Archive for October, 2014|Monthly archive page

1:1 Marketing is here

If you are a forward-thinking manager, chances are you’re thinking about ‘personalization.’ Delivering a unique, tailored, 1:1 interaction with a customer based on previous interactions, the hardware they are using, their particular needs and location within the purchase cycle is a very compelling idea — if you can pull it off. Where do you start?

Thanks to the arrival of mobile computing, powerful smartphones and advanced data analytics, personalization is taking off. During the pre-purchase phase, firms can deliver special promotions or compelling content to make the shopping experience more engaging. Marketers can use social shopping communities to identify product trends and use these insights to enhance their product mix by segment. Companies can even target shoppers in-store in real time with relevant, personalized, location-based advertisements and promotions, thanks to technology such as Apple’s iBeacon.

Product companies are using personalization strategies to stand out by offering unique products such as do-it-yourself t-shirts, blankets and home decor featuring custom messages and designs. Web-based firms like Amazon are successfully using personalization tools to drive revenue, conversion and average transaction value. FRHI Hotels & Resorts uses personalization to create unique experiences for their three brands (Fairmont, Raffles, Swissôtel) both pre and post stay.

“The key to winning in today’s competitive marketplace is to have a universal commitment to putting customer’s first, understanding their stated and implied needs and providing solutions that address those needs on their terms,” says Jeff Senior, executive vice president and chief marketing officer of FRHI Hotels & Resorts. “It requires a holistically aligned organization, and is not a marketing initiative, but a company commitment.”

FRHI Hotels & Resorts maintains a single, holistic profile of each guest and their needs, with the ability to customize their stay, the promotions they receive and the prices they pay. This profile can seamlessly migrate from call centre and hotel to mobile device and social media platform. This personalization strategy has been an important driver in enhancing customer satisfaction and brand image, leading to market share increases in each of the past six years. Some of the best practices they follow include:

  • Align personalization strategies with well-defined brand strategies and values.
  • Act as an insight-driven organization. For example, the Company leverages big data to get a single, holistic customer profile. Furthermore, Fairmont expends a considerable amount of effort on customer research and social media analytics to define the ideal experience, with no detail escaping their attention.
  • Put the customer by segment (their needs, requirements and expectations) at the center of all operations and planning. Careful attention is paid to articulating the customer opportunity, understanding all business issues and producing creative solutions that fits local requirements.
  • Focus on real-time reputation management. Measure, track and evaluate a variety of customer metrics to better leverage existing programs and identify hiccups.
  • Optimize the operational (online and physical) and talent model to ensure alignment, collaboration, responsiveness and seamless execution.

Implementing your own personalization strategy can improve the value your firm delivers, the precision by which you target customers and the marketing efficiency of your programs. But first you need to do some serious thinking about your customers, brand and organization. Firms looking to implement a personalization model need adopt a customer-centric mindset that engages the entire organization. To do this, key activities such as IT, marketing, research and support must act in an integrated fashion, sharing the same information and strategic playbook. This four-step framework can help take a firm from a strategic vision to a personalized experience:

  1. Segment your customers by lifetime value, needs, and habits.
  2. Categorize them by the digital and physical channels they prefer across their entire purchase and support journey.
  3. Customize and choreograph your offering and experience based on where they are in this journey.
  4. Ensure your capabilities (people, systems, processes, assets) can support your personalization strategy.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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Using behavioural economics to trigger action

Behavioural economics posits that all human behaviour, including in business, is shaped by irrational and unconscious influences, such as bias, social pressure and cognitive inertia. The notion of psychology as a driver of economic action is not new: As an academic discipline behavioural economics dates back to the 1970s, and the foundational principle back at least to Adam Smith’s The Theory of Moral Sentiments (1759). Behavioural economics has, however, only in recent years found widespread currency within the business world, spurred by a plethora of bestsellers, including Thinking Fast and Slow (2011) by Daniel Kahneman and Predictably Irrational (2oo8) by Dan Ariely.

Increased interest from the business community is due to the insights gleaned from the discipline, which have been used to successfully “nudge” customer behaviour in a variety of sectors, such as wealth management, insurance, customer products and retail. Specifically, behavioural economics has been used by product managers to guide consumers toward certain product choices (i.e., “choice design”), by marketers to develop brochures and Web sites that more persuasively communicate marketing messages and by service managers to design better support experiences.

The field can provide hundreds of potential “triggers” to augment behaviour, depending on the business objective, situation and context. Psychologists Robert Cialdini, Noah Goldstein and Steve Martin identify 50 different possible applications in The Small Big: Small Changes That Spark Big Influence (2014). Three among the list include:

  1. Leverage social proof: People will make the same decisions as a group with which they identify. Nudge people to adopt a new behavior by showing them a training video featuring their peers doing the same thing.
  2. Invoke first names: Get and keep people’s attention by frequently using their first name. A sales representative’s repeated use of a prospect’s name will cue their attention through the clutter of other sensory inputs and focus attention on the key message.
  3. The power of loss avoidance: Individuals strongly prefer avoiding losses to acquiring gains. Marketing studies have shown that consumers would rather avoid a $5 surcharge then get a $5 discount even though the net effect is the same.
    Case study: behavioural economics in action

Communications Case Study

A technology company was struggling with customer support issues, resulting in unsustainable levels of customer churn, high support costs and wasteful discounting. We were tasked with identifying the root cause of the problem and recommending fixes.

We reviewed the support scripts and escalation processes and listened to call records. Using the lens of behavioural economics to look for unconscious biases, explicit and implicit incentives and insidious social pressures, we discovered both that the existing scripts were ineffective and that the prescribed escalation process was not being followed by most service reps.

While management believed more resources and training were the answer, we convinced them to first experiment with a pilot program that featured rewritten scripts and process redesign. These changes included a variety of nudges to trigger the desired service experience, including:

  • Establishing a rapport from the get-go: People are more easily persuaded by those that they like and have some connection with.
  • Starting with the bad news but ending on a high note: Getting bad news out of the way shows empathy, acknowledges responsibility and allows for a good finish.
  • Following the script: Because a good process is only effective if it is consistently applied, we recommended having service reps formally and publically commit to following the revised protocol.

By implementing insights gleaned from behavioural economics, customer satisfaction scores increased, service escalations fell and cross-selling rates improved.

Behavioural economics for your business

As mentioned earlier, how you should apply behavioural economics insights to your business depends on your circumstances and your goals. However, here are five general tips to guide your strategy:

1.  Understand the business context:  What business problem are you trying to solve?
2.  Audit key customer decision points:Look for hidden bias, social and incentive pressures and opportunities to catalyze desired actions.
3.  Prioritize your opportunities: The economic, operational and brand impact of each decision should be considered.
4.  Identify suitable nudges:This should involve an optimized choice design that guides actions and decisions toward your desired result.
5.  Experiment, measure and scale: Only then will you discover the optimal strategy for your business.

For more information on our services and work, please visit our web site at Quanta Consulting Inc. 

6 traits of great cultures

Several studies confirm the correlation between corporate culture and financial performance, employee engagement, levels of innovation and customer satisfaction. Companies such as P&G, Southwest Airlines, FedEx and Starbucks have been able to differentiate and excel in highly competitive markets in part by developing and sustaining healthy cultures. By the same token, the toxic cultures of firms such as GM, Blackberry and Air Canada have contributed to declining market performance.

In short: culture matters. But what exactly is culture?

A culture can be defined as the norms, practices, history and values of an organization — in other words: “how things are done around here.” The health of a culture is generally quantified through employee engagement scores, with Canadian companies averaging 40-50% engagement.

These days, companies are looking to enhance their organizational life without turning their company inside out. While the differences facing each firm often call for unique approaches to cultural renewal, best practices cut across different sectors and organizational structures and are always based on inspiring leadership and skilled management. Below, I’ve identified six tips for developing a highly successful corporate culture.

Lead by example
Leaders don’t work on culture, they work in it, tracking it, modelling the right behaviours and communicating core messages. Savvy leaders look beyond yearly employee surveys to regularly gauge sentiments and enlist feedback during weekly chats or informal events. David Agnew, CEO of RBC Wealth Management Canada, undertakes frequent branch visits, meets directly with clients and regularly and directly communicates with all of his team, as well as rank-and-file employees.

Tell your story
Every company has a story. Great leaders capture and articulate this story in an inspiring way in order to develop a powerful mission or ethos that serves as an organizational “North Star” (or guiding principle). A good example of a North Star is Google’s inspiring mission to organize the world’s information and make it universally accessible and useful.

Provide purpose
In a healthy culture there is an implicit — if not explicit — awareness of the connection between mission (what value you deliver), values (what inspires your activities), actions (what needs to be done day-to-day) and behaviours (what becomes second nature). Employees within these cultures tend to strongly identify with their company’s purpose, values and goals, improving both engagement and satisfaction.

Solicit feedback
Internal practices, tools and policies play a vital role in promoting or hindering desired behaviours. These practices need to be regularly reinforced and tweaked as necessary to ensure high performance and adaptability to new conditions. Some proven steps include having monthly town hall meetings, encouraging interactions outside of work and utilizing knowledge management systems.

Inculcate and reinforce
It is easier to attract and build an esprit de corps and promote the right behaviours when the firm has effective mechanisms to manage human capital. RBC Wealth Management Canada has extensive on-boarding and training programs for new hires, culture-reinforcing performance management systems and ongoing practice management for seasoned professionals. “It really helps us to attract and retain the industry’s best people,” says Mr. Agnew.

Embrace differences
Healthy cultures are not homogenous. Numerous studies have demonstrated that higher organizational performance and innovation come from diversity, not uniform workforces. Though RBC has a dominant ethos, it does not seek out one specific kind of employee, believing diversity of talent and style can help contribute to continued growth. “There are no shortcuts to establishing and maintaining a positive culture,” says Mr. Agnew. “It requires an investment of time, effort and resources at all levels of the organization.”

For more information on our services and work, please visit the Quanta Consulting Inc. web site.