost’sbook“Brand Turnaround – How brands gone badreturnedto gloryand
14. Confidential 14
the 7 game changersthat made the difference “isa great source of insightforsuch
situations).Sometimescompaniesthathave declinedtothispositionstill have alotof
financial powerandtheycanbuy theirwayinto new growthmarkets (M&A approach)
The customer relationshiptypes
Each markettype has distinct behavioral patternsthatsetthe stage for the optimizationof the
path to purchase,the experiencepathandthe importance of frequencyandcontinuous
experiences.Forexample,forfemaleconsumers,fashion-shoppingbehaviortypicallyrevolves
arounda ‘dayof shopping’.The shopper’sapproachistospendtime andmake discoveriesby
curiously walkingfromstore tostore or visitingmultiple onlinefashionstores.The pathto
purchase can be transformedtothe directionof serial buyingif,forexample,the brandcan
earna position asthe customers’fashionadvisorandsource of inspiration.If the customer
adoptsthe brand as part of theirpersonalityandimage,itispossibletoincrease the share of
walletandmarketshare withexistingcustomers bywinninglargershare of spending.
However,eachof these five customerrelationshiptypes have majordifferencesandvery
differenttoolstoimprove customer experience, -life time value orprofitability.
Picture 9, Source:Toni Keskinen
A) One partner – single transaction
Characteristics: The customerisoftennew to the situationandfeelsinsecure.These
decisionsoccurrarely,oftenonlyonce ortwice ina lifetime,whichiswhythere isno
elementof experience.
Priorities:Do or die marketthat emphasizesthe pathtopurchase.If the company
doesn’twin,the customerislostforever.Becauseownexperiencesdon’texist,the
endorsementsfromothers,publicreviewsetc.are veryvaluableaswell asany
external authorityrecommendationorreview rating.
Improvementopportunities:Positive wordof mouthandan opportunitytoturnsingle
majordecisionintocontinuousrelationship.Whenacustomerinvestsalotof time
and efforttolearnaboutthe companyanddeveloparelationship,itwouldbe ashame
to endit to delivery.
B) Multiple partners –multiple transactions
Characteristics: Thismarketcouldbe describedasa shoppingmarket.The customers
showlittle loyaltyandbuyfrequentlyfromdifferentvendors off- andon-line.Fashion
isa greatexample aswell asrestaurantsortraveling.Behavioral changesinthis
marketcouldbe rapid anddrastic.
15. Confidential 15
Priorities:
- Be the first:Try to become the startingpoint,the top-of-mindoptionwhere to
start. Your share of walletdependsdrasticallyonyour visitingpriority
- Use icebreaker:whencustomermakesthe decisiontobuysomething,likelihoodof
buyingmore increases
- Increase the transactionvalue: make sure thatyouuse all relatedandsupporting
opportunities,package dealsetc.togrow the average transactionvalue
- Leave withverypositive feeling: The endof experiencefeelingwill stickand
influencethe customersnextvisitprobabilityverystrongly
Improvementopportunities:Become the preferred partner,getcustomerto
participate ina loyaltyprogram.If youcan delivervalue andgoodexperiencestothe
customer, youcan earn trustand influence theirbehaviorandreduce the spendingto
otheroptions. There are greatexamplesaboutchoice architecture forrestaurant
menusandhow toinfluence the customer’sdecisionmakingbysimplypresentingthe
optionsina certainwayand order. Strong route to growthisavailable bycreatingand
enforcinghabitsasa way of winningshare of mindandwallet.
C) One partner– multiple transaction
Characteristics: Inthismarket customermakesadecisiontobuyfor eachindividual
purchase and decide tocome to the same place each time.Greatexamplesaboutsuch
behaviorare eg.Dailygrocerypurchases, dailylunch, hairdresser/barber–visits,car
maintenance,tyre exchanges,optician,etc.Thismarketisbasedonhabitsoroften
relationshipstoindividualpersonslike ahairdresser,carmechanicor optician. Inthis
marketindividualtransactionscanbe small,butaverage annual revenuepercustomer
isquite significant.
Priorities:
- Enforcinghabits:Do yourbestto turn visitsintohabits
- Booknextvisitinadvance:If possible,bookinginadvance will make the nextvisit
certainand can potentiallyincreasethe frequencyof visits
- Personalityandindividual attention: Due tothe nature of the relationshipthe
personnel shouldlearntoknow these customersandstart engagingwiththemat
humanrelationshiplevel
- Positive surprises:Randomactsof kindnessandgenerosityworkwondersinthis
kindof relationshipsandcreate momentsworthrememberingandsharing
- No friction:Make sure that anyand everyfriction,disappointmentorreclamation
isdealtwithutmostcare and empathy
Improvementopportunities:Developingfrequency,averagetransactionsize or
changingthe relationshiptype towardscontinuousrelationship.
Case example:There isone barbershopfromFinland,thatturnedbarbervisitsformen
into continuousrelationship.Mendon’timprinttocertainprofessional asstronglyas
female doandtheyvisitbarbersmore frequentlyandtheydon’tlike tobookthe visit
inadvance.Thisbecame an insightforMRoom: Payyour barbervisitsonce a year,visit
as oftenas youlike,andbypassthe line withyourmembershipcard.CurrentlyMRoom
isexpandinginternationallyanddisruptingthe market.
D) Multiple partners –continuousrelationship
Characteristics: Currentlythe growthindigital servicesisbreedingthiskindof market,
eg.Multiple streamingservicesforonline video,sportsorgames.More traditional
examplesare Bankingandteleoperatorservices.Inthese sectorsthe companiescould
serve customer’sall needs,butmostcustomerschoose tobuyfrommultiple partners:
16. Confidential 16
eg.Multiple creditcards fromdifferentvendors. Defectingcustomersandnegative
churn isterrible costinall continuousrelationships.The upside is,thatearning
customer’strustand multipleofferingareascaneasilydoubleortriple the customer’s
value andARPU (average revenueperuser).
Priorities:
- Connectingeverything:People tendtomake decisionsone needorone purpose at
the time.Once youclose that one deal,youshouldbe able topresenthow much
betterandeasiereverythingwouldwork,if theywereconnected.The firstisthe
door-openerandlicense toserve,buteverythingshouldbe inter-connectedin
orderto bringreal value forcustomers
- Natural extensions: Convenience,easiness,feelingof natural andsmall decisions
reduce the likelihoodof customersgoingtoaskoffersfromelsewhere andlower
the barrierto make the decision
- Positive surprises:Randomactsof kindnessandgenerosityworkwondersinthis
kindof relationshipsandcreate momentsworthrememberingandsharing
- No friction:Make sure that anyand everyfriction,disappointmentorreclamation
isdealtwithutmostcare and empathy
- Newcustomeracquisition:If we considerbusinesscase,the profitability/customer
goesup intime.Thismeansthatthere is more moneytospendoncustomer
acquisition, becausethe breakevenisnotdependentonsingle purchase but
invoicingovertime.
Improvementopportunities:Incase youare successful inconnectingeverythingand
gettingcustomerstoconcentrate theirbusinesstoyourcompany,youare successfully
movingtowardsone partner– continuousrelationship –model.
E) One partner– continuousrelationship
Characteristics: Thisisrarer and exclusivemarketlogicinwhichbestexamplesare
electricityandwatersupply agreements.Inthiskindof relationshipthe customerhas
onlyone partnerwithan on-goingservice agreement.Suchagreementsare more
commonin B2B-environment:eg.ICT,Travel agencies,Cleaningservices,bookkeeping
and financial services, media- andmarketingservices, etc.
Priorities:
- Role expansion:InB2B the retainerisoftenrestrictedtocertainkeyareasandany
supportingworkmeansgrowthincustomervalue andbilling.Earningagreater
and more meaningful roleisthe route togrowthand customersatisfaction
- No friction:Make sure that anyand everyfriction,disappointmentorreclamation
isdealtwithutmostcare and empathy
- Minimumcostto serve:Automate everything,focushumanattentiontothose
momentsthatreallybenefitfromhuman interactions.Automationrelease people
to serve more clientswithsame resources
- Newcustomeracquisition:Eachand everynew customergrow the companyand
profitability
Improvementopportunities:Brand,reputation,demand,operational efficiency,great
customerexperience andloyalty.These are the keystosustainablegrowth.
THE CUSTOMER SEGMENTS
Everythingstartsandendswiththe customersandtheirpersonal perceptions,preferences,
attitudesandexperiences. The segmentof one isincreasingly possibleapproachtooperational
marketingandservice production,butcorporate andmarketingmanagementrequire ustobe
able to understandwhatkindof customertype-relatedissuesinfluence atmarketlevelin
17. Confidential 17
orderto be able tosteerprioritiesandactivitiesregardingR&D,channel developmentand
multiple otherareasoutside marketingfunction.
Because thissubjectisenormouslylarge tocover,I’ll onlyconcentrateon acouple of must
have prioritiesinthe creationof customerinsightsandsegmentationforcorporate
managementandmarketing:
1. The Paretoprinciple
2. Value isverydifferentfromvolume
3. Segmentingmustbe easytounderstand
4. There isno single segmentingsolutiontomeetall requirements
5. Segmentinghastobe actionable andmeasureable source of managementKPI’s
1)The Paretoprinciple
Alsoknownasthe 80/20 rule,the law of the vital few,orthe principle of factorsparsity.
Thisprinciple sitesthatitisquite commonthatroughly80% of effectscome fromapr.
20% of causes.Whenwe are lookingatthe marketplace or customerdatabase,itis
imperative forustounderstandwhatgroupsof people representthe minorityof the
populationoncustomerbase thatcontribute the majorityof sales.Inanygivencategory,
onlycertainpart of the populationbuyfromitandfromthose whobuy some buya lot
more than other,have strongerfrequency,highervolume andbetterprofitability.The
role of segmentationistorecognize whatfactorsandcharacteristicsof customers thatare
commonor separate groupsfromothers.These groupsbecome segmentswithdifferent
prioritiesandprobabilities.Segmentationthathas very practical implicationsto
operationsandstrategyprovide incrediblyvaluablefoundationforcustomercentricityin
overall corporate management. Frommyowncase history,there wasacase inwhich
0,27% of customerbase represented80% of sales.Understandingwhatthose customers
are and actingon those prioritiesisimperative.
Alongwiththe currentsales volume andpriorities,the otherkeypriorityistoalso
recognize potential andwhere the mostprofitable source of growthis.InB2B it isquite
commonto segmentcompaniesbasedontheircurrentandpotential value anddefine
operational resources,care modelsandgoalsbasedonthisevaluation.
2)Value isverydifferentfromvolume
It’simportantalsoto understand the difference of valuefromvolume.If segmentation or
KPI’sare onlybasedon sales,itoftencauses blindspotsintermsof priorities.Some
customergroupsare disloyal,onlybuyatverylow cost, become customersbutnever
actuallyreachbreakevenwhichmeansthathavingandservicingthesecustomersactually
cost moneyforthe company. If the segmentingiswell done,itiseasytomonitorhow the
average ARPUdiffersfromone segmenttonextand develops overtime orhow the cost-
to-serve differsbetweensegments
3)Segmentingmustbe easytounderstand
Inside anorganizationeveryone fromtopmanagementtocustomerinterfacingservices
everyone shouldbe aware of the customersegmentsandunderstandtheirmeaning.If
the segmentationistoocryptic,difficultorabstract,it ispracticallyimpossibleto
implement.It’sbettertohave simplifiedsolutiontosegmentationinsteadof very
accurate one,if itmakesadaptabilityinside organizationeasier.The accurate one isgreat
for a specialistlike salesperformance- orCRMmanager,programmaticmediabuyer,but
not forgeneral staff and -managementpurposes.
18. Confidential 18
4)There isno single segmentingsolutiontomeetall requirements
In case of a largercompanythat serve customersinmultipleserviceorproductareas,it is
oftenimpossible tocreate asegmentationthatwouldanswerall questionsregardingtheir
needs,currentandpotential value, currentuse of servicesa/b/c/x, channel preferences,
attitudes orservice preferencesfromone offeringtothe next,etc.
Answeringall these questionsrequire separate segmentingaccordingtodifferent
attributesandpurposeseg.Caremodelstocurrentcustomersvs.mediabuyingsegments
for newcustomeracquisition.However,itisimportanttorecognize the mostimportant
customercharacteristicsthatdefine strategicsegmentsinthe marketandenable strategic
KPI’sat the overall managementlevel.
5)Segmentinghastobe actionable and measurable source of managementKPI’s
Actionable segmentingmeansthateverysingle customerhasa segmenttaginthe
customerdatabase (if there existarecognizedcustomerrelationship) andwe can
recognize segmentsfromgeneral populationandmeasure adaptationandmarket
changeswithinthese segmentsinthe givenmarket.Segmentationisa commonand
sharedlanguage inside acompanythatmakesitpossible todistribute customercentricity
and insightsacrossorganizationandlearnmore fromreal life experiences.
The level of active customersin the market
The market activityhashuge variationfromone businesssectortothe next.Lets say,thatonly
certain% of people everbuyahouse andrather big% of themonlybuyitonce.This means
that the numberof people whoare currentlyactivelyconsideringaboutbuyingahouse
representverysmall %of population.Onthe otherhand,mostof usvisitgrocerystore
multiple timesaweek,we visitrestaurantsandcafeteriasquiteoftenandmake multiple
decisionswhile visitingthem.Thispicture representshow the marketactivitylevel influences
marketingdecisionsandwhetherthe impactof marketingisexpectedto be fastor slower:
Picture 10, Source:Toni Keskinen
In case we like tounderstandthe marketactivityandour capacityto influence,we should
considerthe following:
19. Confidential 19
#1 How manypeople are activelyinthe marketrightnow?
#2 How manyof those active people are inourowncustomerdatabase (ownreach)?
#3 What is ourpositioninthe marketdynamicsmapregardingthatspecificoffering?
#4 What kindof relationshiptype andtransactionvalue are we talkingabout?How muchcan
we investinnewcustomeracquisition
Whenwe are makingmarketinginvestmentdecisionsthese are the thingsthatwe needto
knowinorder to optimize the valueof investmentsinbothshortandlongterm,or inownor
external channelsandmedia.One importantconsiderationistoalsorecognize thatown
customersalwaysnotice brand’sadvertising inexternal mediums betterthanthose whodon’t
have an existingrelationship.Itisimportanttounderstand,how muchof total advertising
returncomesfrom existingcustomer’sandhow muchdoesitdelivernew customers. There
are casesinwhichthe publicmediastories,news,articlesoradvertisinghasactuallyincreased
negative churnandexistingcustomershave leftbecausetheydidn’tlikewhatwas
communicatedaboutthe companyor itsproducts.Negative publicityandadvertisingROIis
alsoa riskthat require monitoring.
PART 2: THE CUSTOMER JOURNEY – parts and chapters
Nowthat we have an understandingaboutthe external forcesinfluencingthe customer
journey,a.k.a.the stage andthe set-upof the play,we can dive deeperintothe actual
journey.
Picture 11, source:Toni Keskinen
Path to purchase is a decision making process that connects the customer to
different options available and finally, to the solution - the brand and product
they choose to buy from the selected vendor from the selected channel.
The path to purchase can be dividedinto three main stages
1) Brand as a platform: The situationbefore active considerationstarts
Characteristics: Brand meanscustomers’awareness,emotionsandattributesthat
theyconnectwitha certainbrand or product category.In case the areaof decision-
makingisnewto the customerand there isno previousexperience aboutit,mostof
the learningcouldhave beenunintentionalandpossiblyevenunconscious.Incase the
case hasto do withdecisionsthathave more frequency,all formerexperiences
contribute to the customer’sview tothe brandand category. Brands are oftenour
unconsciouscollectionsof perceptionsandpreferencesandthatiswhytheyare not
that easyto change.Creatingsuchpositioninthe collective mindof apopulation
meanseducationof thousandsandevenmillionsof brains.Suchtrainingtakestime
and changesare surprisinglyslow atthe marketandpopulationlevel
20. Confidential 20
Drivers: The awarenessandfamiliaritytranslate astrustveryeasilyunlessthe
awarenessof the brandis specificallynegative.Inthe customerjourneysbrands
representthe GPSthat dictate how the customerjourneyswillgoevenbeforethey
start. Asalreadystatedinthe “pre-determinedfunnel”and“habitandimpulse buying”
drivenfunnels,brandrepresentanchorsandconsiderationgroupsthatshape the
customer’sjourneysverystrongly.
Opportunities:Brandis an outcome of systematicandlongtermmarketingworkand
investments.Wheneverthe companydoesanymarketingactivities,the longterm
impactshouldalwaysbe on the radar. Whenwe talkaboutcreatingstrong and
sustainable brandvalue,itmeansyearsanddecadesof workandcreationof
cumulative competitive advantage.
2) Initiation:Whenactive considerationbegins
Characteristics: Inmost customerjourneysthere isamoment,change orimpulse that
isa wake-upcall forthe customer. The mainthingisthat the impulse bringsthe
considerationorrealizationtocustomer’sconsciousmind.
Drivers: Sometimesitisamarketingcampaign, butveryoftenithasto do with
customersownlife eventsorchanges,the productmightrun out,breakor get lost,or
some otherexternal impulsesorcompetitoractivitiesmightcause disruption.
Sometimesthe reasonisinvoicing,ornoticesaboutanendingagreement,customer
satisfactionquestionnaire ordissatisfactionwithcurrentpartner.
Opportunities:What everthe reasonsforinitiationare,itisimperative tounderstand
them.Incase we can recognize theirfrequency,seasonality,context,relatedsubjects,
emotionsandevents,we candefinehow tobe presentinthose momentsandhelp
customers.Beingthere inaright moment,inaright place to the rightpeople canbe
incrediblyvaluableandprofitable. Formarketing,especiallyprogrammaticbuyingand
the recognitionof customerintentionsorSEMmarketingrelatedtocustomerneeds
offergreattools,as well ascontentmarketing.Othersourcesfortriggering
opportunitiescanalsobe foundfrompublicregisters,eg.Moving,kidstartingfirst
grade at school,car needstobe checkedbylegal obligationetc.
3) Choosingand buying: The learning,dreaming,consideringandchoosingjourneyto
purchase
Characteristics: Thisisthe actual funnel process inwhichthe customergetstoknow
options(ornot),usesdifferentchannelstolearnmore (ornot) and eventuallymakesa
choice aboutwhere,howandwhat to buy.Dependingonthe customer’sfamiliarity
withthe choice,intensityof the decisionmakingandothervariables,thisprocess
couldtake anythingfromminutestomonthsor evenyears.
Drivers: Dependingonthe brandandproduct,it couldbe knownand preferred,option
amongothersor completelyun-known.The goalsandthe driversare verystrongly
categoryand productspecific.
Opportunities:Incase youspendenoughtime andefforttotrulyunderstandhow
customersmake theirdecision,where theydothemandhow youcan influencethem,
it ispossible toincrease salesandconversion rate verymuchwithverylittle
investments.Inthe bestcasesthe saleshasmore than doubledwithoutdoinganything
flashyorvisible.Fromcompetitor’spointof viewtheycan’tunderstandhow itis
possible thattheysuddenlylosesalesandmarketshare withoutanyvisible changesin
the market.As an addedbonus,alsocompetitor’scampaignssellthe targetbrand’s
offering,incase customersengage more thanjustone optionalongtheirjourney. In
one clientcase theircompetitor’scampaignbroke their ownsalesrecord,because the
competitorinitiatedcustomersandgotthemactivated,whichboughtthemtothe
21. Confidential 21
brand’sinterfacesandtheysuccessfullyconvertedthemintosales.Thisisbehavioral
economicsatits best.
Esimerkki SEO+CRO businesscasesta
Esimerkki OMNI:nCustomerJourneyjaAudienceinsight -työkalusta,sekäContent
inspirationista
The path to purchase isverymuch aboutcreatingand changingperceptionsandexpectations.
Customers’are influencedandtheyactivelylearnmore abouttheirownpreferences,prioritize
theircriteriaandtheyalsoget more emotionally engagedandinfluencedalongthe way.
Transactionisthe final pointof entry;the price andthe expectationsare setandit’stime to
enterthe experience path.
PART 2: The experience path- Redeemingexpectations
4) Order to delivery
Characteristics: Onlyapplytocases inwhichthere isa waitingtime betweenbuying
and experiencing.Sometimesthistime couldbe ratherlongeg.Incase of orderinga
newcar or buyinganapartmentbefore the buildingisreadymeanmonths,evenmore
than a yearof waiting.
Priorities:Commonchallenge isthatcustomerscanfeel leftalone,forgottenand
insecure whilewaiting,whichisdefinitelynotagreatexperience
Opportunities:Keepcustomersup-to-dateandservice themduringthe deliverytime.
Thisis a possibilitytodifferentiatefromcompetitionanddelivergreatbranded
experiencesthatenablestrongercustomerrelationshipandthusloyaltyandup-sales
potential overtime
5) First experiences
Characteristics: The higherthe intensityof buyingis,the more importantthe product
or service isto the customer,the more the firstimpressionmatters.One interesting
phenomenonrelatedtothisare the “un-packingX”-videos.Inthese videos’customers
showhowtheyun-packtheirproductand talkabout theirexperiencesastheydoit
Priorities:Firstimpressionisoftenveryimportantandmayhave longtermimpacton
the customerrelationship andbrandperception.Itisimperative torecognize where
thingscouldgo wrong:eg.Customerdoesn’tknow whattodo,feelsstupidor
betrayed,can’tstart the productor start usingit.In case of eg. Service experience
similarfeelingsof insecurityorbeingneglectedare justas dangerous.
Opportunities:Makingthe firstexperience surprisinglypositive pavesthe wayfor
great and long-lastingcustomerrelationship,enablehigherpurchase frequencyand
potentiallyactsas a seedfornew habits andpreferences
6) Learning and livingwith the product/service
Characteristics: Productsandservice are verydifferentbynature.Customer’s
expectationisthatthe productor service meets expectations, andeverythingworks
smoothly
Priorities:Make sure to take awayany possible friction,disruptionsor potential
disappointmentsrelatedtothe use of product,continuouscustomerrelationshipor
frequentlyoccurringengagementslike eg.Groceryshopping.
Opportunities:Randomacts of kindnessof otherpositiveandsurprisingexperiences
that are worthsharingand remembering.Formanyproductsandservicesitssmartto
create an onboardingprocesswhichhelpcustomersdiscoverthe mostvaluable uses
22. Confidential 22
for the newproduct or service theyhave bought.Thiskindof communicationshave
impacton EBIT (cost-to-serve),loyalty,brandrecommendationsandlikelihoodof re-
purchase.Althoughthisisoftendeliveredwithmarketingautomationtechnology,the
nature of suchcommunicationsisaboutcaringand educatingthe customers.The core
emphasisof thiscommunicationistoimprove customerexperience andtackle most
commonchallengesandfailierstogetmostoutof theirpurchase inadvance,before
customersface challenges. BestKPI’sforthisare NPS, decliningservice costs,loyalty,
share of wallet(if applicable),ARPUincreasesdue tohighervalue service purchasesor
cross-use of differentproductsorservices.Classicanalysisapproachtothisinretail is
RFM-model (Recency,Freqency,Monetary).If itisapplicableinbusinesscase,this
approach isveryvaluable,butincase of continuousrelationship(monthlyfeebased)
or single purchase thisapproachmightnotwork.However,eg.Incase of continuous
monthlyfee-basedserviceuse like Netflix,the frequencyof use isverygoodindicator
of loyaltyandvalue experience.
7) Defect,failure,re-purchase,end-of-agreement
Characteristics: The product runsout or break,there isno longerneedforit,the
agreementperiodends,competitorinnovationorsales activitiesdisruptthe ongoing
relationship…multitude of potentialsituations
Priorities:The most importantthingistounderstandwhatisinevitableandwhatcan
be influenced.Avoidingdefectandnegative churnisoften the mostcost-efficientway
of boostingbothtop-line andbottom-line profitability.Especiallyincase of continuous
relationshipsitisimperative tounderstandhow andwhypeoplecome tochange
service providersandhowtobe presentatthe righttime withthe rightmessage tothe
rightpeople.Preventinglossesandnegative experiencesatthe endalsohas positive
impacton the brand perception.
Opportunities:Atbest,the endof previousrelationshipisthe beginningof the next
and newrelationship,purchaseorextensiontothe alreadyexistingrelationship.If the
productruns out,breaks,wearsout or the service experience ends,it’sjust an
opportunityfornextdecision.The customer’sfeelingatthe endof experiencehas
majorimpact onthe potential of returningandpreferenceornatural flow tore-
purchase withoutevenconsideringanythingelse.Veryoftenendingisnotreallyan
end,butmore like apause andendingof one is an opportunitytoanother. Some
special situationslike productmigrationrequire more thoroughconsideration,
because customerisforcedtomake a decision.The smootheryoucanmake the
transitionandthe lessyouneedfromthe customer,the lessyouwill lose customers
due to disruptioninrelationship.Incase decisions are required,thenthe core
messagingshouldbe verypositiveeg.Yougetbetterservice atlowercost.
PART 3: Conclusionsand practical advice to management and marketing
Whenenteringthistype of analysis,itissmartto lookat the overall large scale andbigpicture
before divingintothe nittygrittydetails.Thatiswhythispaperstartedwiththe “lawsof
nature”.The difficultywiththistype of analysis isthatthere are multiple specialistsinvolved
and theyall are responsible andlookatthe journeyfromtheirspecialistpointof view,eg.Web
analyst,social mediaanalyst,mediaagencyplanner,SEO/SEMspecialist,Researcherdoing
brand tracking,NPS/VOC- ordefectingcustomerresearch,call centeranalyst,CRMor sales
performance analyst,mysteryshopper,categorymanagementandprocurement…andthe list
goeson and on.The problemisnot the lackof data, it’sthe fragmentationof vastamountof
23. Confidential 23
data at source,insightandpractice levels.Here isamapof some verygenericand relevant
datasources:
Insightsource map:Toni Keskinen
It isimperative touse all datasourcesmentionedabove asasource of insightbutcreate a
viewthatcombinesall of them.Whenyouhave the bigpicture documented,itiseasyto
recognize hotspots,eg.Highvolume engagementsatcertainmomentincertainchannelsor
momentsof truth that have veryimportrole intopline orbottom-linefinancial successaswell
as inbrand experience andreputation.Thiswill take timeandeffort,butthe workisincredibly
valuable andenable the creationof solidinsightplatform. Recognitionof these hotspots,
momentsof truthand overarchinginsightsabouthow the marketworks,enable youtodefine
where todig deeperandwhere youreallymustfocustime andeffortinordertogetsignificant
result.
Wheneverwe are analyzinganddesigningcustomerexpectationsandbroaderinsights,the
firststartingpointisthe level of sharedanduniversal level.We canall agree that there are
universal ruleslike the goldenrule fromthe Bible: “Oneshould treatothersasonewould like
othersto treat oneself”. The ideadatesat leastto the early Confucian times(551–479 BC)
accordingto RushworthKidder,whoidentifiesthatthisconceptappearsprominently
inBuddhism, Christianity, Hinduism,Judaism,Taoism,Zoroastrianism,and"the restof the
world'smajorreligions".[3] The conceptof the Rule iscodifiedinthe Code of Hammurabi stele
and tablets,1754-1790 BC. So,thisis nota “new”insight.
Thislevel of customerunderstandingshouldbe obviousandit’seasytoagree on internally,
but inthe everydayrealitycustomers’expectationsevenatthisbasiclevel are notmet.
Wheneversomethinggoesagainstcommongoodmannersandgeneral feelingof justice,the
companyfailsinitscustomerexperience andlosestrust.There are conflictinginterestsin
everycompany,butthe company’sdecisionmakersshouldneverlose sightof the bigpicture.
Thisis a level of customerexperience,that isexpectedbyall customersfromall companies
and itdoesn’tneedspecialiststodecipherwhatthe rightwaysto operate are,justcommon
sense.However,thislevel of experiencecanalreadysurprise some customerspositivelyand
drive competitive advantage.
Veryoftencompaniesfindthiskindof “minimumrequirement”tobe obvious,lessinteresting
and excitingandthe specialisteasilyjumpdirectlytothe nuancesandspecificsof the
customersegmentsandtheirdesires.Thisisacommonbias forall of us whowantto create
newand buildsomethinggreat.However,itisimperative thatwe don’tskipstages.The
minimum“commonsense”levelrepresentsafoundationyoucanbuildon.If the foundationis
24. Confidential 24
not solid – whatevernewandinnovative youcreate ontopof it,its successdependsonthe
foundationandbaseline experience.
Thistype of workisverystrategicand require seniormanagementtobe involvedalongthe
way.Thiskindof insightcreationprojectfocusesmanagementattentiontocustomercentricity
and marketlogic,whichisimperativewhenyouare introducingoutside-intype of
managementagendaandactionable customercentricityinthe managementmodeland
governance. The onlywaytotrulyfindwhatis meaningful istoworkyourwaybottom-up
Bottom-upprocess:Toni Keskinen
In the managementliterature there are greatquotesthatemphasizethe role of details,eg
“Building a visionary company requiresonepercentvision and 99% alignment”- JimCollinsand
JerryPorras inBuiltto lastor
“Strategy withouttacticsis theslowestroute to victory.Tactics withoutstrategy isthe noice
beforedefeat.”– Sun Tzu
Customercentricityandthistype of analysiswill reveal the mostmeaningful issueswhere the
managementandseniorstaff attentionisamusthave.The keyissue ingettingthe required
attentionisthe understandingof impact. Some detailshave majorimpact,theydon’trequire
majorinvestmentstofix andtheycanbe implementedveryfastwithverylittle effort.
Recognizingthese detailsisimportantforthe seniorstaff eventhoughtheywouldbe
otherwise excludedfromthe managementagenda.
25. Confidential 25
Picture 12, source:Toni Keskinenbasedonanoriginal picture “Sweatthe details”byRory
Sutherland
Managementandseniorstaff easilyconcentrate mostof theirtime tothingsthatare
expensive.The price of the issue easilytranslatesaspriorityandincase there are no other
clearinsightstobalance thissituation,level of coststeersmanagementtime andattention.
Whenwe can uncoverissuesthathave a big impact,itis easiertogetthe requiredattention
and urgencyto turninsightsinto actions.Because these thingshave abigimpact,theycould
be rather strategicissueseventhoughtheyare cheaptochange or develop.
Thisis importantforus to understand,because membersof the managementandseniorstaff
are biasedtothinkthatif somethingisimportantitisalsoexpensive.Thisisoftennotthe case.
Understandingthisisthe keytomake sure that the lefttopcornerstays cleanandthe
managementdon’tdodecisionthatendupbeingveryexpensive buthave verylittle tono
impactwhat so ever.
Positive Example:GovernmentagencyinFinland.
The analysis work has beenconcentratingoncoststoserve meaningwhy customersdon’tuse
self-servicesonline orwhytheyneedadvice,supportorotherwiseneedtocall tocall centers,
or costs relatedtomanagementof the applicationprocess,attachmentsanddecisions.The
applicationareabasedon these analyses hasbeen the developmentof publicwebsitecontent.
Currentlevel of savingsisat10M€/year while the costsrelatedtodevelopmenthave been
marginal incomparison.
The key to actionable insightsand investmentplanningor organisation’s operatingmodel
developmentisto make customersand market insightthe center of everything.Youstart
fromcustomerand marketinsights,analyze customer segments,needs,requirementsand
choice criteriatogetherwith interfacesandinteractionsorcustomerjourneysandwhere they
take place.Whenyouhave thiscustomerperspective ready,thenchange alense and lookat
the personnel andwhatitrequiresfromresource perspectivetoserve customerswell or
where the pitfallstake place.Understandingof customers/markets,customerinterfacesalong
theircustomerjourneysandpersonnel formthe contentsof aservice blueprint.The service
blueprintenable youtodefine use casesandtechnical ordatarelatedrequirements whichin
turn allowyoutodiscussaboutthe ICT architechture anddatastrategywithCIOorCTO. By
26. Confidential 26
combiningthese perspectivesasa roadmapand investmentplan,youhave all relevant
incredientsforabusinesscase andtransformationschedule aswell as an inspiringstoryforthe
staff to explainwhythese changesare meaningful forcustomersuccessandexperience.
Picture:Process forservice blue print,roadmapandtransformationcreation >From customers
viainterface engagements,customerjourneysandpersonneltowardsICTarchitechture &
Datastrategy - Toni Keskinen
Takeaways for marketing
Basedon the previouspages,itshouldbe clearbynow,thateach companyand productrange
has veryspecificandunique dynamicsandyoucan’t use one recipe forsuccessto all of them.
In marketingwe tendto have a biasto oversimplifyourapproachesandbestpractices (which
couldalsobe consideredas self-deception).Optimal recipeforsuccessfora specificcompany
ina specificmarket indifferentcategories isn’tsomethingthatyoucan inventfromthinairor
gut feeling.
However,incase youcarefullyconsiderandanalyze the marketdynamicsmap,understandthe
type of funnel andcustomerrelationshiptype inquestionandare able torecognize the hot
spotsin volume engagementsandmostimportantmomentsof truthalongthe customer
journey,youalreadyhave alotmore tangible toolstodefine yourprioritiesorKPI’s andmake
your hypothesisfortesting.
The days whenthe marketerhadto admitthat 50% of the marketingbudgetwaswastedare
over.We have access to toolsand data thatenable usto understand,plan,implement,
measure andlearneffectivelyandmake certainthateverycentof investmentalso delivers
healthyROI.Marketingstrategyandmanagementis ascience andbehavioral economicsis
verystrongscientificadditiontomarketingscienceframeworkthatwe have beenaccustomed
to until now.
The developmentof AIandmachine learningalongwithcapabilitytoconnectvastdatasets
togetheriscurrentlyenablingthe continuousmodelingapproach.Thismodelingallowsusto
continuouslyanalyze howourmarketinginvestmentsandchannel choicesare impacting,what
short andlongterm impactstheyare generating,how muchand to whichchannelsshouldwe
investinpaidmedia.Until now,the mediainvestmentplanninghasbeenaboutoptimizingthe
ROI or ROMI for fixedmediabudget.Thisisveryimportantandvaluableworkassuch,but has
veryimportantlimitations. The overall budgetisofteninsufficientandthe budgetlevel
decisionisnotfoundedinfacts orbusinesscase.Continuousmodelingandfreshnew toolslike
27. Confidential 27
OMNI investmentplannerandchannel plannerallowustocreate a solidfoundationfor
budgeting.The optimal situationwouldbe toenable dynamicinvestmentconsideration,thatis
to make businesscasesforeachcampaignand setthe investmentlevel andchannel choicesin
a way that theyproduce maximumsalesupliftandrevenue margin. Eachcampaignhasa
breakevenpoint,inwhichthe campaignhaspaiditself backandthendevelopessurplus.Let’s
say that the ROI is5 andrevenue margin2. That meansthatthe campaignincrease sales5
timesmore thanit costsand generate profitmargintwice asmuchas it costs.Typicallythe
breakevenpointisreachedinacouple of weeksandthe surpluscontribute the profitinshort
term.However,majorityof marketinginvestment’sbenefitshow inlongtermuplift,the
baseline sales.Thislong-termimpactrepresent+50% of total marketinginvestmentimpact.It
has beenscientificallyproved,thatincreasingshare of voice reduce price sensitivityand
contribute tobrand considerationandpreference.Theseimpactscontributeopportunityto
price upliftand/ormarketshare growth.
Picture:Investingtoreachmax salesandrevenue marginuplift,Toni Keskinen
However,howmuchyouinvestissecondarytothe fact, whatyou communicate andhow well
your communicationsare noticedandimpactpeople’sopinionsaboutyourbrand isthe core. If
whatyou communicate doesnotcreate traction,differentiationorimprove brand’simage,no
amountof moneycanfix it. Primaryadvertisingimpactdriversare adawareness/-recall &ad
liking
Picture:Advertisingrecall price/%
Picture:Adliking(persegment)
Esimerkki OMNI investmentplanneristäjaChannel Planneristä
The nextlevel of sophisticationisalreadybrewingatearlyadoptionstage ina formatof
machine learningandartificial intelligence applications. AIROMI andSellfortetoolsenable this
kindof analysisrightnowand we are alreadyusingthese technologieswhichwill experience
dramaticgrowth andadaptationrate surge startingfrom2020. The technologyisanenabler,
but whatreallyneedstochange isthe decision-makingprocess,marketingmanagement
ideologyandoperational process.Withcontinuousmodelingwe have continuousview towhat
mattersinshort and longterm,whichmakesagile development,hypothesis,testsandlearning
possible.The boardof directorshave directaccesstoresults,scenariosandresults,which
meansthat resourcingandinvestmentdecisionsare easytomanage and marketingbecomes
an ingrainedpartof corporate management. Adoptingthisapproachenable customercentric
commercial managementlike neverbefore.
28. Confidential 28
Currentlywe are educatingthe technologytounderstanddifferentbusinesses,customer
relationshipsandearninglogics,because correlationdoesnotalwaysstandforcausalityand
we needdifferentmudulestointerpretcause andeffectinordertoenable businessspecific
recipe forsuccess. Infinancial andinvestmentsectorBEinsightshave alreadybeen
implementedindifferentalgorithmspredictingstockmarketdevelopmentandthe same
developmentisalreadyhappeninginCRMand marketingautomationtechnologies.Whatwe
have there now,will lookprimitive inonlyfew yearsfromnow.
As a conclusionabouteverythingsaidinthispaper,itisevidentthateveryengagementand
experience withthe brandshouldbe consideredaspart of marketingandbrandingactivity
regardlesswhichunitof the companyactuallyisresponsibleforthe execution.Thisiswhy
modernmarketingandbusinessmanagementare actuallythe one andsame thing(perception
& experience),itsall aboutcustomercentriccommercial management.However, media
advertisingandstorytellingare still asimportantnow astheyhave everbeen. We’ve been
blindedbynitty-grittydetails andpseudoKPI’s likeonline marketingdataandKPI’swhichhas
steeredourfocustowards optimizationandefficiency,orinsome casestotallywrong
assumptionsandfalse insights.Atmanagementlevel,we needtotake some distance and
concentrate onStrategy,positioningandthe brand’spurpose whichdictate the effectiveness
of ourstrategy and marketing. The strategicimperative now istounderstandthe bigger
picture andmake sure that all parts of the companyand itspartners are alignedandshare the
same fundamental promises,experiences, goalsandguidelines.
About the author
Toni Keskineniscurrentlyresponsible forthe CustomerExperience BusinessunitatToinenPHD
Oy (Omnicomcompany) inHelsinki Finland.Mr.Keskinenhasbeenstudyingcustomerjourneys
and designingthemsince2004 for great varietyof differentbusinessesatoperationaland
strategiclevels.LatelyMr.KeskinenhasbeenconcentratingonCustomerCentricManagement
Transformation,Service automationdevelopmentalongcustomerjourneysandAI-driven
continuousmarketingmodelingforbusinesscase centricmarketinginvestmentenablement.
Mr. Keskinenismostlyoperatingatuppermanagementandboardlevel decisionmakersand
create bottomup insightsfromdata in collaborationwithcustomerinterface staff inorderto
create a sharedunderstanding,directionandinsightsfromoperational developmentto
corporate strategydevelopment. Mr.Keskinen’stheoriesandmethodshave theirfoundation
inpractical real-life requirements,have beenbattle testedmultiple timesin variousbusinesses
and are veryactionable andeasytounderstand.