The Customer Rules

1
The Customer Rules

• MIS 7223
• Fall 2002

2
Outline

• Customer Value
• Customer Demands
• What Businesses Should Track
• Creating a Great Total Customer Experience
• Steps to E-commerce Success
• Critical Success Factors

3
Customer Relationships

• Mgmt indicators in the past
• ROI
• Profit/Loss
• Mgmt indicators now
• Customer retention
• Most highly valued companies are managing
  themselves by and for customer value.

Seybold, et al., 2001
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Customer Value (Metrics)

• Customer retention
• Customer satisfaction
• Growth in of customers
• Growth in customers spending
• Predictors of customer defection

Seybold, et al., 2001
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Customers are in Control

• Try before they buy
• Buy by the piece
• Mix and match
• Reshape and repurpose goods
• Share with others
• Publish their own mixes
• Co-brand material

Seybold, et al., 2001
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Customer Demands

• Open, equal access
• Real-time info
• Specialist info
• Convenient access
• Info portability
• Process transparency

• Logistics transparency
• Pricing transparency
• Fair, global pricing
• Ability to set prices
• Choice of distribution channels
• Control over their info

Seybold, et al., 2001
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E-Market Value

• Example eBay
• electronic trading communities made up of buyers
  and sellers with common needs
• Easier and more cost-effective to locate and
  procure everything
• B2B e-Markets

Seybold, et al., 2001
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Customer Relationships Count

• They drive the value of business
• Customer capital
• Sum of the value of all existing customer
  relationships ( of customer relationships, depth
  and quality of those relationships in terms of
  capacity to generate current and future earnings,
  duration of those relationships (customer
  retention), and profitability of those customer
  relationships)
• Customer momentum
• Ability to attract and sustain new customers
• Customer franchise
• Total present value of the projected earnings
  from current and future customers

Seybold, et al., 2001
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Customer Lists

• Added value?
• Privacy policy
• Rights to sell
• Who counts as a customer?
• Customers, distributors, dealers, etc.

Seybold, et al., 2001
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What Businesses Should Track

• of end customers
• Who customers are
• Profits per customer
• How profits per customer are growing
• What customers care about
• How satisfied customers are
• How loyal customers are
• Actions that will keep customers loyal

Seybold, et al., 2001
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Managing Customer Value

• Customer Metrics
• Asset accumulation
• Customer satisfaction
• Customer retention
• Employee retention
• Etc.
• Focus on the total customer experience

Seybold, et al., 2001
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Customer Experience

• Branded Experience build brand name around the
  product and the customer experience (service)
• Customers prefer multi-touchpoint, multi-channel
  experiences
• Identify with brand
• Customer relationship
• Trust
• Reliable, fulfillment, delivery, support
  integrity value efficient use of my time ease
  of doing business, interactions, and
  decision-making
• Channels catalog, call center, dedicated retail
  store, web, eMail, partner, multi-product store,
  e-Markets

Seybold, et al., 2001
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Steps to Create a Great Total Customer Experience

• Create compelling brand personality
• What customers can identify with personality
  and a core brand idea
• Deliver seamless customer experience across
  channels and touchpoints
• Touchpoints stores, telephones, mail, fax,
  kiosks, ATMs, Web
• Channels deal direct with customers or indirect
  through a set of partners
• Care about customers and their outcomes
• Corporate culture and core values that center
  around caring about customers (customer loyalty
  and lifetime customer value)
• Customer-centric instead of product-centric

Seybold, et al., 2001
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Steps to Create a Great Total Customer Experience

• Measure what matters to customers
• Focus on customer wants instead of business wants
• What are the most common tasks customers need to
  do
• Hone operational excellence
• Design back-end processes first
• Allow customers to see and interact with every
  step of every customer impacting process
• Monitor customer satisfaction in near-real time
  and end-to-end performance, and take
  responsibility for the end-to-end experience
• Monitor and manage every element that impacts
  customers, shortens cycle time, and improves
  costs to serve

Seybold, et al., 2001
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Steps to Create a Great Total Customer Experience

• Value customers time
• Make it easy for customers to make decisions
  (multiple searching types, decision-making tools,
  side-by-side product comparisons,
  photographs/illustrations, price, availability
  and arrival times, and access to trouble-shooting
  and installation info)
• Offer ubiquitous, convenient access (24 hrs/day
  on any device)
• Place customers DNA at the core
• The customers life electronically managing
• Design to Morph
• Change business model typically 4X a yr.
• One business spawns into 2-3 parallel business
  models

Seybold, et al., 2001
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Summary

• Customer demands reshape business
• Investors want to know customer numbers
• Manage company by customer value
• Deliver great total customer experience

Seybold, et al., 2001
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5 Steps to Success in EC

• 1. Make it easy for customers to do business with
  you.
• Use technology to streamline customer
  interactions
• 2. Focus on end customer for your products and
  services
• 3. Redesign your customer-facing business
  processes from the end customers point of view
• 4. Wire your company for profit design a
  comprehensive, evolving e-business architecture
•   integrate info and applications
•   5 stage of e-bus.
•                 i. Supplying co. and product
  info.
•          ii. Providing customer support and
  enabling interactions
•          iii. Supporting electronic transactions
•              iv. Personalizing interactions
  with customers
•                v. Fostering community
• 5.  Foster customer loyalty, the key to
  profitability in ecommerce

Seybold, et al., 1998
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Critical Success Factors

• target the right customers
•   know who your customers and prospects are
•   find out which customers are profitable
•   decide which customers you want to attract
  (or keep from losing)
•   know which customers influence key purchases
•   find out which customers generate referrals
•   dont confuse customers, partners, and
  stakeholders

Seybold, et al., 1998
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Critical Success Factors

• 2. own the customers total experience
•  deliver a consistent, branded experience
•  focus on saving customers time and irritation
•  offer peace of mind
•  work with partners to deliver consistent
  service and quality
•  respect the customers individuality
•  give customers control over their experience

Seybold, et al., 1998
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Critical Success Factors

• streamline bus. processes that impact the
  customer
•   start by identifying the end customer
•   streamline the process from the end
  customers point of view
•   streamline the process for key stakeholders
•   continuously improve the process based on
  customer feedback
•   give everyone involved a clear view of the
  process

Seybold, et al., 1998
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Critical Success Factors

• 4. provide a 360-degree view of the customer
  relationship
•   provide one-stop shopping for the customer
•   remember everything your company knows about
  the customer
•   ensure that everyone in the company has
  access to the complete customer picture
•   put an underlying technical infrastructure
  into place to provide a 360-degree view

Seybold, et al., 1998
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Critical Success Factors

• let customers help themselves
•   let customers help themselves to information
  and perform transactions on-line
•   let customers check on the status of orders,
  pay or adjust bills, and access service
•   let customer interact using whatever media
  they choose
•   give customers the ability to design their
  own products

Seybold, et al., 1998
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Critical Success Factors

• 6. help customers do their jobs
•   develop a deep understanding of how your
  customers do their jobs
•   continuously refine your business processes
  to make it easier for your customers to do their
  jobs
•   give customers direct access to your
  inventory
•   give customers the ammunition and tools they
  need to make purchasing decisions
•   prepare bills the way your customers need
  them
•   make it easy for your customers to satisfy
  their customers

Seybold, et al., 1998
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Critical Success Factors

• deliver personalized service
•   develop a warm, personal relationship with
  each customer
•   let customers specify and modify their
  profiles
•   custom-tailor information presentation and
  offers based on customers profiles
•   provide appropriate service and information
  based on customers needs
•   give customers access to their transaction
  histories
•   encourage customers to leave something of
  themselves behind

Seybold, et al., 1998
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Critical Success Factors

• foster community
•   seduce customers into the fold
•   introduce customers to others with common
  interests
•   introduce and reinforce common terminology
  and values
•   let customers strut their stuff
•   encourage customers to become part of the in
  crowd

Seybold, et al., 1998
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Customer Service

• Offer customer choices and multiple decision
  points
• Be accountable for your mistakes
• Empower people in your company to oversee
  customer service
• Know your customer (and what interests them)
  feedback mechanisms contact them
• Value your current customers
• Customer-service reps should treat customers like
  human beings
• Measure customer service customer-satisfaction
  level and cost savings achieved

Mollison, 2001
27
7 Cs of the Customer Interface

• Context sites layout and design
• Commerce sites capabilities to enable
  commercial transactions
• Connection degree that site is linked to other
  sites
• Communication the ways the site enables
  site-to-user, user-to-site, or two-way
  communication
• Content text, pictures, sound, and video that
  the website contains
• Community the ways that the site enables
  user-to-user communication
• Customization sites ability to tailor itself
  to different users to personalize the site

Rayport and Jaworski, 2002
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References

• Mollison, C. (2001). Driving Customer Service
  Seven Practical Ways to Become Fanatical on
  Behalf of Your Customers, Internet World, 15
  September, pp. 28-34.
• Rayport, J.F. and Jaworski, B.J. (2002).
  Introduction to E-Commerce, McGraw-Hill
  Companies, Inc. New York.
• Seybold, P. B. and Marshak, R. (1998).
  Customers.com How to Create A Profitable
  Business Strategy for the Internet Beyond,
  Patricia Seybold Group Inc.
• Seybold, P. B., Marshak, R. T. and Lewis, J. M.
  (2001). The Customer Revolution How to Thrive
  When Customers are in Control, Patricia Seybold
  Group Inc.