Customer-Centric Strategies To Escape The Commodity Trap

customer centric

 

One of my close friends provides image consulting and communications training to corporations and professionals in career transition. She regularly receives calls from low level corporate gatekeepers in Human Resources, Finance, Training, and other non-revenue producing areas. They ask for proposals for training programs, and never expect to get into any conversation about their business with my friend. All they want is that proposal to prove they did their due diligence.

These gatekeepers are doing what they do best: saving their company money and treating vendors like commodities.

If you are lucky or just a downright innovative genius, you will never fall into this commodity trap. If, however, you have been dragged into the land of commoditization, your job is to escape as quickly as you can. It is a dubious place to live with marginal value or spark. Price pressures and arm’s length relationships with the ultimate decision maker will eventually sink you. Things will not improve—unless you are willing to deploy customer-centric strategies to uncover category-killing innovations. With some determination, planning, and a bit of luck, you may just position yourself to become the next Apple in your industry.

Let me illustrate why this is the ideal time to consider customer-centric marketing. Most of your competitors are still hoarding cash and focusing inward. Worse yet, they may be buying into the media naysayers, who are claiming that the U.S. is ostensibly in the midst of a "lost decade." (You can't make this stuff up—I heard it on the BBC this week. I guess the BBC reporter forgot that Facebook, Google, Apple, and Zappos are defining a new decade. But I digress).

I recently interviewed two executives who live and breathe customer centric marketing strategies: Chris Golec, CEO of DemandBase and Jim Bampos, VP of Customer Quality at EMC Corporation (you can listen to the full roundtable discussion here).

Here are our collective recommendations to help you engage your customers in your commodity "escape plan":

1. Accept the fact that sometimes, your products and services cannot escape the commodity trap. The only remaining area where you can outpace competition are your relationships with customers, vendors, your employees, and your community. Zappos, now an Amazon subsidiary, does this very well. Their culture is obsessed with delivering fun, weird, memorable customer experiences. Golec reported that Demand Base’s unique customer relationships and customer success program have enabled them to discover an unmet need, which resulted in a new product idea that now comprises nearly 90% of their total revenues.

2. Track how often you put your customer first while making strategic and marketing decisions. Customer-centric cultures share one thing in common: the entire company is oriented and incented around customer success, and a single customer metric shapes behavior.

3. Be mindful of end-of-quarter pressures to close business at any cost. They will undermine your customer-centric efforts and core competencies. Whether you are a startup or a publicly traded company, this can become a huge obstacle to long term success. Avoid succumbing to unique customization requests. At EMC, Bampos says the company mitigates the risk by taking "a holistic view of what is most important to the customer, then we tie it back to each business unit. The proof points are if the business units are using our customer metrics to drive business decisions." 

4.  While enrolling customers in key decisions, and gathering valuable feedback, monitor how your stakeholders going to take action on the data. Your customers want to know that their input is valued beyond the interview or advisory board discussion. EMC distributes mirror surveys to the entire organization to assess employee's perception of how well EMC is managing the customer experience.

5. Get creative on metrics. If you are truly committed to building a customer-centric culture and marketing plan, look beyond customer renewal rates. Golec indicates that time to value is a priceless measure: "We track the time from when we close the sale how long it takes before they have a measurable benefit from our technology. The minute that happens, we improve our relationship with that account." Find a way to temper sales' innate desire to drive a bigger sale.

6. Focus your customer centric efforts on ideal customers. Any program will fail if you administer programs across all customer segments and try to serve anyone with a pulse and a budget.

7. Let customers know you are building a customer-centric company. They may just have a new idea on how you can further strengthen the program. Don't keep it a secret!

8. Build social media incentive programs for your initiative. EMC is launching several new online forums where they will announce the agreed-upon action steps generated from from their Voice of the Customer programs.

Gatekeepers play an important role in managing expenses. That doesn't mean you have to live in their world. These strategies will help you avoid getting ensnared in their commodity trap.

 

Lisa Nirell helps companies grow customer mind share and market share. Since 1983, Lisa has worked with Zappos, BMC Software, Adobe, Microsoft, and hundreds of entrepreneurs in nine countries. Lisa is also an award-winning expert speaker, FastCompany expert blogger, and author of the acclaimed "EnergizeGrowth® NOW: The Marketing Guide to a Wealthy Company." Download your sample chapter and business energy booster survey at www.energizegrowth.com.

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2 Comments

  • Coach Lowell

    Lisa, thank you first for distinguishing this Commodity Trap for those who didn't even know they didn't know! That in itself in of great value. Next, thanks for your clear and comprehensive set of practices to help companies steer clear of the Trap. While some smaller firms may be challenged to implement all of the above, implementing some will certainly be of benefit.