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Customer Manufacturing Update |  |
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Dear Mitchell, Welcome to the September 2005 Customer Manufacturing Update. This month's white paper looks at the topic of customer centricity. It was written by our newest consultant, Marilyn Tahl (mtahl@customermfg.com). Aside from her extensive process expertise, Marilyn is also an expert and authority on website usability and effectiveness. She applies her usability knowledge with customer-centric insight to help you make sure your website is all it can be. She works in our Silicon Valley office supporting clients globally. If you have friends or colleagues who would appreciate receiving this e-zine, feel free to forward a copy to them using the "Forward e-mail" link at the bottom of the e-zine.
Over the past few years, the buzz keeps growing about “customer experience.” As with most buzz terms, there’s a high level of misunderstanding about what the term really means, and what it means to your business. This month’s white paper helps you understand what being “customer centered” is all about and provides you two principles you will want to adopt to help you gain and retain customers.
A recent article in Fast Company magazine on the subject of Six Sigma hit home for us. As thought leaders in the application of process management to marketing and sales, we are often asked how Six Sigma can be applied to these areas. While it clearly can, with all due deference to Jack Welch and others who flog the Six Sigma bandwagon, it is usually not the right first thing to do to improve marketing and sales processes. Six Sigma is an advanced measurement and control method designed to facilitate the removal of virtually all defects from a process. By definition, Six Sigma implies 99.997% defect free. (Even Ivory Soap was only 99.44% pure, and it has done pretty well for 100 years.) While we understand and agree with the idea of Six Sigma, there are usually other process management methods to apply first, including Constraint Theory and Lean Thinking to name just two. Anyway, the folks at Fast Company wondered how one of the leading companies in Japan, and a clear quality focused company such as Toyota, felt about Six Sigma. So they visited Toyota to find out. The answer they got from the engineers was, “What is Six Sigma?” Seems this is not a practice that Toyota has embraced. At least not overtly. And they seem to be getting along ok anyway. So what about companies that do purport to be using Six Sigma? Some investigation by the folks at Fast Company found the following interesting situations according to JD Power and Associates:
Before you adopt another management fad hoping to fix what ails you, remember, hope is not a strategy. Process management works, but Six Sigma is probably not the right place to start.
How much choice should you give your customer? It has been argued, successfully, for many years that choice is important to customers (at least in Western cultures). However, studies have shown that too much choice is counter-productive, as the customer is over-whelmed by the decision requirements. Researchers found that giving people too many choices, for which they were ill-equipped to make a decision, was worse than narrowing choice. Successful examples include the good, better, best strategy developed by Sears decades ago. Aldi Markets’ limited choice offerings are also a good example. However, Amazon.com has demonstrated that with assisted search and intelligent recommendations, you can offer “everything” and still avoid the “overwhelming the customer trap.” Which approach is “better?” Research may provide the answer. In a recent study, a group of subjects were shown Godiva Chocolates (we would have suggested they use Bissingers Chocolates instead, but we didn’t do the study). They were asked to select the chocolate they would buy for themselves, based on the name and the look of each chocolate. Half of the members of the group were given 6 chocolates to choose from and half were given 30 to choose from.
People who picked from the group of 6 were more
satisfied with their selection than the people who
picked from the group of 30. Too much choice
appears to have caused worry about making
the “right” choice.
As marketing accountability and marketing ROI become topics of conversation among executives and marketing professionals, the answer to the question “what is marketing?” becomes critical. If you are going to be accountable, or if you want to measure ROI on marketing, it is imperative that you define what it is you are going to be accountable for, or what you want a return on. Most companies (especially in the B-C segments), when looking at marketing accountability or marketing ROI, focus on what we call the back-end of marketing (promotion, advertising, website, marketing communications, etc.), since this is where the vast majority of marketing money is spent. However, that may not be where the real leverage in marketing resides. (And sometimes it does). Consider the “lowly” vacuum cleaner. For about 100 years there has been a clear leader in this category ... Hoover. Their position is so strong that in the UK the act of vacuuming is still referred to as “Hoovering.” Over the years, many companies (including such highly promoted brands as Oreck) have tried to promote, advertise, position and “brand” themselves in such a way as to displace Hoover as the #1 brand (in terms of market share). To no avail. However, two years after creating and introducing a “unique” bag-less vacuum to the U.S. market (at a price 2x to 3x that of “normal” vacuums), Dyson has captured the #1 market-share position with 21% to Hoover’s 16%. Did Dyson use advertising and promotion? Of course. But the advertising was compelling because the product was truly different.
Dyson also got “free” promotion (guest spots on hit
TV shows) because the product is visibly different
and actually different. And it works better too. We
know people who are quite frugal in their spending on
everything who have spent $500 on a Dyson. Why?
Because the product is valuably different ... not to
impress their friends.
We appreciate any feedback you can provide to help us make sure these Updates give you value each month. Feel free to respond to this e-mail with any comments or suggestions for future topics or ways we can make these Customer Manufacturing Updates more valuable to you.
Thank you for your interest, and if we can provide
any
additional assistance in sales, marketing, strategy, or
innovation to help you increase your sales,
let us know.
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