Chapter 2: Harness Customer Networks PDF

Stuvia - Koop en Verkoop de Beste Samenvattingen Chapter 2: Harness Customer Networks The first domain of the digital transformation playbook that we need to rethink are customers. ➢ Customers in the digital age are not passive consumers but nodes within dynamic networks—interacting and shaping bra...

Stuvia - Koop en Verkoop de Beste Samenvattingen Chapter 2: Harness Customer Networks The first domain of the digital transformation playbook that we need to rethink are customers. ➢ Customers in the digital age are not passive consumers but nodes within dynamic networks—interacting and shaping brands, markets, and each other. ➢ Businesses need to recognize this new reality and treat customers accordingly. They need to understand how customer networks are redefining the marketing funnel, reshaping customers’ path to purchase, and open up new ways to co-create value with customers. Customers are no longer passive customers because they interact and shape brands, markets, and each other (dynamic network). The Customer Network Paradigm Before digitalization: The mass-market model= was used in firms with Mass production and Mass communication. - Customers are passive and are considered in aggregate Their only significant role is to either purchase or not purchase Companies seek to identify the product or service that will suit the needs of as many potential customers as possible Success hinges on efficiencies of scale With digitalization: Customer Network model = is used today. In this model, the firm is still a central actor in the creation and promotion of goods and services. But the new roles of customers create a more complex relationship. - Customers don’t have the sole roles of buyers or non-buyers. - Current and potential customers have access to a wide variety of digital platforms that allow them to interact, publish, broadcast, and innovate - Customers are just as likely to influence each other as they are to be influenced by direct communications from a firm. While delivering value outward to customers and communicating to them, the firm also needs to engage with its customer network. It needs to listen in, observe the customers’ networked interactions, and understand their perceptions, responses, and unmet needs. Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen The marketing funnel and the patch to purchase The marketing funnel (or purchase funnel) = one framework for understanding how customer networks have such great impact on businesses’ relationships to customers. The marketing funnel: The marketing funnel is based on “hierarchy of effects” and maps out the progression of a potential customer: 1. Awareness: (knowledge of product/company) 2. Consideration: (recognition of potential value) 3. Preference: (choice of a referred company/product) 4. Action: purchase of a product, subscription to a service 5. Loyalty: it is more efficient to retain customers than to attempt acquiring new ones. With each step the number of potential customers decreases. In the mass-market area: broadcast marketing tools to reach and influence customers at different stages of the funnel - Awareness: television advertising - Direct mail coupons and promotions to drive customers from choice of brand (preference) to sale (action). - Reward programs (offering incentives) makes customers repeat business (loyalty). In the digital area: Customers are also influenced by customer networks at different stages of the funnel - Advocacy = advocating for the brand and connecting the brand to people in their network. Awareness: search engine results, blogs. Consideration: customer reviews influence the evaluation of different brands. Brand preference: social networks like Facebook or asking friends Action: purchasing from a retail business in store, on website, on mobile device, or even on a mobile device while in a store. Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen - Loyalty: “friending” via e-mail marketing, FB, Twitter. Whereas the funnel is a macro tool for thinking very broadly about customers’ psychological states, the path to purchase is a lens for looking at customer behaviors much more specifically. Five Customer Network Behaviors There are 5 (core) behaviors that drive adoption of new digital experiences. The book refers to this as the five core behaviors of networked customers: 1. Access = The networked customers seek to access digital data, content, and interactions as quickly, easily, and flexibly as possible. - Any offering that enhances this access is incredibly compelling. - Example: text messaging on early mobile phones, which revolutionized communications with the ability to receive and send messages from anywhere at any time. 2. Engage = networked customers seek to engage with digital content that is sensory, interactive, and relevant to their needs. - The desire to engage with content is a key driver of customer behavior. 3. Customise = Customers seek to customize their experiences by choosing and modifying a wide assortment of information, products, and services. 4. Connect = Customers seek to connect with one another by sharing their experiences, ideas, and opinions through text, images, and social links. 5. Collaborate = customers are naturally drawn to work together: accordingly, they seek to collaborate on projects and goals through open platforms. Access strategy Be faster, more flexible, easier, everywhere, and always be on for your customers. An access strategy may therefore take a variety of approaches, namely: - Mobile commerce: E.g., using QR codes as tickets to board planes and trains; room doors that guests can unlock through swiping on smartphones; etc. Omni-channelled experiences: E.g., Walmart using an app that has different features for when used at home versus while in a Walmart store. Working in the cloud: customers are becoming accustomed to paying for products that reside entirely in the cloud (e.g., Spotify instead of MP3s). On-demand services: services that used to require the customer to be in a specific location are now accessible to customers anywhere at any time (banking) Engage strategy The engage strategy for business is to become a source of valued content for your customers. Businesses today face an increasingly challenging environment in seeking to communicate with their customers. An engage strategy may take a variety approaches, namely: - Product demos: Content (videos) that demonstrate the value proposition of a Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen - business or product in a compelling and engaging way can be extremely effective. Storytelling: Reach a broader audience by creating an emotionally compelling story that is less product specific. Utility: Brands can effectively engage customers by providing useful content at just the right time. Brands as publishers: Creating value by becoming a publisher of a(n) (online) magazine that tells the stories of designers, fashion models, and craftspeople and of the products themselves. Customise strategy The customize strategy for business is to make your offering adaptable to your customers’ needs, which has become better possible due to e-commerce, automation in inventory, and the accessibility of big data on consumers’ preferences. Find ways to meet demands without overwhelming them with choice or unnerving them with excessively personal messaging. - - - - Recommendation engines: To help viewers find what to watch from its large catalog of streaming • e.g., Netflix using behavioural data and micro-tags that have been applied to all of its content to recommend movie titles. Personalised interfaces: • Lancôme’s magic mirror on its Facebook page allows customers to select one of their Facebook photos and then try out various beauty products Personalised products/services: • e.g., Coca-Cola using customised Coke cans, using the 150 most popular names for young adults in Australia. This increased young adult consumption with 7% in the Australian market. Personalised messages and content: • readers of digital content can be invited to indicate their interests (thumbs up or down; liking), which can be used to promote future content that is of the highest relevance. Connect strategy The connect strategy for business is to become a part of your customers’ conversations. Businesses are expected to be present, responsive, and active in social media conversations. - Social listening: customer conversations can be big sources of market insight for businesses. Social customer service: social media can serve as an effective channel within their customer service mix, alongside call centres and instant chat. If a business can answer questions successfully, it can impress Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen not only one customer, but a network of others as well. - Joining the conversation: A company can begin engaging in conversations and sharing videos and photos from the workplace around the world, using platforms as Facebook, Instagram, or LinkedIn, which might create engaged following of customers, suppliers, and employees. - Asking for ideas and content: using social media to ask customers for suggestions or content in the form of photos or videos. o This responsiveness can be a way to make customer feel a sense of ownership and contribution to a company’s success. - Hosting a community: businesses sometimes host their own online community around a shared topic of interest. In that way, customers, business partners, employees and others can share insights and discuss questions. Collaborate strategy The collaborate strategy for business is to invite your customers to help build your enterprise. A collaborate strategy is distinct from a connect strategy in that the company invites customers not just to share information but also to work together in a focused way toward a shared goal or objective, using open platforms - Passive contributions: Sometimes collaboration can involve as little as customers’ consent so that actions they are already taking can be used to power a collective project Active contribution: customers are invited to contribute their efforts directly to a cause, taking on a small part of a large project. Crowdfunding: the process of seeking collaborators to contribute to and raise funds for a new project Open competitions: competitions can be used to enlist a diverse group to find the best answer or solution. Collaborative platforms: the business creates a context for collaboration but lets the network of collaborators define the challenges to be addressed Tool: The Customer Network Strategy Generator The Customer Network Strategy Generator is designed to help develop new strategic ideas for engaging and creating value with networked customers. The tool follows a five-step process for generating new strategic ideas, explained below: Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen Step 1: Objective Setting The first step of this process is to define the objectives you are hoping to achieve for your business with any new customer strategy you develop. It is valuable to define objectives at two levels: direct objectives and higher order objectives. Direct objectives = objectives you are directly responsible for addressing in your project. ➢ For example, if you were leading customer service, you might be seeking to develop new strategies that leverage customers’ digital behaviors to increase the speed of response to customer queries, reduce attrition of dissatisfied customers, or turn customer service into a source of customer insights High-order objectives = overarching objectives that you are not solely responsible for, but that your project should support. Step 2: Customer Selection and Focusing The next step is to get a clear picture of the customers that you are seeking to address. This starts with selecting which customer segments are most relevant to your stated objectives For example, if your key project objective were to reduce customer attrition, you might select customer segments with the highest rates of attrition and high value segments whose losses pose the greatest risk. To understand these customer segments the following three questions needed to be answered: - 1. What is my unique objective for each customer segment? 2. What is my unique value proposition for each customer segment? Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen 3. What are the unique barriers to success for each customer segment? Step 3: Strategy Selection Look at the 5 core customer network behaviours and their broad strategies that derive from them: - Access: Be faster, be easier, be everywhere, and be always on for your customers. Engage: Become a source of valued content for your customers. Customize: Make your offering adaptable to your customers’ needs. Connect: Become a part of your customers’ conversations. Collaborate: Invite your customers to help build your enterprise. Although all five strategies can be valuable for your business in the abstract, you are now looking to generate ideas for a specific project. Step 4: Concept Generation A concept = a specific, concrete idea for a product, service, communication, experience, or interaction you design for customers - For example, if you are looking at a customise strategy, you may want to consider ideas related to recommendation engines, personalised interfaces, personalised products and services, and personalised messages and content It is important to keep focus on how your ideas can create value for the customer! When pursuing an - access strategy, keep your focus on “How could you make the experience faster, simpler, and easier for customers?”. customize strategy: “Where do your customers’ needs, and interests differ most from each other?”. collaborate strategy: “What skills could your customers bring to bear, and what are the limits in their ability to contribute successfully?”. connect strategy focus on ‘’what conversations are your customers already having that are relevant to your objectives?’’ Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen? Stuvia - Koop en Verkoop de Beste Samenvattingen Step 5: Defining the impact - If you proceed with the concepts, how will you know if you have achieved the objectives you set? Will the strategy you have developed address the problem/objective? How will you measure the impact? è Make sure benefits are measurable and clarify how you think the strategic concepts you developed will achieve these benefits. There are a few challenges pre-digital firms may face in rethinking customer assumptions: 1. Enabling the network inside: A firm’s internal customer network – its own employees is critical to the digital transformation of a business. 2. Adding new skills and replacing old habits - Businesses must acquire a cloud of new skills in order to leverage customer networks outside the firm. - These skills include social media and community management, journalistic content creation, new media buying and measurement, e-commerce, etc. 3. Bridging silos - Customer networks affect every department of the organisation, which can lead to tensions over who leads customer interactions across digital touchpoints. • For example, Facebook presence: marketing? Communications? Customer service? IT? Should that presence be managed by global HQs or devolved to local business units with their own page? Gedownload door: matsmolenberg | [email protected] Dit document is auteursrechtelijk beschermd, het verspreiden van dit document is strafbaar. ¤ 912 per jaar extra verdienen?