For every billion dollar idea there will be plenty that don’t add much to the bottom line and several that just eat up resources getting launched. More importantly, there will be many that reach the disagree and commit stage. The point is that most companies are consistently striving for innovation.
What if your team could regularly produce these type of ideas and you could implement and launch them with the agility that Amazon does? Is that a process you’d like to learn?
Jeff Bezos recently announced that Amazon has topped 100 million Prime members. Amazon Prime started just like every other idea in the nearly 2000 experiments Amazon runs in a year. Let’s spend a few minutes to understand their process and then look at how you can effectively adopt it as your own.
Every test begins with a team developing a 6-page narrative memo. No PowerPoint presentations are allowed.
We’ve also learned that what’s most important to the process is the perspective that these memos take. The keys to these memos are to write them from the point of view of the customer’s benefit and to start from the end result or the final goal. This is what Amazon calls “working backwards.” It’s what we teach as Reverse Chronology in our Buyer Legends process.
It may help to think of these internal memos as low-fidelity rapid-prototypes to keep your company agile.
When you start from the end-point and craft the narrative from there, you’re not tied to the present conditions, which means you’re not tied to optimize what already is, and you also build believability for what your idea could BECOME rather than starting from what it might be right now. Prime didn’t become a billion dollar idea overnight. And there were some challenges that had to be ironed out with it before it scaled as big as it did.
So if you started just with the idea to “test” this out, it wouldn’t have been a success.
You had to start with the idea that Prime Members became Amazon-exclusive with their buying and what that would look like and mean for the company, AND then you work backward on how to make that happen.
These documents are well-researched and carefully considered. They are intended to help others in your organization fully comprehend the recommended experiment, all logistics and the anticipated outcomes. Before a meeting starts everyone sits, reads these memos and add their questions in the margins.
These narrative memos align the organization and allows them to commit with the knowledge and resources to see the test executed. Keep in mind no team at Amazon is larger than two pizzas can feed. So there are thousands of teams developing ideas on a regular basis. How many of these ideas could your teams develop regularly if they had the tools and the skills to craft these memos?
We had the pleasure of developing our Buyer Legends Process in order to train Google’s teams to emulate this rapid, customer-centric, innovation process. Like all teams, they needed to communicate more efficiently, prioritize based on well-documented ideas and improve execution time and outcomes. They required a process to provide direct communication instead of implied instructions. Since developing the Buyer Legends Process to achieve those goals, we’ve used it to help dozens of companies from startups to existing brands to be like Amazon.
Would your company benefit from more customer-centric innovation, executing with greater precision & agility and developing a growth system like Amazon’s? Drop me a note if you want to chat further about this innovation process.
Smart entrepreneurs know that in order to grow a business you must keep an eye on both being productive and being innovative. How do you continue to be reliable and efficient with your existing customers while trying to push the boundaries on providing the best customer experiences? What are the technologies, philosophies, and systems you need to have in place to keep pace with your competitors and best serve your customers?
After all, reliable service typically equals loyal customers.
In this on-demand webinar, presented by Comcast Business and Entrepreneur, New York Times bestselling author and customer experience expert Bryan Eisenberg, and Teresa Ward-Maupin, vice president of customer and digital experience for Comcast Business, uncover the best practices for improving productivity and reliability, while striving for innovation and growth.
Crecimiento Empresarial – primero un resumen de los conceptos básicos.
El departamento de marketing y ventas son los responsables de la adquisición de clientes, pero no la experiencia del cliente. La responsabilidad es de persuadir a los clientes potenciales para comprar productos y / o servicios. Aquí es donde la mayoría de las empresas se centran en el crecimiento de su negocio. Es un error.
El Costo de Adquisición es crítico. Añada todos los costos de adquisición de clientes. A continuación, dividir por el número de clientes adquiridos en ese período. Por ejemplo, si ABC S.A. gastó $ 100,000 en marketing en un año y adquirió 1,000 clientes su Costo de Adquisición es $ 100.
Margen Bruto es el porcentaje de beneficio que queda después de pagar los costos. Si el margen bruto es de 40% y la venta promedio de ABC S.A. es de $500, su beneficio bruto es de $200,000. Les cuesta $100,000 para generar $200,000 en nuevas ventas.
Cada empresario responsable y ejecutivo se preocupa por Costo de Adquisición y Margen Bruto.
Peter F. Drucker fue considerado el mayor filósofo de la administración (también conocida como management) del siglo XX. Fue autor de más de 35 libros, y sus ideas fueron decisivas en la creación de la Corporación Moderna. El escribió: “El propósito del negocio es crear y mantener un cliente“.
Crear un nuevo cliente es fundamental. Es sexy.
Y mantener un cliente también es fundamental. No es sexy.
La retención de clientes, el mantenimiento y servicio a los clientes, siempre reciben menos atención. Las acciones que toman las empresas para reducir el número de defecciones de los clientes no se celebran.
El valor de la vida del cliente, es abreviado a menudo como LTV, es Life Time Value en inglés. LTV predice los beneficios de la futura relación con un cliente. La retención del cliente afecta directamente a los valores de por vida. Si la ABC S.A. gasta $100 para atraer a un nuevo cliente, obtiene un beneficio bruto de $100 en la primera transacción. Si ganan $100 cada mes durante cinco años ganan $6,000. Cuanto más larga sea la relación, mejor será el retorno de la inversión (es abreviado a menudo como ROI).
El patrimonio del cliente es el total de los valores de por vida de todos sus clientes actuales y futuros. Es la suma total de todo el valor que jamás se dará cuenta de los clientes. Los clientes crean todo el valor. El patrimonio de los clientes es el mismo que el valor de “Negocio En Marcha” de su negocio.
Valor de un Negocio = Patrimonio del Cliente + (Activos – Pasivos)
Compradores Transaccionales Versus Compradores Relacionales
Cada persona tiene un modo transaccional y un modo relacional de hacer compras. Los compradores transaccionales son aquellos cuyo mayor temor es pagar demasiado por algo. Les encanta la experiencia de compra. Van a comprar muchas empresas y sitios en busca de gangas.
No son leales a ninguna marca o negocio, buscan sólo el mejor precio.
El miedo más grande de los compradores relacionales es comprar la cosa incorrecta. Ellos ven las compras como parte del costo de la compra.
Buscan ayuda de expertos y pagan una prima por la guía de confianza. Confían en las relaciones, con marcas y personas, para ayudarles a tomar decisiones.
Cada persona tiene un modo transaccional y un modo relacional de hacer compras. Así que no se sorprenda cuando se vea en ambas descripciones. Usted es extremadamente transaccional en ciertas categorías de productos y servicios. Usted también es totalmente relacional en otros. En cualquier momento dado y en cualquier categoría dada, aproximadamente la mitad de todos los compradores estarán en modo transaccional. La otra mitad estará en modo relacional.
Los compradores en modo transaccional irán de compras por todas partes. Les encanta negociar. Las empresas a menudo concluyen, equivocadamente, que la mayoría de los compradores están en modo transaccional, porque son mucho más visibles y vocales. Pero en verdad, más compras son realizadas en silencio por los clientes en el modo relacional.
Esta equivocación es una de la las fallas que más dañan al emprendedor.
El Costo De Adquisición Del Cliente Depende De La Retención Del Cliente
Tenga en cuenta los datos públicos de Amazon. Las visitas de los clientes de Amazon Prime (ellos que pagan una suscripción anual por el privilegio de ser miembros se convierten en ventas el 74% del tiempo. Gastan 300-500% más que los miembros no pri- meros. Aproximadamente el 60% de los hogares norteamericanos son miembros de Prime de Amazon.
¿Puede ver el impacto que el enfoque en la retención puede tener sobre los costos de adquisición?
Enfoque En La Experiencia Del Cliente Para El Crecimiento Sostenible
El estudio de Rockefeller Corporation encontró que el 68% de los clientes se van porque creen que las empresas no se preocupan por ellos.
Bain & Company encuestó a 362 empresas. Encontraron que el 80% cree que entregan una “experiencia superior” a los clientes. Cuando le preguntaron a los clientes, informan que sólo el 8% están realmente entregando. Bain & Co. llamo a este resultado la “brecha de entrega”. ¡Yo lo llamamos trágico!
Ahora fíjese en este dato bien conocido: que los líderes de la experiencia del cliente superan las valoraciones del mercado de acciones de los rezagados de la experiencia del cliente:
Cuando se trata de crecimiento, la experiencia del cliente claramente importa!
Ahora, yo quiero ser generosos y darles a los 80% de los ejecutivos el beneficio de la duda. Ellos realmente creen que sus empresas están centradas en el cliente Nadie discute cuando explicamos los cuatro pilares del crecimiento de Amazon.
Estos son los cuatro principios unificadores de Amazon:
UNO. Centricidad en el cliente. DOS. Optimización Constante. TRES. Cultura de Innovación. CUATRO. Agilidad Corporativa.
¿Qué es lo que impide en el camino? Piense en lo siguiente como los cuatro principios disunificantes.
UNO. Un enfoque organizacional: los impide centrarse en el cliente. Los equipos internos se centran en el “rendimiento” de su propio equipo, no en la realidad del cliente
DOS. La aversión al riesgo: mantener el status quo, los impide de la optimización continua. La gente no percibe su proceso como roto y no ven el beneficio de optimización.
TRES. Un enfoque en los competidores – observan a los líderes de su industria – es lo que les impide tener una cultura de innovación. Las empresas se ven en relación con los competidores, pero no en relación con las lagunas en las expectativas de los clientes
CUATRO. La imputabilidad errónea -la necesidad de culpar a alguien- los mantiene fuera de la agilidad corporativa. Los equipos internos cumplen o exceden sus puntos de referencia internos, pero esos datos no reflejan la realidad del cliente
Las Intenciones Son Importantes, Pero Las Acciones Hablan Más Que Las Palabras
Nos juzgamos por nuestras intenciones, pero los clientes nos juzgan por nuestras acciones. Juzgarte por sus intenciones no es un peligro entre amigos. Un amigo conoce su corazón. Pero es un peligro muy real en los negocios. ¿Qué sucede cuando un posible cliente hace contacto con su empresa? ¿Conoce a su mejor empleado en el mejor día de ese empleado? Por supuesto no. Reúnen a un empleado promedio en promedio
O peor aún, se encuentran con un empleado por debajo del promedio en un día por debajo del promedio. Y entonces usted está confundido por esas críticas negativas.
Triste, ¿no? Sus intenciones, motivaciones y compromisos personales nunca llegaron a la fiesta.
En Resumen: Usted Tiene Un Negocio En Crecimiento. Pero Podría Crecer Más Rápidamente.
Usted necesita conocer mejor a sus clientes. Reconocer que los clientes tienen sus expectativas establecidas por las empresas ni siquiera en su categoría de negocio.
Como líder, hay muchas demandas en usted. Es difícil priorizar y mantener un enfoque a largo plazo cuando lo urgente interrumpe lo importante.
En lugar de centrarse sólo en el crecimiento de las ventas, los competidores, la tecnología o todos los cambios en su mercado, nos gustaría ayudarle a centrarse en las cosas que no cambiarán. Usted puede construir un crecimiento sostenible y saludable si se centra en las prioridades de sus clientes. Por favor creame. Si usted entrega una gran experiencia, mantiene un margen razonable, y permanece enfocado en sus prioridades entonces el crecimiento es inevitable.
En mis próximos artículos voy a hacerle un seguimiento de cómo uno se enfoca en el cliente y los fundamentales que los impacta.
The sales team is having a hissy fit. They proclaim we’re 11% ahead of goal and we’re in the slow season! Why are you making life more difficult for the sales team? This change project is unrealistic! None of our competitors do better than us! It’s not broken, why fix it?
There’s a disturbance in The Force.
Ten seconds into our call I hear that Chuck, our client who owns a thriving $28 million business, is shaken up. We’ve been working together for almost three years. It’s not the first time we’ve met resistance to what the organization calls The Customer Rules Initiative.
In almost three years we’ve rolled out eleven important changes and dozens of small improvements. The Customer Rules Initiative has helped our client grow beyond their expectations.
Chuck is second guessing his twelfth change. The pushback on this change project is almost as hard as the first project where we decided to put all the information a customer needed on the website. The sales team was in open rebellion. They couldn’t imagine why anyone would call if we answered all their questions online. They were wrong then, they’re wrong now. Being wrong is human, acknowledging it and pushing beyond it is hard.
How Do You Stay On Track?
My job is to remind Chuck why the Customer Rules Initiative matters. First I listen. I listen for about half an hour. This has the desired calming effect.
I remind him of his favorite quote: “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” – Sam Walton
Chuck is listening, that’s good. The problem is real. We have to fix it.
Chuck is committed to what we teach as The Four Pillars of Amazon’s Success:
Culture of Innovation
If you’re a growing company it’s hard to argue with any of them. Intuitively every business owner knows they need all four pillars, they are unifying principles.
Chuck’s the guy that pointed out that The Force that propels this flywheel is Customer Centricity. The gap between customer expectations and customer reality is what needs to inform change.
The Force = Customer Centricity = Caring about the customer’s perspective
What Caused The Disturbance In The Force?
After almost three years of continuous improvements, why don’t they just trust us? If it were only that simple.
We came up with the twelfth change the first month we engaged. We’ve been putting off taking action on it since then.
A few months ago while visiting with Chuck and his senior executives at an offsite retreat we needed to print out several documents. The hotel couldn’t accommodate us. Bryan, my business partner, ordered a printer using Amazon’s Prime Now. Less than an hour later we were printing.
Bryan decided to point at the elephant in the room. We can get a printer here in an under an hour, why exactly can’t the sales team always respond to an inquiry within two business days? What do your customers expect?
Sales Team Response Time
In our first draft of our Buyer Legend, the narrative originally read that the customer was delighted because sales team responded in four minutes. That draft was abandoned. Two business days was substituted. They didn’t know their actual response time but anecdotally we estimated it averaged 2-4 days. We didn’t win this battle but we did insist on compliance with updating Salesforce. We now know that they respond to 87% of leads within two days. Of course, there are automated emails that are intended to follow up.
Yet, customers are human. Humans want what they want now. Not later, not even in five minutes. We want it now!
A New Goal – 5 Minute Response Time
After a long discussion, we agreed to tackle the twelfth change. We agreed that customer expectations could be unrealistic but we could meet that challenge. It helped that this time we had internal data to back us up. Leads that were reached by phone the same day closed a little over 3x the leads that took more than a day to respond to. Leads are expensive! We also reminded them of The Lead Response Management Study by Professor Oldroyd, a Faculty Fellow at MIT.
The new buyer legend says: “John (the prospective customer) is delighted because the inquiry was responded to immediately. John says “if they respond that quickly to an inquiry I bet they do that for customers too.”
Let’s examine why this change makes sense based on the unifying principles of Amazon’s Four Pillars Of Success:
Customer Centricity – immediate response is what the customer wants and expects
Continuous Optimization – be better today than yesterday is always the way towards our new goal
Culture of Innovation – find solutions and embrace change to improve customer experience
Corporate Agility – work to become more nimble and react to changing customer expectations
The Sales Team Rebels
This change is what the sales team was up in arms about. They missed the part where the sales coordinator, a new position, made the call answered a few questions, asked a few questions to qualify the prospective customer and scheduled a follow up with a sales person.
What we had was a failure to communicate. Chuck assumed the sales team reread the Buyer Legend carefully. The did not. Crisis averted.
Publishing a new Buyer Legend means employees scan quickly for changes. There are always minor changes highlighted but major ones are deliberately not. That is supposed to encourage careful reading.
Disturbance In The Force A Post Mortem
There are four forces that pull against the unifying principles of Amazon’s Four Pillars of Success:
Maintaining Status Quo
We could call them disunifying principles.
Let’s examine how they almost derailed the twelfth change:
Organizational Focus – the sales team metrics were focused on their own team’s “performance”, not the customer
Maintaining Status Quo – the sales team didn’t perceive their process as broken
Competitor Focus – the sales team saw themselves relative to competitors but not relative to the gap in customer expectations
Misplaced Accountability – the sales team was exceeding sales goals, an internal benchmark, but that data didn’t reflect the customer’s reality
Happily Ever After?
The sales team was asked to reread the Buyer Legend and some minor edits were made and agreed upon. The twelfth change is underway and initial results are positive. We’re nowhere near the 5-minute goal but our motto is #BeBetterToday. Nearly every lead is having a conversation within the same day as their inquiry. The hero of a Buyer Legend is always the customer. Chuck is unshaken in his faith that when he takes the customer’s perspective things work out well in the long term.
Shep Hyken interviews Bryan Eisenberg co-author of the book, Be Like Amazon: Even a Lemonade Stand Can Do It.
Shep Hyken’s opening comments focus on how any company can improve their customer service, by thinking about how they can become more convenient for their customers. The reason that Amazon has become so successful is that they have developed a way to create customer convenience. Shep gives an example of how, in areas where Amazon offers two-hour delivery, a product could arrive at your home faster than the time it would take you to drive to the mall to purchase it.
Shep begins the interview by asking Bryan Eisenberg about the four secret ingredients to making a great presentation, which are:
1. Provide entertainment – tell a story.
2. Present a Big Idea.
3. Give the “How to’s.”
4. Give the audience or the reader the hope that they, too, can do it.
Bryan continues his “rule of four” by telling you exactly how you “can do it,” by discussing the four unifying principles of how to successfully run your business:
1. You must be customer-centric.
2. You must have a culture of innovation.
3. You must be agile. Execute, test and fail quickly, so you can keep learning.
4. You must continually optimize by shaving costs and adding value.
• Don’t “water the soup.” Putting a little water in the soup may give you more soup, but it takes away from the great taste. It’s not smart to do things that produce an immediate profit if what you are doing isn’t in the best interest of the customer.
• Don’t think short term. An example Bryan gives is when Starbucks payment system went down, they gave away the coffee. Most coffee shops would have shut down until they could take payment for their coffee. But, not Starbucks. They knew the cost of free coffee was better than losing customers – and it showed how committed Starbucks is to taking care of their customers.
Bryan Eisenberg is the co-founder of BuyerLegends. He is the co-author of the Wall Street Journal, Business Week, USA Today and New York Times bestselling books “Call to Action”, “Waiting for Your Cat to Bark?”, “Always Be Testing” and “Buyer Legends.”. Bryan is also a professional marketing keynote speaker.
Shep Hyken is a customer service and experience expert, best-selling author and your host of Amazing Business Radio.
Customer-centricity is like “excellent customer service” — everyone thinks they’re doing it, few actually are.
And one reason for that is that there are right and wrong paths to pursuing customer-centricity. Her’s a quick chart of the three most prominent wrong paths vs. their right path counterparts:
The first “wrong path” towards customer-centricity is taking customers’ (or worse, unqualified prospects’) spoken wishes at face value.
In other words, relying solely on surveys of potential customers as insight into “what the customer wants” is a bad idea. You might expend company resources creating exactly the offer people say they want, only to watch all the actual, paying customers actively choose someone else when it’s time to buy.
Businesses that achieve epic success through customer centricity take great pains to “see their customer real.” We’ll get into depth on techniques for this in my next post, but it involves tracking actual data on customer actions and understanding the context of buying decisions.
The second “wrong path” is to focus on the Peripherals at the expense of the “Hard Stuff.”
Imagine a dentist who focuses on being customer-centric by improving his waiting room with more comfortable furniture, a cappuccino machine, fast & free wi-fi, and plenty of power charging stations. That’s a focus on peripherals.
A focus on the hard stuff would be finding a way to reduce wait time to (nearly) zero.
The difference between peripherals and “hard” items is that
Peripherals change with the times, hard stuff does not, and
Hard stuff has the power to make peripherals irrelevant
The factors that make a better waiting room change with the times; for example, better magazines have given way to wi-fi. Whereas reduced wait time is always desirable, and a significantly shorter wait time makes the quality of the waiting room irrelevant.
The third “wrong path” is to over-focus on optimizing existing processes at the expense of re-engineering and innovation.
It’s a good thing to optimize the customer interactions you have in place now. But if you’re not looking at what customers really want — at an ideal interaction, unconstrained by current technology or operations requirements, — you won’t be able to innovate and invent on the customer’s behalf.
You could find ways to optimize the cash register or check-out experience for your store. by speeding up the check-out, keeping more registers open, automatically opening new registers when wait times exceed a certain number of minutes, etc.
Or, you could take advantage of new technology to re-engineer the shopping experience to render the cash register obsolete. Amazon Go‘s new offline store’s payment is handled via tracking and recording what you put in your cart and your card is automatically charged when you walk out the door with your stuff.
So what paths are you taking towards customer-centricity?
This is a post about false accountability and the worship of quantitative idols. Companies looking to be innovative face a dilemma. Policies and procedures that make them efficient at execution also stifle innovation.
On day one a startup is flexible until it discovers its business model and establishes a goal. On day two a mature company organizes around that goal and measures the efforts to reach the goal. Then they strive to find the most efficient ways to reach that goal. They create processes to make execution repeatable and scalable by employees.
These KPIs and processes, which make companies efficient, also impede agility.
That’s a question Ijustgot at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.
I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?
Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.
Jeff Bezos is once again describing the Four Pillars of Amazon’s Success:
Culture of Innovation.
Every business (B2C, B2B and others) can make Amazon’s Four Pillars work for them. Leaders can use Amazon’s Four Pillars to refocus on what never changes. Amazon’s Four Pillars help you look beyond data about your company’s performance. They help you see the data that reveals your customer’s reality.
Examine whether what you measure is what you most value
George Eastman organized the Eastman Dry Plate Company in 1881 under four unifying principles:
Keep the price of the product low so the customer will and more uses for it.
Always sell by demonstration.
Be the first to embrace new technologies.
Listen to what the customer tells you.
In 1976, Eastman Kodak sold 90% of all the camera film and 85% of all the cameras in America. By 1988 they had more than 145,000 employees worldwide, and in 1996 they had 16 billion dollars in annual revenue and a valuation of $31 billion. In 1975 Kodak’s Steve Sasson invented the digital camera, they patented it. In 2012 Kodak went broke because they decided they were in the camera film business. That was the result of abandoning their unifying principles in favor of the false accountability of their KPI’s.
What if Kodak had pioneered digital photography? What about they listened to their customers? What if they decided that instead of how many units of film they sold their measure of success would be how many magical moments customers captured?
I certainly hope you are measuring and optimizing the right things.
We kick-off the workshop with a two-day onsite visit. We help you create the Four Pillar foundation for your organization. The entire process takes between 4-8 weeks and the typical investment is $30,000 – $100,000.
We can speak at your event. Our fees are $20,000 in North America, and that includes travel. International fees are $20,000 plus business class travel, from Austin, and lodging. Contact us to discuss your event