Customer Knowledge – Your Competitive Advantage for Bottom Line Growth

Customer knowledge

As per wikipedia Customer knowledge (CK) is the combination of experience, value and insight information which is needed, created and absorbed during the transaction and exchange between the customers and enterprise. Campbell (2003) defines customer knowledge as: “organized and structured information about the customer as a result of systematic processing”. According to Mitussis et al. (2006), customer knowledge is identified as one of the more complex types of knowledge, since customer knowledge can be captured from different sources and channels. (source: wikipedia)

Based on our research, Customer Knowledge is the second best competitive advantage for any company. First is Culture! . On an average, brands are spending 40% of their budget to manage Customer insights (part of customer experience ). However, few have partial or no idea where to spend the money mindfully. This is classic dilemma in small and medium businesses in India. The budget is not allocated well and there are over laps. These two point us to lack of understanding of the Importance of Customer Knowledge Management. Another problem is most of the data get wasted in the channels and distribution points. No one is capturing. No dedicated department to do the hard work.  However, we are not discussing this under this topic…

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In any market situation, customers segmentation cannot go undefined. It makes no sense to offer product and service without clear understanding of customers. The way brands define customers, they define the problem and solve them efficiently. With the collective knowledge in small and medium businesses (in the COVID-19 era), expandnext reimagined  customer into 4 main categories –

INFLUENCERS – big ticket startups, innovators, doers –  they don’t need business consulting full service, they look for partners in crimes, outsource is best policy, agile buddies. They are problem solvers

The growth seekers – traditional business, multipliers/ Retail and franchise owners – look for specialised advisory services, don’t have deep idea of consulting, deep pocket but conservative

Lost stars – family business, unorganised or undefined business – they look for turnaround ideas, budget pockets, Often cynical and twice cautious before spending a dollar!

Lone fighters – Soloprenuers, unique preposition holders, domain wolfs – undefined ! They go either direction once they understand the advantage of advisory services. Difficult.

Competitive

Note –

The digital and Technological needs are across the categories/ types of customers.

The categories of customers are mutually inclusive. They could overlap at some point of the growth stage and at the same time could move to other categories in case they lag behind or fail to perform due to internal mis-management ( example – influencer could fall into Lost stars due to several wrong decisions/ policy paralysis).

——- JUST A LITTLE DE-TOUR BELOW—–

The consulting value chain:


 

customer

Based on our experiences with these 4 types of customers, broadly – the engagement with consultant or consulting firm depends on the Level of business problems and Depth of relationships business (customers) wants to establish with constant / consulting agency.

 

Why bring Consulting Value chain in between  (customer knowledge) ?

Customer Knowledge  requires lot of digging, chasing, capturing, maintaining and finally drawing insights. Insights are highlighted by Consultant – internal team or an external agency or independent advisors. Companies must understand the Value Chain. Each level of Problems requires deep analysis of data which the converted into Insights. Insights are Customer knowledge a brand must have to pitch the next service or product. It is as basic as the simplified graphical representation above. Either companies hire consultants / insights team or outsource the insight processing to external consultants, advisory agencies must take initiative to understand its customer they are planning to sell or engage with.  Independent Consultants or advisory agencies should understand their market positioning and help companies / customers  understand the Consulting Value chain for successful engagement.

Similarly, the level of business problems ( Y-axis) also differs with 4 Customer Types. Big ticket customer (Influencers) would go for Trusted advisor. They hire full or part time Consultant /Subject Matter experts. However, the COVID-19 has accelerated the demand of Flexi independent consultants.  As per Flexing It, there is a significant growth in demand in Q2 , with companies increasingly leveraging consultants as they opt to keep costs variable while accessing top-tier expertise. Key shift in the professional gig economy in different sectors on the impact of COVID-19.


Customer Knowledge – competitive advantage

Once the customer are categorised, companies need to decide the  segmentation strategy.  This process will ensure competitive advantage by following action items in place –

  1. Set customer segmentation goals (Note: this is not one-size-fit-all thing/ it keeps changing as per problem you are solving)
  2. Custom segment the customers (group it as per your choice)
  3. Target and reach your customer segments
  4. Analyze your customer segments ( you can customise / adjust as required)

The above 4 steps based one your Customer Knowledge is your competitive advantage over others in any market segment.  Eventually once you put the above steps into process / as a repeat behaviour action. It will become part of the company culture!

Thank you for reading

#expandnext

COVID-19 Marketing Matrix during the lockdown

Marketing Matrix

Uncertainties during the lockdown

We are going through strange and unpredictable times, and businesses are grappling with the unknown factors every new day.  But to get things going through any tough situations, brand owners across industry must sit with teams and plan ahead. Now is the good time to reflect and act.

Some facts –

As per FICCI, the economy grew at a six-year low rate of 4.7% in the third quarter of the current fiscal.  The corona crisis will further aggravate the situation and revival will be a longterm process.

As per JLL report, ~ 30 per cent of hotel and hospitality industry revenue could be impacted if the situation doesn’t improve by the end of June 2020.

As per Retailers Associations of India (RAI), India has over 15 lakh modern retail stores that generate Rs 4.74 lakh crore worth business – is under the direct impact of the pandemic. Though government authorities is doing its best to allow essential to transact during this period, the demand side looks discouraging for most of the other category of retail brands.

The immediate reaction to the above facts is panic and could get decision makers into Denial zone (Kubler Ross Grief Cycle), and it may take long to come out of this loop due to sudden disruption in supply.  However, we have a point of view towards mindful marketing that brands could deliver during this pandemic. We understand and aware of the fact that around 70 percent of the small enterprise are not touching marketing due to revenue impacts. The bright side is (as per Hammerkopf Consumer Survey) that there is an 87 percent increase in social media usage amid lockdown, and 75 per cent people were spending more time on Facebook, Twitter and WhatsApp compared to time before pandemic started. This gives a hope that there is an opportunity during this lockdown, where brands could leverage the time in minimal marketing effort. For the same we have devised the COVID-19 Marketing Matrix to encourage optimized marketing spend during this time.

Before we continue with the Marketing Matrix, we also gathered from primary interviews that brands are likely to pivot into new market with additional or new feature or services using same resources or adding new resources. While few brands will market same product / services into new market with slight changes or customization as per customer requirements.

Brands are constantly watching the customer movements and demands as per change in requirements due to sudden pandemic. From customer prospective the wallet is getting small in each passing day.

For the benefit of better understanding, we have created a framework called Lockdown Framework. The Lockdown Matrix is the function of Market and Resources. It goes like this:

 

  • Most of companies will continue in the existing market with same product and services. They are Opex heavy and not in the hurry to change during this Lockdown
  • While few companies are contemplating taking low risk of entering in new market by targeting new customers with same product/ services. As per the consumer demand, company are likely to offering using same resources (tech, employee, IPR, etc.)
  • We are not likely to see radical innovation or change during this lockdown where companies will start producing new product or services to enter new market. Perhaps post lockdown they might re-think their strategies and enter new market with new service/ products.
  • This is the favorite box, which describe disruption during lockdown. Companies would try using new resource and process to offer better product in same market. Again this is a sweet spot for many brand to win this lockdown period by offering existing customers by being innovative.

For each of the approach in the lockdown framework, brands should have the Business continuity plan. Each plan is considered based on different scenarios as different companies will have different internal and external factors affecting them in the lockdown period.

Shown below is the COVID-19 Marketing Matrix that presents the various possible decisions that could be planned during slowdowns. We wanted to share it with the hope that it can help decision makers to fight the slowdown from the business war rooms.

Quick remarks on the Matrix picture below:

  1. Business leaders must take series of actions to reduce the business and employment risk. A well thought out business continuity plan covering pandemic outbreaks or lockdowns will help in minimal disruption to your services. Apart from several set of protocols which include fewer face-to-face meetings, working remotely, split teams and locations, we have identified Marketing is key. Marketing in such lull period is key to real success when the markets are back to normal. Marketing will ensure the brand identity alive especially when you are part of crowded space. However constant hammering of brand identity into the minds of consumer needs constant cash flow into the marketing budget, and during slowdowns that itself is a major challenge. Taking into account this Matrix would serve as a starting point at the planning stage.
  2. Three scenarios are considered here for different period of lockdowns
  3. Three different set of Plans A, B and C to accommodate the revival plans (each plans is different for different budget , burn rate, operating expense /opex, etc)
  4. COVID-19 Marketing Matrix highlights the possible decisions which will affect the marketing spend in the unpredictable situation at different stage/ scenarios

Acknowledging the fact that every company’s situation is different – this matrix is a suggestive representation for taking a strategic marketing decision

Matrix