Friday, July 10, 2009

Books I'm Reading 22) Return on Customer by Martha Rogers and Don Peppeers

I actualy finishhed this book back on Apr. 17 but it took me this long to finally get all the notes that I wanted to remember into the computer.

Overall a good book, a little academic but with solid anecdotes and real world examples. And while, the authors make me really really want to drink a Dr Pepper or Mr. Pib right now, it's a good read. I kind of feel like it's something that more of the managers and management team at my current employer should be reading and taking notes on.

Notes from Return on Customer by Martha Rogers and Done Peppers

P2 Innovation and new products will temporarily solve problems of diminishing returns and maturing markets but these are not infinite.
- this also brings to mind the idea that too many choices can be a bad thing.

P4 The challenge is to balance short term goals and reporting against long term sustainability and success

P5 There are often people responsible for the short term goals. C-level executives responsible for quarterly profit goals or growth, but who is consistently responsible for the long term success of a company?

P11 In any business, the true scare resource is not money/capital but customers. Customers are the resource that may suffer the tragedy of the commons

P19 The key to retaining and growing customers long term is to build customer trust; how do you build customer trust in your company? Who is responsible for that objective and how do they measure it?

P21 DVD example. How do you avoid making shortsighted decisions to keep your customers satisfied in the long term?

P22 The Goldfish Principle. Customer’s are not like goldfish, they have a memory and will remember your actions today when they talk to you tomorrow.

P23 It’s not the revenue from the customer that’s valuable but the relationship value with the customer that’s important

P24 You need to retain a split focus. Focus strategically on tomorrow but focus tactically on today

P25 Customer relationships are two way streets. It’s not just somebody coming in to buy stuff from you. Even if you’re Wal-Mart of McDonald’s the relationship with your customers is a two-way communication.

P26. If you were your customer, would you do business with your company?
- in technical things, I have the “mom test” is it easy enough to use that your mom, or maybe Nikki’s mom, can use it? If not then, it’s not a technically a good product. Similarly, you need to put your company to that test. If you were looking for products or services, would you do business with your company?

P27 Customer relationships (really all relationships) are built on four principles: Credibility, Reliability, Intimacy (safety) and Orientation (self or other). Credibility is based on the words you say. Reliability is based on your actions. Intimacy is how safe the other person feels and you need to ask in that relationship whether your immediate focus is on yourself or the customer. Being customer oriented has reciprocal benefits.

P28 Treat the customer the way you would want to be treated if you were the customer.

P29 How do you take a commodity and make it more than a commodity? Look at what Starbucks did for coffee, it became not the coffee but the environment and ambiance…and really addictive brownies. Almost as addictive as nicotine. Which brings to mind smoking. All the different cigarettes, how do you choose between a brand? Once you do choose a brand, how do you decide where to buy them?

P31 Who is your target customer? ilbert cartoon and the “stupid rich”
And more importantly, how do you treat your customers?
Smart Dumb
Rich X

P33 Simplicity is the goal, transparency and honest are the way to get there.

P35 Business success has historically been described in terms of competitors and advantage oveer competitors. It’s also important to look at customer orientation of a company.

P37 Who is your market? What do they expect? What do they need? What do they want?

P38 Learn to see things from the customer perspective, how to view your company as your customers view it.

P39 Features are not equivalent to customer needs. Features are designed around the “average customer.” The ‘average customer’ doesn’t exist because the ‘average cutomer’ doesn’t accurately describe any ‘particular’ customer.

P43 You don’t build value by creating features, you create value by meeting needs.

P45 Identify the needs of your lead customers.

P47 Improve your memory of the customer to improve your relationship with that customer.
- eg. Think of the Visio’s we use at PLNI. Do they accurately detail the necessary information to interact with a customer with knowledge of their account?
-P48, for example the reccomendations engine

P49 Brand equity first requires building a worthy brand, and then requires you continue to take actions deserving of that worthiness

P55 Short term, contract term value is not the same as lifetime value. Telecom for example is a service industry, when the service sucks, I’d leave as soon as I can which means less revenue over the long term. I’d say the lifetime of the company but then if you fuck it up bad enough, the lifetime of the company may not be all that long.

P57 What is the overall value of your customers? How do you measure it? Who’s responsible for tracking it?

P58 What are the relevant metrics for you to measure customer value? You might say money but then is that monthly recurring revenue? Or lifetime revenue?

P59 Yes, you do still need to look at short term goals, but that can’t be your only focus

P63/64 – What is PLNI’s Lifetime Value for a customer?

P70 this means you must take the customer view of things. Have a sales message that is focused on the customer, not just selling to the customer. And do thins like problem resolution to the satisfaction of the customer, not just the satisfaction of the company.

P73 Realize that sometimes you have to treat different customers differently. Thee ‘long tail’ business model

P82 How much of our business is simply the result of a bad relationship with someone else? How much do you want to be the someone else tomorrow?

P83 When you focus on a customer’s need, you don’t focus on your products

P85 Categorize your customers by their needs

P93 Customer equity ultimately drives up the value of your business

P95 Changes through the lifecycle ultimately change a customer’s value to your company

P97 Focus on your customer relationships. How do you influence this relationship positively? Negatively?

P98 Customer satisfaction is ultimately good for you

P99 How do you build upon the trust relationship between your customers and your company

P100 do you keep reliable data about your customers based on your interactions with them?
-We don’t seem to do that well at PLNI

P100 Focus on your high value customers to keep them high value over the long term

P101 Have good account managers. Trust and empower them, they are your link to and interface with the customers

P101 A single bad experience can substantially color an otherwise good, long standing relationship

P105 Marketing falls to the law of diminishing returns when it comes to your relationship with your customers. Action and reaction count more than marketing

P105 You can measure the revenue a customer brings. How do you measure, what are the metrics for measuring the relationship with a customer

P108 Strategy: “a plan for succeeding in a hostile environment.”

P109 Sell on solving a problem for your customer to differentiate yourself from the commodity market. Again Starbucks vs coffee

P110 Narrow your focus. Don’t try to do everything for everyone

P112 Ask yourself, why do your customers buy from you instead of your competitors? Price better not be the answer

P112 If customer relationships are important, then focus on that and not the technology

P115 Differentiate yourself by product, price or service but keep in mind that the overall goal is to solve your customers problems.

P117 Which customers should you focus on? How did you come to make that decision, that is, how do you determined which customers are important do you?

P118 Pick customers who best align to your competitive advantage

P123 A good customer strategy and customer relationship strategy should be part of and are in service to your overall competitive strategy

P125 Cross-discipline, skilled people are important to success. What are their motivations for joining your company and staying?

P126 Everyone who interacts with your customers or touches a customer’s account, is a part of your relationship with that customer

P127 The “why” is just as important as the “how”

P128 What’s my motivation to change?

P128 Leadership sets the example

P129 Culture is key. Treat your customers like you would want to be treated if you were a customer

P130 Inspire your employees every day

P131 Change succeeds only if employees feel different, not just think or analyze.

P135 Successful change is not an employee issue or even a management issue. It’s a leadership issue.

P137 Learn to measure success differently

P137 Communicate and act with customer oriented values

P140 Incentivize your employees in alignment with overall strategy

P142 To change your customer’s behavior, first change your behavior
- How many lights do you see? If you turn off your light, can you still see? All lights are part of the same light

P143 Who? Job descriptions don’t matter when customer satisfaction is at risk. Everyone is sales, everyone is customer service, everyone is billing, etc.

P144 Stena AB example. What was wrong was in four parts: 1) Internal communication was lacking. 2) Training was insufficient 3) Change management was non existent and records keeping was sloppy. 4) Staff attitude was unprofessional towards one another (which probably just built on the lack of communication

P146 Poor implementation can be worse than doing nothing at all (status quo)

P149 We want customer’s out there selling for us.

P150 Gain a better understanding of your customer’s business, business practices, business neds

P152 Three criteria Orientation, Information, Configuration.
Orientation: the entire organization must be focuses on a common goal
Configuration: align the company with incentives, metrics, accountability and clear organizational structure.
Information: Information and technology alone do not mean success. Information is the tool to give you a better understanding by which you can properly align the company to meet your goals

P153 Your back office needs to deliver or all you do is show the inadequacy of logistics

P154 Connect supply and demand, the back office and the front office. Coordination is the key.

P155 Customize yourself for each customer.

P157 Customer value declines immediately upon unsatisfactory resolution

P159 Customer are a scarce resource. Treat them as such. Additional customers aren’t always available, even for good products. Customers are always available for good companies

P163 How do you invest in growing the lifetime value of your customers?

P175 Be relevant to what’s going on with your customers to be relevant to your customer’s needs

P182 Again, the mom test. If you or quit your company, would you still recommend its services to your friends and family? Platinum rule: Treat your customers as you would want to be treated if you were a customer

P183 Responsible stewardship of not just information but of customer relationships is important to your bottom line.

P185 Who’s responsible for managing your relationships? Objectives? Expectations? Across the board?

P187 Who will bear the responsibility of the task of maintaining the customer relationship?

P188 Assign different objectives and different strategies across different customers. Different does not mean unequal.

P191 Differentiate your customers based on their needs, not yours.

P194 Accountability may exceed authority. Should it?

P196 Focus on the customer, not the account or the product.

P198 Use the information, the history to better service the customer; to benefit the customer.

P201 The first rule of ‘wing walking.” Good product management takes good planning. Never let go of what you have until you’re holding something else. Don’t give up the old way too hastily, change = shock.

P207 It’s not about how many new customers you get but what kinds of new customers you get

P208 The Seven Principles of ROC
1. Customers are a company’s scarcest resource
2. When companies don’t treat customer’s like a scarce resource they focus too much on the short term.
3. ROC requires balance and focus
4. Looking from the customer’s perspective is the first step
5. Maximizing ROC requires treating different customers differently
6. Create tactical leverage for your competitive strategy
7. Success not only requires your CEO’s active support and advocacy but investor/shareholder buy in as well.


Blogger Don said...

Thanks for the great review, Reid. Looks like you really did delve into Martha's and my book. I'm glad you got so much out of it.

For a less academic and more entertaining read, with more about social media, networking dynamics, and corporate culture issues, you might find our latest book interesting, too: Rules to Break and Laws to Follow (2008)

- Don Peppers Twitter: @donpeppers

6:33 AM  
Blogger rpalmeira said...

Okay so how cool is that? I throw up some notes for things that I want to remember and bam, w/ in a few hours I get a comment by one of the authors. That's just awesome. Somebody's got a Google alert setup :)

Hm, I actually have the rules to Break book in my Amazon cart right now, along with the next round of stuff to read in the evenings since my TV doesn't work. The social media apsects (more with regardst to how you interact with customers) and in particular the communication dynamics are something that I'm hoping will have some good real world experiences.

10:39 AM  

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