False Features

headphones

Are the features you provide in your products the features that your customers want or those you think they want?

Variants on that question are common. But all too often, a feature slips through and you have to wonder how it got there, how was it approved, why did the company spend time and effort to build it?

I was browsing for some headphones over the weekend.  I saw the typical functional features of playtime due to battery, recharge time, frequency response, etc. I also saw the non-functional features such as design, shape, colour, etc.

Then I saw this feature, where you could use the hashtag #LameIdeas for your benefit (#hashtag name changed to protect the innocent). The idea was that you could take an image of yourself using the headphones and then  post that image using the provided hashtag.

How is that a feature? 

Later on in the specification, it mentions this phrase:

“won’t slow you down”

I had never considered a situation where headphones would slow me down. Even the 1980s headphones, bereft of the miniaturisation possibilities available today, didn’t slow you down.

In both cases, the features are nothing to do functionally with the product; instead they’re most likely marketing’s view of how the product should be used, especially by those they think will be using it. 

My gut feel is that was an inside-out way of thinking. Marketing deciding what their customers would want and using that as a feature. However, it could be that the company conducted user research and found that the customers did want to post hash-tagged photos about their new headphones.

Exclusive Relationships

Exclusivity
Have you considered the exclusivity of your relationships? This follows on from the post regarding the value of the data and the priority attached to the relationship or the data. I want to further explore the value of the relationship and shine some light on a different approach.

The Scenario

It’s the same scenario as the previous article, imagine you’re in a store, purchasing a product and you’re asked for your email address. How do you respond? Do you have a default answer? When was the last time you chose a different response and what prompted that change?

Rationale

Email
Email
Depending on how you value your time, how you value access to your time (and distractions) such as providing your email or how you value the privacy of your email address, you’ll respond differently to the request. All of these are currency that can be traded:
  1. Your time
  2. Access to your time – this is different to (1) since it relates to an acknowledgement that there is a route to your time, but you can safeguard it. Whereas (1) is more protective of time as a resource or possession.
  3. The privacy of your email address
These can be traded for items in the following non-exhaustive list:
  1. Discounts – immediately applied
  2. Discounts – off future purchases
  3. A free product/service
  4. Entry to a competition
  5. An item/service that others don’t have access to
The one I’m interested in exploring further is 5.

Different Perspectives

Reserved
Reserved
Let’s consider two ways of thinking:
  1. A company asking customers for email addresses so they can email them once a week with slightly reduced clothing that the company wants to sell before it has to sell in bulk to a discounter, so that it can clear space for the new season’s stock.
  2. The concept of fashion store charging for admission, maintaining exclusivity and ensuring that the experience warrants charging for entry.
That first option is the one followed by the majority of companies. We have to question, just how big a financial incentive is required to gain valuable email addresses/contact details. After all, we primarily want to focus on those people who are most likely to buy. More than that, we want to focus on those that we can convince to buy more than they would have done. It’s a balance between offering enough to get people interested but to keep the discount percentage low enough you’re not losing out. Isn’t this the attitude of 95% of retail companies? But it doesn’t feel an equal relationship. We’ll continue to explore the impact on emails, but recognise that there are other, more modern and interactive channels available as well. That second option introduces another concept that alters the relationship. It focusses on entertaining the customer, providing a valuable experience that the customer would pay for. Now let’s extrapolate that further by using the same principles.
Can we develop a mailing list that people would pay to be on?
What would we have to offer that customer in order for them to want to pay to access it? Following the fashion store concept from above, exclusivity is the angle. That fits (5) as above. Instead of a situation where the item of value is the email address and we request that item so we can use it as the channel to contact the customer/prospect, we end up with a situation where the email address becomes the channel but is offered to us (potentially along with payment) so that the customer can access the list. The relationship is reversed. Nightclubs, restaurants and social clubs/business clubs have been using exclusivity for decades (and centuries in some cases). This isn’t new. Before email, there were postal lists you could pay to be on. Again, this isn’t new. That relationship reversal then implies one of two choices:
  1. We provide a service centred on exclusivity and customers will pay to access that service via an email list. But the service/product is what they want access to. Or
  2. We provide a service that is in the email content itself. And customers pay to receive that email.
The first is similar to exclusive wine clubs, members clubs, etc. The channel isn’t important, it’s the end product that counts. There’s little value to the email itself; it’s a conduit or an access channel to the product. Some of the crowd-funding platforms such as Kickstarter blend the mass-market with the exclusive by restricting access to early adopters or sponsors. The second is interesting because it would have to be a information-only service since it’s delivered over email. We’re then left with the question of what content could be provided with a degree of exclusivity and create a demand from prospects? For that, we can look to previous centuries (and the current century and stock market information). The value is in the effort, skill and knowledge involved in the financial analysis that isn’t in the email. Part of the perceived value is in the brand and reputation. Hence the existence of con artists creating ponzi schemes on the back of fabricated or incremental reputations.

Conclusion

We’ve covered the concepts of the items of value that a potential consumer could be traded, the items that they could be traded for, explored the idea of creating a chargeable service and how exclusivity could apply to that service. Where does that leave us? We could create exclusivity in our relationship with customers by restricting the size of the segment (e.g. first 100), we could offer that email for a cost, we could create a difference in the products/services specific to the segment or we could create an exclusive product where the channel communication itself is the product.

The Whole Chicken

Chick

KFC has a radio commercial playing over the last few weeks, but I’m struggling to understand what it means. I understand the words but they’re contradictory, even within the commercial spot itself. I’m left wondering what the business motivation is behind commissioning that ad slot. What was the intention?

The Content

Here are some of the main points of the commercial:

“The whole chicken, just the chicken and nothing but the chicken.”

“For £12.99”

“Prices may vary”

Analysis

Let’s take each of those in turn:

“The whole chicken, just the chicken and nothing but the chicken.”

Did someone fall in love with that phrase and refuse to see the reality when presented with it. The deal includes fries and drink. Neither of them count as chicken. It’s not just chicken or nothing but the chicken. There are sides. Maybe those are alternative facts.

The deal includes pieces of chicken. I’m assuming chicken feet, beak and eyes aren’t included in the pieces of chicken so neither is it the whole chicken. In fact, 100% of the phrases in that sentence are false.

“For £12.99”

Great. We now know how much some of the chicken pieces with sides and drink costs. However, the following phrase removes that knowledge. “Prices may vary”. It’s more complicated than that since the price depends on where you buy from, so it’s not £12.99 as advertised.

Remove the “whole chicken” line and the price and there’s not much content left of that advert. Now we’re left knowing that they sell chicken, drink and sides but we’re unsure of the price.

Half of that advert could be paraphrased as something similar to “we sell chicken with sides and drink and the price varies”.

I think most of us already knew that.

Motivation

So what’s the point of an advert? Is it to raise awareness, inform of new releases/changes, inform of offers, etc? I’m interested in the business motivation behind actions by companies. Whether using Business Motivation Model, VMOST or similar models, many of the principles are the same. Identify the top-level vision, separate into big themes and then align every action to those themes.

I’d struggle with this one to understand what theme was that advert aligned to?

I’d guess it’s increase awareness of offer, in order to increase a positive change in purchases (converting people who are already familiar with KFC products to purchase more than they would have done). I’d also guess it’s aimed at lapsed customers, e.g. those who used to buy but have stopped/paused.

Maybe the sole purpose was to lodge the phrase “The whole chicken, just the chicken and nothing but the chicken.” into our minds; associating take-away fried chicken with KFC first and foremost.

I also wonder if the business motivation had been clear, with a connection between vision, theme and action, would the commercial have sounded different or had different content?

Finding a balance between the needs of the organisation and the needs of the customer

Checkout Till
Some companies are immature in their approach to customer relationship management (CRM), but at the heart is a desire to get something for free. And that’s wrong.

The scenario

You look around a shop, you pick something up, take it to the checkout, wait in a queue. You notice that the queue is moving slowly, despite most customer only having a handful of items and then paying with credit card. Maybe the link to the credit card authoriser is a bit flakey today? It’s your turn at the checkout. Once the greeting and the small talk is out of the way, the dreaded question is delivered by the sales assistant “Can I have your email address please?” or some variant on that request for your email. This may be followed with “can I take your postcode?” or “do you already receive our newsletter?”.

The analysis

What’s happened is that the company’s desire for collecting valuable customer data got in the way of its prime purpose and I’m guessing the prime purpose is to make money by selling goods that customers want to the customers that want those goods.
There are other methods for collecting customer data. Some methods cost more than others, some are more accurate than others, some are more comprehensive than others. More importantly, some are less demanding to the customer and even less demanding to the customers in the queue behind them.
Often the desire is created due to a new multi-channel campaign that wants to treat all customer channels equally, not recognising that there’s a different social contract in place when you’re in a store to the one that’s in place when you’re buying on line. Companies that slow down the queue in order to collect information have broken that social contract.

Exceptions

While I’m against slowing queues down, I can concede that short analyses are valuable. This would mean performing the data collection during the natural queue created by your checkout processes. Even then, I’d be concerned that you have a queue and, while it may be acceptable to have queues, I would question an organisation if it counts queues as excellent customer service. If the answer to that is no, then we can prompt other questions such as relative priorities, but that’s for a different article. The take-away here is that companies usually choose acceptable customer service over exemplary customer service.
There are potentially other methods that they could use in store. One that never seems to be used apart from by car salespersons is the option of walking up to a customer, engaging in a conversation and then asking for their contact details. Can you imagine this working in your supermarket, the next time you buy a phone or the next clothing shop you go into? While I don’t believe we should all move to the used-car sales model, I do believe there is room to find a better balance.

The Real Issue

There is no need to wait until the checkout to ask for this information. In fact, asking at the checkout is contrary to the purpose of the checkout.
What’s missing is that the company is trying to build a relationship with the customer. But rather than trying to do that in an underhanded manner at the checkout till (sometimes in the guise of asking to email a receipt), why not engage with that customer while they’re perusing? This highlights the actual issue. It’s not what the company wants, but what the customer wants. What value is the company going to deliver to the customer in exchange for a longer-term relationship?
So rather than trying to obtain an email address for free, consider what you’re going to provide so that the customer would actually want to provide their email address. When viewed in that light, a 10% voucher may not be sufficient.

Alignment

I take issue with any company that slows down the purchasing process for the purpose of collecting customer information. Whether it works financially or not, it’s a bad customer experience and not one I want to see implemented in any shops. I believe in a managed flow from a lean perspective (that’s Lean, not Lean Startup) and so, simplistically, anything that gets in the way of that flow is waste and should be avoided. Instead I’d provide options for collecting emails while people are queueing, while they’re on their way out (e.g. a pedestal table, pen, cards and a ballot/post box on the way out) or have it built into the product itself (like the cupcake liner mentioned in an earlier article).
In short, engage with customers at a more appropriate time (or stage of their purchase) and collect data that’s appropriate to collect for your future interactions but don’t make the purchase process worse just so that you can collect that data.
Any comments, you can find me @alanward.

3 Reasons for Running Sales Campaigns

Context

A friend the other day suggested that he drop his prices for a few weeks and I questioned what the rationale was behind the intended price drop. I wanted to check that there was a valid reason and it wasn’t just a knee-jerk reaction that led to the idea of creating sales campaigns.

Sale on green
Sale on green

I only know of 3 reasons for sales. I’ll define sales as campaigns based on a short-term price reduction, such as end of season sales, January sales, etc. To be clear, I’m avoiding discounting and similar activities to keep specific customers happy and/or make the sale which I see as a different set of activities.

The 3 Reasons for Sales Campaigns

1: Due to Inaccurate Estimates

The provider chain (including the parts supplier, manufacturer, distributor and/or retailer and any combination of the above) has inaccurately estimated the amount that customers will buy at the RRP. So they need to shift stock rather than have it build up in the warehouses or showrooms. This sometimes occurs because a new model is coming out or because the weather was as predicted (and so not as much ice-cream was sold the week before). The answer could be that the MRP/RRP was always too high for the market and so the price drop is, in effect, a reduction to a more valid price that the market can sustain.

2: To Acquire Customers

Another reason for limited campaigns is as the basis for lead generation in terms of selling nearer to cost or at a loss to acquire new customers. A reduction during the campaign can lead to a long-buying customer that otherwise could have been tempted by competitor offers. The typical view is that a the price of the reduction is vastly outweighed by the long-term revenue from the customer. However this should be validated in your own organisation. In some sectors, customers are increasingly becoming used to jumping from competitor to competitor, getting the new deals available only to new customers.

On that subject, it is also worth considering the aspect on existing customer. Some may feel maligned or forgotten, depending on how important the price reduction would have been to them.

3: Short Boost

To create a boost in what customers are buying for a short period of time. This could be to alleviate a cashflow issue, e.g. to avoid company administration or pay annual tax bills, etc, or could be to alleviate another pressure, e.g. warehouse needing emergency repairs so some stock needs to be removed (and sold) rather than stored. In the case of cashflow, this could have been considered as a subset of (1), in the money is the resource. However considering many of the instances requiring short term boosts are unforeseeable, the boost is instead intended to be used as a stabilising factor.

4: Shift unused resources

In most industries, there are resources that do not generate revenue if not  being actively used, but the companies need them available in case of larger contracts. For instance, telcos provide ports to corporate customers, the number is static so spare, unused capacity could be packaged into a campaign. Similarly, larger consultancies operate a bench (usually quite lean) with consultants who are not actively being resold to clients. However this this is just another form of (1). Had the company planned better, then these resources wouldn’t be spare. So we remain with 3 reasons.

Further Thoughts

The better the company at predicting and responding to the future needs of its customers, the fewer sales campaigns it will require. This does require the company to act on those forecasts.

The issue with (1) is that while it makes sense, there should be an associated activity. This secondary activity should be to look at whether the assumptions in the original plan are accurate in hindsight and whether they should stand for future forecasts. For instance, if you’re reducing your price to meet the market expectations, then actually that’s your price, not your originally-inflated price.

So you’re about to run a sale, which reason are you using?