Customer Value: Narrowcasting vs. Broadcasting

The traditional model for customer acquisition has essentially been a broadcast approach, reaching a large audience generally descriptive of the customer base. Contrast this with what is sometimes described as “narrowcasting.”

Virtually every brand we’ve met with in the last few months is hungry for new customers: The war for the customer is on. For more on growing your customer base, consider reading “Bigger is Better: How to Scale Up Customer Acquisition Smarter,” which is an article we published recently about how to grow your customer base.

Many organizations are hooked on customer acquisition. That is, in order to hit sales plans for the organization, new customers will be required in large numbers. It’s about as easy to kick the “acquisition addiction” as it is to kick any other for most brands. Try going without coffee suddenly, and see how your head feels. It’s not very different from reducing a business’s dependence on customer acquisition as a means to achieving revenue and profit targets.

Organizations that need ever larger numbers of new customers to achieve growth goals eventually will find the cost of acquiring incremental net new customers can become prohibitive.

Broadcast vs. Narrowcast
The traditional model for advertising and customer acquisition has essentially been a broadcast approach, reaching a large audience that is generally descriptive of the customer who a brand believes to be a fit. Contrast this with what is sometimes described as a “narrowcasting” strategy. Narrowcasting uses customer intelligence to understand a great number of discrete dimensions that a consumer possesses and can leverage statistical methods to validate the accuracy and predictiveness of targeting customers through these methods.

The chart below, depicting the value of customers acquired through traditional broadcast capabilities upfront and over time helps illustrate why “broadcast” strategies for customer acquisition alone aren’t enough.

Research for Mike Ferranti blog

Broadcast Acquisition Strategies Lack Focus on Customer Value
Large numbers of customers have been acquired in a trailing 13-month window – lots of them. The challenge is this cohort of customers has been acquired without adequate consideration of the right target.

Consider the fact that the target customer value of average or better customers is around $500. In the example above, the marketer has acquired a large number of customers who are lagging in their economic contribution to the business. While the customer acquisition metrics may look good, this was a large campaign and produced several hundreds of thousands of customers over its duration – the average value of those customers is quite low indeed.

Low Customer Value Manifests Itself, Even if Acquisition Volume Is High
When sales targets are rising, it becomes harder to justify the high cost of customer acquisition if the customers previously acquired are underperforming. This leads to a very common bind marketers are placed in. The only way to “make the number” is to acquire more and more.

The most competitive and high quality businesses steadily acquire and have a robust customer base whose economic contribution is materially higher. Consequently, profits are higher, and we have a fundamentally better business.

Oftentimes, “broadcast” advertising approaches define the target with a single criteria like age, income or geography. This can be effective, especially when the media is bought at a good value. However, “effective” is almost always defined as “number of customers acquired.” This of course is a reasonable way to judge the performance of the marketing – at least by traditional standards.

There is another way to measure the success of the campaign that is only just beginning to be understood by many traditional “broadcast” marketers: customer value. The chart above shows that this cohort of acquired customers had relatively low economic value.

Root Causes of Low Customer Value
What are the causes of low value? It would be fair to start with the ongoing marketing and relationship with the customer. Bad service could keep customers from returning. Poor quality could lead to excessive returns. Over-promotion could drive down value. Getting the message and frequency wrong could lead to underperformance of the cohort. These are all viable reasons for lower value that need to be rationally and methodically ruled out prior to looking elsewhere.

Therefore, if operational issues are not clear – either through organizational KPI tracking, or simply by monitoring Twitter — then a marketing professional needs to start looking at three things.

  1. The Target (and Media)
  2. The Offer (and Message)
  3. The Creative

Given the target is historically responsible for up to 70 percent of the success of advertising, this is the first place a professional data-driven marketer would look.

Target Definition Defines the Customer You Acquire, and It Drives Customer Value.
A fact that is often overlooked is that target definition means not just focusing efforts and advertising spent on consumers who are most likely to convert and become customers, but it also defines what kind of customers they have the potential to become.

In conversations with CMOs, we often discuss “the target customer” or the “ideal customer” they wish to introduce their brand to. The descriptions of course vary by the brand and the product. Those target definitions are often more qualitative in nature. In fact, only about 30 percent of CMO’s we engage with regularly are focused on using hard data to define their customer base. While these are helpful and create a vocabulary for discussing and defining who the customer is, those primarily qualitative descriptors are often sculpted to align with media descriptors that make targeting “big and simple.”

“While simplifying is good business, when simplicity masks underlying business model challenges, a deeper look will ultimately be required, if not forced on the organization.”

While we would not refute a place for those descriptors of a valued consumer, they do fall short of true target definition. Ideally, the process of defining the customer who a brand wishes to pursue must begin with a thorough inventory of the customers it already has, and a substantial enhancement of those customer records which provides vibrant metrics on affluence, age, ethnographic, urbanicity, purchasing behaviors, credit history, geo- and demo-graphics, net worth, income, online purchasing, offline purchasing and potentially a great deal more.

5 Data-Driven Strategies to Feed Your Customer Obsession

The digitization of our culture and marketplace has made it even more important for marketers to be customer advocates. Every bit of content we create, every retargeting campaign we develop and every customer journey we attempt to map … all this must be tied to superior and engaging customer experiences. It’s the only reason marketing exists.

The digitization of our culture and marketplace has made it even more important for marketers to be customer advocates. Every bit of content we create, every retargeting campaign we develop and every customer journey we attempt to map … all this must be tied to superior and engaging customer experiences. It’s the only reason marketing exists.

This Forrester Research recently claimed that companies obsessed with customer experience are more profitable and see higher growth. Consider Amazon, Nike or Mercedes Benz, where innovation is part of the culture. Consider how an obsession with innovation at Apple and Google translates to customer delight in their products. For the rest of us, it may be harder without that kind of a culture behind us, but frankly, there is no longer a choice for marketers: Each of us must adopt an attitude of obsession with customer satisfaction. Then, we need to employ a systematic approach to optimizing everything we do toward customer value. The key question to ask at every point in your day, “Is what I’m doing adding real value to a large number of high-value customers?” If not, change it or dump it.

Like any change, in life or business, it starts with attitude. If you don’t work for a customer-obsessed company, can you successfully meet the demands of your market and rise above the competition? At a minimum, companies must embrace that digital and customer experience is everyone’s business—great ideas and the seeds of change can come from anywhere, regardless of title, but do need to be cross-functional and valued to blossom.

It’s time to make this transformation personal. Consider how you can use the technology you have to adapt the customer experiences that you do control, and demonstrate success to the rest of the organization. This proof of concept approach is a great way to get more budget, too. Incremental change is great—improvements to a campaign for next time or an adjustment to the timing for a triggered message are good starting points. However, more is needed.

We must re-think the customer experience across an ecosystem, and not just a set of interactions with owned media or branded touchpoints. Collaborate with other suppliers and influencers to focus on digital efficiency so that you can react in “right time.” Right time is an alternate to “real time” that recognizes that immediacy is not the most effective reaction in all situations. This is especially true since the customer journey is non-linear.

Thinking differently can be difficult inside an organization—especially if you are successful. Often, good ideas are limited because of the way we ask questions about our customers or our marketing programs. A research experiment with third graders provides some proof of why creativity goes beyond tactical application of cleverness or humor. (The video is about two minutes long.)

The project gave two groups of third graders the same assignment—to make a picture out of a triangle. When the assignment was narrowly defined, the pictures came out nicely, but not that different from each other. When the assignment was not defined, the pictures came out wildly different—and much more creative!

Don’t just wait for disruption to come to your industry—learn to disrupt your own business. Truly aim to understand whatever is blocking your path to innovation and customer connection. Consider some of these strategic elements that can help you break free of legacy patterns and test new ideas.

1. Use the Data You Have to Zero-in on Key Segments. Use microtargeting to really get to know your customers. Dig deep into customization and personalization opportunities to find the small, yet potentially profitable subsets of your market and niche offerings.

2. Separate the Signal From the Noise. Being able to do so is a powerful intoxicant: If I can just repeatedly do that one perfect thing that will really drive our business forward, I’d dominate our market and be a hero. Problem is, identifying that one perfect thing is very hard. Marketing analytic models may be more accessible than you think—and perhaps are no longer a luxury, but an imperative for understanding the customer needs—and predicting future behavior. Bring these practices closer to the campaign management and segmentation strategy—and give your analytics teams a seat at the table. Consider some of these key questions that analytics models can answer:

a. What dynamic forces are affecting my customer and how effectively am I changing to meet these changes?
b. Are there new market opportunities developing that I can take advantage of and become the industry leader?
c. Would this new product be interesting to our current customers? What must be true for customers to feel pain? Who are our most valuable customers, and over time? What outside factors impact customer loyalty and retention?
d. What are the characteristics of our best prospects?
e. Which marketing messages and campaigns are contributing, and when do they contribute during the lifecycle?

3. Marketing Automation Tools Are Slowly Evolving to Help You Manage These Changes, but you may need to bolt together point solutions in the meantime (especially if a big upgrade is not in your budget this year). Look to consolidate applications into a platform with data and process level integration to improve efficiency and effectiveness; work to integrate marketing technology with the enterprise infrastructure to reveal deeper insights into customers, partners and market opportunities. Here is a good reason to establish inter-disciplinary teams with IT and sales and customer service and legal to improve marketing contribution, vendor management, due diligence and governance practices.

4. Paid Placements (Native Advertising) Are Here to Stay. Spend your money on the right content and platform and understand which digital properties are performing best. Build budgets and relationships around content placement, sponsorship opportunities, syndication services and content recommendation platforms. Content marketing can’t be limited to owned and earned media if you need to reach larger and broader audiences.

5. Focus on Quality Content; we are all publishers now. Mobile will continue to dominate, so master its impact on your content and targeting. All our writing has to be compelling and adaptable across platforms, and written to the tastes of narrowly targeted personas. Automation tools help to make sure your content is repurposed with panache and context.

Clearly there’s lots of opportunity for growth in many areas of marketing success, particularly as we align our investments in areas where vendors have incentives to innovate. Scouring your budget for “past success” might be a good place to start: Given the advances in technology, will what worked in 2010 or even in 2014 work now in 2015? Please share your own tips and challenges for creating a customer-obsessed culture in your organization in the comments section below.

Omnichannel Customers Are 2X as Valuable – How to Make Them Yours

With so many trying to sort out an “omnichannel” marketing strategy, I thought it would make the most sense this month to provide some structure around what it is, the best way to take the “buzz” out of the term, and provide a framework for thinking strategically about this new mandate in marketing and strategy. For starters, here’s a simple idea, or “true north,” you can use to drive your own marketing strategy as you embrace the omnichannel consumer. “Put the Customer First” and build your “omnichannel strategy” around them.

With so many trying to sort out an “omnichannel” marketing strategy, I thought it would make the most sense this month to provide some structure around what it is, the best way to take the “buzz” out of the term, and provide a framework for thinking strategically about this new mandate in marketing and strategy.

For starters, here’s a simple idea, or “true north,” you can use to drive your own marketing strategy as you embrace the omnichannel consumer. “Put the Customer First” and build your “omnichannel strategy” around them.

Let’s remember, connecting with, engaging and finding the right new customers are where customer value is created and realized in omnichannel marketing. Optimizing that value comes through studying and tuning communications, improving your relevance and becoming more creatively authentic, not in the boardroom, but in the eyes of your customer.

Today, marketers appreciate that consumers engage on multiple platforms, devices and channels—the ones they want, when they want. With mobile devices being a spontaneous window into their thoughts and an outlet for their wants and needs as they arise. What’s a bit more subtle and more often missed is the objective and capability to respect the way your customers choose to engage and buy across them in a scalable manner—as it will either fragment their relationship with your brand or galvanize it.

Consider Kohls. Not exactly a high tech player in most folks’ minds. However they now deliver an omnichannel experience that deepens relationships with them. Recently, my wife received a promotion by direct mail (I doubt if she remembers when they asked for her phone number the first time, making the connection between the POS and her online purchases), she had it in hand as she went to the website to browse. Later, she used another promotion from her email right at the POS with her iPhone.

In a single engagement with the brand, she hopped across three channels, not including a customer service call by phone. As a consumer, she didn’t even notice—she just expected it to work.

Similarly, OpenTable will consistently get you to a good restaurant based on where you’ve dined before, and what your current online browsing and mobile location is. You probably do it all the time. Your relationship with that brand hops between mobile, desktop and point of sale effortlessly—but as a consumer, you’re not exactly impressed: You expect it to work.

As a result, effective omnichannel organizations have become “stitched into” the lifestyles of their customers. Moreover, this supports the creation of competitive advantage in the measurable, trackable, digital age.

Omnichannel Means Understanding the Customer
Putting the customer first obviates really knowing and understanding your customer in more meaningful and actionable ways. Not just with an anecdote of the “average customer,” but with legitimate, fact-based methods that are built on a statistical and logical foundation. This is the basis for the “absolute truth” that your omnichannel source is dependent on.

This, too, is no small task for many organizations, but it’s becoming more “doable.” And it has to be—because your competition is thinking and investing in this path, and it’s not a long-term, viable position to not have an actionable strategy to miss the boat on knowing your customer in a way that is valuable, actionable and profitable.

But first, let’s clear up some of the confusion that we’ve been hearing for at least a year now: Is omnichannel more than the buzzword of 2015, or is it something much more important?

Multichannel
At the most basic level, “multi” means many. As soon as you adopted your second or third channel, be it a catalog or an e-commerce website, your organization became a multichannel organization. Multichannel came quickly—as it’s not uncommon that the majority of a customer base has made a purchase across more than one channel—whether you have that resolution or not is another matter, and often requires a smarter approach to collection.

Digital growth is accelerating channel expansion. With the explosion of online and digital channels and the rapid adoption of mobile smartphones, tablets and now wearables, digital can no longer be viewed as a single channel. We now have the merging and proliferation of digital, physical and traditional channels.

Many marketers have experienced as much challenge in juggling an increasing number of channels as there is opportunity. But digital channels, of course, are more measurable and challenge the traditional approaches by bringing a greater resolution and visibility for some, and confusion for others.

Key factors in leveraging, managing, and maximizing those channels include:

  • Competencies developed in the organization
  • Identifying third-party competencies, especially in digital partnerships
  • The culture of the organization
  • Support for change and innovation in marketing
  • The depth of technical capability in an organization

As channel usage expands, data assets “pile up,” though most of the data in its raw format is of limited practical use and less actionable as one would hope. From the inside of dozens of IT organizations, the refrain is common; “We’re just capturing everything right now.” Creating marketing value would require strategists and the business units.

Omnichannel Is the Way Forward
While most organizations are still working through mastering their channels and the data they perpetually generate, the next wave of both competitive advantage and threats have come with them. The customer learns what works for them relatively quickly and easily, adopting new channels and buying where they want, how they want. Those touches are often lower touch, and introduce intermediaries, and are surrounded by contextual advertising, often from competitors.

Omnichannel buyers aren’t just more complex, they are substantially more valuable. We’ve seen them be as much as twice as valuable as those whose relationship is on a single channel. Perhaps this a reflection of the greater engagement with the brand.

Delivering that omnichannel experience will require more thought, focus and expertise than before. It requires the integration of systems, apps and experiences in a way that’s meaningful—to the customer—and that of course requires an integration of the data about those purchases and experiences.

To serve the business, the Omnichannel Readiness Process has six components, each of which require thoughtful consideration:

1. Capture—many organizations are aware that they need to capture “the data.” The challenge here is shifting to what to capture, and what they may be missing. The key challenge is: It’s impossible to capture “everything” without understanding how it can and should be used and leveraged. How that data is captured in terms of format and organization is of great importance.

2. Consolidate—In order to act on the omnichannel reality, we must have all our data in one place. In the ongoing effort to find the balance between cost, speed and value, “silos” have been built to house various data components. Those data sources must be consolidated through a process that is not quite trivial if those data sources are to create value in the customer experience and over the customer lifetime.

3. Enhance—Even after we’ve pulled our data together into an intelligent framework and model, built to support the business needs, virtually every marketer is missing data that consumers generally don’t provide, or don’t provide reliably on a self-reported basis. “Completing the customer record” requires planning and investing in appropriate third-party data. This will be a requirement if we’re to utilize tools and technology to mine for opportunity in our customer base.

4. Transform—much of the data we need to perform the kinds of analysis and create the kinds of communication that maximize response now, and the customer value over time, utilizes the derivation of new data points from the data you already have. Here is one example: Inter-order purchase time. Calculating the number of days between purchases for every customer in your base allows you to see whose purchase cadences are similar, faster, slower or in decline. On average, we’ll derive hundreds of such fields. This is one example of how a marketer can “mine” data for evidence of opportunity worth acting on and investing in.

5. Summarize—The richest view of a customer with the best data in its most complete state is a lot to digest. So to help make it actionable, we must roll it up into logical and valuable cohorts and components. Call them what you will—segments, personas or models—they are derivative groups that have value and potential that you can act on and learn from.

Many marketers traditionally spend 80 percent to 90 percent of their time and effort on getting their data to a point where it serves both the omnichannel customer and their brand. However, marketers can do better with emerging tools and technologies.There is no replacement for solid data strategy that is built around the customer, but efficiencies can be gained that speed time-to-value in an omnichannel environment.

6. Communicate—The prep work has been done, you’ve found the pockets of opportunity, now it’s time to deliver on the expectations the omnichannel customer holds for marketers. At this juncture, we need to quickly craft and deploy messages that resonate in ways consumers will think about their situation and your brand. They must address the concerns they have and the desires and opportunities they tend to perceive.

Omnichannel customers expect you will recognize them for their loyalty and their engagement with your brand at multiple levels, and that those experiences will be tailored in small ways that can make a bigger difference.

They expect your story to better-fit with their own, if not complete it. That sounds like a dramatic promise, but the ability to know your customers and engage them in the way they prefer, and at scale, is upon us.

Keep It Relevant to Your Business
This entire process must include of course, the answers to key business questions about the types of discoveries we’d make and questions we’d answer with it—for example, does the Web cannibalize our traditional channels? (Hint: It surely doesn’t have to).

That said, we’ve learned to start with the most basic questions—and are not surprised when there are no robust answers:

1. How many customers do you have today?

2. Do you have a working definition of a High Value or Most Valuable Customer?

3. If so, how many of those customers do you have?

4. How many customers did you gain this past quarter? How many did you lose?

a. Assuming you know how many you lost, what was the working definition of a lost customer?

5. How many customers have bought more than once?

6. What’s the value of your “average” customer, understanding that averages are misleading and synthetic numbers are not to be trusted? But we can measure where other customers are in terms of their distance from the mean.

7. Who paid full price? Who bought at discount? Who did both? How many of all the above?

8. For those who bought “down-market,” did they trade up?

9. How many times does a customer or logical customer group (let’s call them “segments,” for now) buy? How long, on average, is it between their purchases? And the order sizes, all channels included?

10. All this, of course, gets back to understanding more deeply, “Who is your customer?” While all this information about how they engage and buy from us is powerful, how old are they? Where are they from? What is relevant to them?

Now, even if a marketer could get the answers to all of these questions, how does this relate to this “Omnichannel” Evolution?

Simple. It only relates to your customer. Of course, they are the most important actors in this business of marketing—in fact in the business of business. What this really means is deceptively simple, often overlooked, and awesomely powerful:

Omnichannel Is Singularly Focused on Customers, Not Channels
It’s about the customer, and having the resources, data and insights at your disposal to serve that customer better. Virtually all of your customers are “multichannel” already. Granted, some are more dominantly influenced by a single channel. For example, online through the voice of the “crowd.” But even then, the point of omnichannel only means one thing: Know your customers across all the channels on which they engage with you. Note the chasm between having the dexterity to examine and serve customers across all the channels, and just knowing their transactions, behaviors or directional, qualitative descriptors.

So “knowing the customer” really means having ready access to actionable customer data. Think about it. If your understanding of your customer data isn’t actionable, how well do you really know your customer in the first place?

Considering the 10 questions above, and evaluating the answers in terms of the most important questions about your customers, is a solid starting point.

When you’ve worked through all of these, you’re now ready to create experiences and communications for customers that are not only relevant, but valuable—to your customer and to the business.

When you’re adding value and are channel-agnostic, as you must become, you’ve achieved the coveted omnichannel distinction that market leaders are bringing to bear already.

Not only is this an impressive accomplishment professionally, it surely is—but remember—it’s the customer we have to impress.

How Much Should You Spend on Google AdWords?

One of the most frequent questions I receive about Google AdWords is, “How much should I be spending on my AdWords campaign?” That’s a great question, and the short answer is, “It depends.”

Editor’s Note: Don’t miss Phil Frost’s upcoming webinar “Old School SEO Is Dead: What you can do to adapt to Google and the new world of search marketing,” live on February 25. Click here to register.

One of the most frequent questions I receive about Google AdWords is, “How much should I be spending on my AdWords campaign?” That’s a great question, and the short answer is, “It depends.” One of the great things about AdWords is that it is highly customizable, allowing you to make the decisions that best fit your business needs. The downside is that it is not easy to see at a glance how best to manage your AdWords budget.

Fortunately, we have developed a formula that allows you to plug in your numbers and calculate a realistic budget. It breaks down into two phases: Testing and ROI.

Phase 1: Testing

When you begin your Google AdWords campaign, you will need to test several ideas to see what works for you and what doesn’t. While some campaigns are profitable right out of the gate, many others are not. Consider your testing phase to be a form of market research, and plan to invest those dollars without the expectation of getting them back.

Before you begin, gather the following information:

  • Target Keywords Cost Per Click (CPC): Google AdWords follows a pay per click (PPC) model. No matter how many times your ad appears, you only pay when a prospect actually clicks on it. For each keyword, you will pay a different amount of money for that click. This is known as the CPC, or cost per click. For example, Google estimates that “coffee shop” costs $2.90 per click, while “mortgage broker” costs $13.76.

Make a list of the keywords that you want to test, and then use the Google AdWords Keyword Planner Tool to estimate the CPC for each of those keywords. Remember that this is just an estimate, so your actual cost may be higher or lower.

  • Time Frame: How long can you spend in the testing phase before you need to see your results? This is partly dependent on your industry and the keywords you choose. Some keywords have a higher search volume than others, making it easier to get results in a shorter time frame. Also consider your normal sales cycle. Do customers tend to purchase in one day, or does it take months for them to make up their minds? The lower your search volume and the longer your sales cycle, the longer it will take for you to obtain accurate data.
  • Sales Conversion Rates: As a general rule of thumb it’s safe to estimate that 1 in 100 people (1 percent) who view an AdWords ad will click on it, and 1 in 100 clicks (1 percent) will convert into a paying customer. These are estimates, and your ads might drive more or less traffic, but they work for planning purposes in the testing phase.

Now you are ready to put together your testing budget:

  • Per Keyword Cost to Test: If you can turn 1 in 100 clicks into a customer, then the estimated cost per sale is the cost per click (CPC) divided by 1 percent. For example, a keyword that costs $3 per click will cost you an estimated $300 for one sale. Go through the same process for each keyword you want to test, and add up the results to get your total budget.
  • Monthly Testing Budget: To generate a per-month Google AdWords budget, divide your total keyword costs to test by the number of months you want to allot to the testing phase. For example, if your total costs calculated earlier are $2,000, then you could budget $500 per month for 4 months. Or if you wanted to test faster, then $1,000 per month for 2 months.

Phase 2: ROI

Once your testing phase is complete, and you have generated a handful of sales from your ads, then it’s time to move into the ROI phase. The goal here is obviously to maximize return on investment from AdWords.

What should your budget be in the ROI phase? If your ads are profitable, then the answer is you should ditch your budget altogether! If every dollar you spend nets you more than a dollar in sales, it only makes sense to invest as many dollars as possible.

While many businesses focus on writing better ads, which improves the AdWords quality score and reduces the cost per click (CPC), that’s only half of the equation. The real magic comes from the EPC, or earnings per click.

To find your EPC, just multiply your customer value times your conversion rate. Your Customer Value is the average amount that one customer spends on your product or service minus your fulfillment costs. Your conversion rate is the percentage of clicks that become paying customers. So if the customer value is $100 and you have a 1 percent conversion rate, your EPC is $1.00.

Why Is EPC so important?

Well, it tells you exactly how much you can afford to pay per click for every single keyword in your account! If you pay more than your EPC, then you’ll be unprofitable. If you pay less, then you’re profitable. It’s as simple as that.

That means the key to AdWords success is to maximize your EPC by increasing both your customer value and your conversion rates.

Google AdWords is a highly customizable and extremely powerful advertising network, but it can be a bit overwhelming for newcomers. That’s why I put together an AdWords checklist to help you get your campaigns set up for success. Click here to get my Google AdWords checklist.

What Customer-Centric, Customer-Obsessed Companies Must Do

In building relationships with and value for customers, my longtime observation is most organizations tend to progress through several stages of performance: customer awareness, customer sensitivity, customer focus and customer obsession. Here is the “executive summary” version of some conditions of each stage.

In building relationships with and value for customers, my longtime observation is most organizations tend to progress through several stages of performance: customer awareness, customer sensitivity, customer focus and customer obsession.

Here is the “executive summary” version of some conditions of each stage.

Customer Awareness
Customers are known, but in the aggregate. The organization believes it can select its customers and understand their needs. Measurement of performance is rudimentary, if it exists at all; and customer data are siloed. There’s a traditional, hierarchical, top-down management model, with “chimneyed” or “smokestack” communication (goes up or down, but not horizontal) with little evidence of teaming.

Customer Sensitivity
Customers are known, but still mostly in the aggregate. Customer service is somewhat more evident (though still viewed as a cost center), with a focus on complaint and problem resolution (but not proactive complaint generation; internal groups tend to point fingers and blame each other for negative customer issues). Measurement is mostly around customer attitudes and functional transactions, i.e. satisfaction, with little awareness of emotional relationship drivers. The organization has a principally traditional, hierarchical, top-down management model, with “chimneyed” or “smokestack” communication (goes up or down, but not horizontal), with some evidence of teaming (mostly in areas of complaint resolution).

Customer Focus
Customers are both known and valued, down to the individual level, and they are recognized as having different needs, both functional and emotional. The customer life cycle is front-and-center; and performance measurement is much more about emotion and value drivers than satisfaction. Service and value provision is regarded as an enterprise priority; and customer stabilization and recovery are goals when problems or complaints arise. Communication and collaboration with customers, between employees, and between employees and customers is featured. Management model and style is considerably more horizontal, with greater emphasis on teaming to improve customer value processes.

It’s notable that, at this more evolved and advanced stage of enterprise customer-centricity, complaints are thought of more in terms of a life cycle component, and recovery is more of a strategy than a resolution.

Customer Obsession
Throughout the organization, customer needs and expectations—especially those that are emotional—are well understood, and response is appropriate (and often proactive).

Everyone is involved in providing value to customers—from C-suite to front-line—and everyone understands his/her role. Customer behavior is recognized as essential to enterprise success, and optimal relationships are sought.

Performance measurement is focused, and shared, on what most monetizes customer behavior (loyalty, emotion and communication metrics—such as brand-bonding and advocacy—replace satisfaction and recommendation).

Customer service (along with pipelines and processes) is an enterprise priority, and seen as a vital, and profitable, element of value delivery.

The management model is far more horizontal, replacing traditional hierarchy; and there is an emphasis on teaming and inclusion of customers to create or enhance value.

Companies that are customer-obsessed, and what makes them both unique and successful, have been extensively profiled by consultants and the business press. Often, they go so far as to create emotionally driven, engaged and even branded experiences for their customers, strategically differentiating them from their peers.

In addition, these companies focus on the complete customer life cycle, and much more on retention, loyalty and risk mitigation (and even winback) than acquisition. Support experiences are strategic, nimble and seamless, and often omnichannel. Multiple sources of data are used to develop insights. Recognizing the information needs of their customers, they invest in altruistic content creation (over advertising); and they communicate proactively and in as personalized a manner as possible

Customer obsession, what I refer to as “inside-out” customer-centricity, has been a frequent subject of my blogs and articles: One of Albert Einstein’s iconic quotes reflects the complete dedication of resources and values needed for an organization to optimize its relationships with customers: “Only one who devotes himself to a cause with his whole strength and soul can be a true master.” Mastery requires, as well, a storehouse of experience coming from experimentation; so, just like in the pole vault and high jump, we can expect that the customer-centricity bar will continue to be raised.

Five Ways to “Get Real” With B-to-B Social Media

Today, 89 percent of B-to-B marketers in the U.S. are using social media, says a study conducted by iTracks and the Business Marketing Association (BMA). In fact, B-to-B use of social media may have even eclipsed that of consumer marketers, according to another report from White Horse Productions. But the B-to-B marketers I talk to still sound confused. “What should I be doing,” they ask. “What’s really worth my time?”

Today, 89 percent of B-to-B marketers in the U.S. are using social media, says a study conducted by iTracks and the Business Marketing Association (BMA). In fact, B-to-B use of social media may have even eclipsed that of consumer marketers, according to another report from White Horse Productions. But the B-to-B marketers I talk to still sound confused. “What should I be doing,” they ask. “What’s really worth my time?”

What you want to do is get out of the hype, get real, and get results. Here’s a simple plan of attack.

First, get busy on LinkedIn. This is the no-brainer of B-to-B social media marketing. You, your company, and all your employees need to take maximum advantage of the exposure. Your LinkedIn to-do list looks like this:

  • Fill out your profile 100 percent. LinkedIn will prompt you on how to make sure every element is captured. Encourage your employees to set up their profiles, including their skills lists. Prospective customers will check out you and your staff as part of their due diligence before doing business with you—so be prepared.
  • Set up a company page, with your logo image, plus a crisp, benefit-laden company description. Invite links from your customers, suppliers and friends. Along with a Google search, this is how you will be found in the marketplace.
  • Join groups, or set up fresh groups, in your field of expertise.
  • Post regular status updates in the micro-blog area LinkedIn provides.

Then, examine your marketing objectives. Each social medium has its own strengths and weaknesses. What you want to do is get the most bang, by applying them to their best use.

Here’s a typical array of business marketing objectives a company may be pursuing. Let’s look at how social media can be applied to support what you’re trying to do.

Understand your market opportunity. In other words, market research. What customers and prospect are talking about on social media gives companies valuable insight into customer needs, issues and trends. You can set up a listening post using tools like Radian6, or simply set up an RSS feed from sources like blogs, Twitter, LinkedIn, Focus, Quora, YouTube and Wikipedia, so you can keep current with what’s being said in your field.

Stand out in the crowd. Social media can help you differentiate your company from your competition. If you want to be seen as a thought leader in your industry, or a trusted advisor to businesses trying to solve problems, then it’s all about content. You’ll be publishing white papers, research reports and case studies, and tweeting about them. Or publish an informative blog and promote it via Twitter and LinkedIn micro posts.

Blogging can be a powerful way to establish thought leadership, but it does represent a risk. Only start a blog if you have valuable content to present, and if you can commit to keeping it up. Editorially, the tone should be informative, not sales-y. If you don’t have good writers in house, there are plenty of freelancers available to help. Another tip: If you hesitate to take on a blog on your own, you might provide guest posts to influential blogs managed by someone else. (As you see, this is the route I took for myself—it’s great!)

Find new customers. There’s a lot of hue and cry out there about whether social media can help you find prospective customers. Of course it can. The trick in B-to-B is to turn your social media messaging into a lead generator, with the addition of three essential elements:

  • A compelling offer, such as an intriguing research report or white paper.
  • A clear call to action, like “Download now.”
  • A dedicated landing page that captures the respondent’s contact information.

We can debate the merits of gating your content for lead generation, versus making it available to all, for thought leadership. A worthy discussion. But if your objective is to launch a business relationship with a prospective buyer, than the lead generation route is the way to go. So add an offer and call to action to your blog posts and tweets.

Expand current customer value. Social media can serve as another useful “touch” in your ongoing effort to penetrate accounts and deepen your relationship with current customers. Encourage customers to follow you on Twitter, subscribe to your blog, or connect with you on LinkedIn. A smart salesperson will link to every possible contact at a current account, and post company and product news in the LinkedIn microblog a couple times a week.

Now, what about Facebook? With 845 million users worldwide, it can’t be ignored. Ask yourself whether your customers are there, and whether they want to interact with you there. According to Globalspec, 66 percent of industrial workers have Facebook accounts, but 67 percent of them say they cannot access Facebook from their office computers. Given its vast reach, at the very least set up a company page on Facebook—for employee recruitment, if nothing else.

And don’t forget YouTube, the world’s second largest search engine. Set up a channel to give exposure to your product demos, training videos and corporate videos.

So, with that, you have a reasonable attack plan for cutting through the hype and putting social media to work for you in a manageable way. Now, what have I forgotten? Do you have any good social media applications you can share with the rest of us business marketers?

A version of this post appeared in Biznology, the digital marketing blog.