v Most strategy models are based either on a focus on o The market opportunity o The competition o Inside excellence as a driver for success Even if these strategy models have proven their value in time, the changes in economic and market conditions require an open mind to incorporate new balances of power Today, one of the key power balance changes is the one between Provider and Customer
v This is where Arnoldo Hax’s Delta Model adds an additional dimension by placing the Customer centrally in the forming of your Strategy The way to win is not to beat your competitor but to bond with your customers!
v Low cost Best Product Total Customer Solutions System Lock-in DifferentiationCustomer Integration Redefining the Customer Relationship Horizontal breadth Exclusive channel Dominant exchange Proprietary standard Enabled through effective use of technology
v Challenges to move from best product to system lock-in? Best Product Product differentiation, as technology gets more mature and lifecycles shorten, is very hard to achieve. If your product becomes a commodity, you are deprived from superior financial performance, from serving your customers splendidly and from having fun Focus on being the lowest cost provider in an undifferentiated product category will require a continuous effort to optimize supply chain
v Challenges to move from best product to system lock-in? Total Customer Solutions The first move is to stop selling “products” but start selling customer solutions. Customization, learning, and services bundles with products as a unique customer offering The objective value of a product or service are secondary to the perceived value of the customer
v Total Customer Solutions Customer Integration Customer Integration seeks to effectively substitute for or leverages activities currently performed by it’s customer. Competencies will be bundled and are brought to the customer to enhance his economics Example: vending machines (non owned) with data supply on stock and consumer behaviour Best product Total Customer Solutions System lock-in
v Club C-mode machines: Mobile phone payment system Member club advantages to earning points Points provide access towards free drinks, barcodes with offers on mobile phones and occasionally a barcode coupon for a free drink Scanners
v Total Customer Solutions Redefining the Customer Experience Redefining the customer experience seeks to deliver a full experience to the customer from the point of acquisition through the complete lifecycle of ownership of the product. Musts are: o An intimate knowledge of the customer base o An effective customer segmentation o A differentiated treatment of the customer tiers Example: Carglass Best product Total Customer Solutions System lock-in
v Total Customer Solutions Horizontal Breadth Horizontal breadth seeks to fulfil the entire customer needs by a set of customized products and service offerings. Features and functionalities are such that products are unique desired and command price premiums Example: Bol.com and Coolblue.nl Best product Total Customer Solutions System lock-in
v System Lock-In Exclusive Channel / Restricted Access Exclusive channel / Restricted access seeks to create significant barriers for competitors to even compete for the acquisition of customers. Attention: difficult to achieve and sustain as regulatory practices tend to be deployed to prevent it Example: vending machines and freezers Ola Best product Total Customer Solutions System lock-in
v System Lock-In Dominant Exchange Dominant exchange seeks to provide the company an interface between buyers and sellers that is very hard to displace once it achieves critical mass. In this case the first mover advantage is critical Example: o Nespresso (technology with controlled supply and sales channels) o Senseo (pad with limited exclusivity) Best product Total Customer Solutions System lock-in
v System Lock-In Proprietary Standard Proprietary standard seeks to draw the customer to your product because of the extensive network of third party complementors that are designed to work with your product. This option is only feasible when the rewards are enormous Example: Microsoft Windows Best product Total Customer Solutions System lock-in
v Customer Relationship “Management”: classic data driven model Data Cleaning Formatting Standardization Deduplication Validation Enrichment Data Cleaning Formatting Standardization Deduplication Validation Enrichment Marketing Database Marketing Database Listbroking In-company files In-company files Reporting & Analyses Reporting & Analyses Profiling Campaign Sales Sources Marketing Database Data quality Campaign Management Close the loop Analyses Sources = only “external factor”: One time renting, data relevance, up-to-date, input continuity & volume, …?
Customer Relationship: intimacy & interaction driven model Create value for brand, retailer & consumer... Increase brand loyalty Strenghten independant retail channel Create direct relationships with consumers Manufacturer Independant Retailer Consumer via a B2B2C contact strategy
Customer Relationship : data driven marketing model Marketing Database Marketing Database Data Cleaning Formatting Standardization Deduplication Validation Enrichment Data Cleaning Formatting Standardization Deduplication Validation Enrichment Listbroking In-company files In-company files Reporting & Analyses Reporting & Analyses Profiling Campaign Sales Campaign Mgmt Campaign Mgmt... Adding the retailer network as a source to the Marketing database...
Introduce retail network as main source of consumer data Ensures a continuous flow of qualitative consumer data in addition to classic list broking and in-company files Marketing Database Marketing Database Listbroking In-company files In-company files Store A Cash register Consumers Store A Store B Postal card Consumers Store B Franchisee C Postal card Consumers Store C Data extraction Store A Data processing Store B Data processing Franchisee C ?
v What was the deal between Essilor & the independent opticians o To help the optician deploy a state of the art customer & contact management and be able to implement a loyalty marketing that would differentiate them from the competition o The objectives were: increase market share, ROI, shorten purchase cycle, increase traffic to store, improve loyalty o Economies of scale providing access to advanced contact management tools What was the mechanism (Total Customer Solution) o The participating optician uses a web platform for input of the customer profile, behaviour, preferences and provided services o 4 clusters, centrally managed, define the customer segments and the actions during the lifecycle o 4 stages within the lifecycle are defined to optimize individualize customer contact o The web platform tracks the customer contact / loyalty actions, which are visualized in a dashboard with benchmarks
Customer Relationship : Individualized consumer contact Re-activate After sales Build relation Stimulate Purchase date Per Customer we determine: Expected purchase interval Content Incentives Contact Frequency Customers are reached via the right channel Jim, your glasses have arrived There are 4 main clusters, based on purchase behavior, frequency and motivation. They are then clustered into eye care or fashion and then product type / age
v Re-activate After sales Build relation Stimulate
v What’s in it for Essilor o Essilor is able to implement a state of the art CRM approach with high ROI o Essilor bundles tons of information on the customer behaviour in this market segment and is able to provide highly appreciated added value to the independent optician o These customer insights combined with a centralized approach provide a competitive advantage towards the large optician chains What’s in it for the independent opticians o The ability to deploy an powerful and advanced contact management and loyalty strategy but with limited investment o Maximize his position as a trusted advisor with personalized service o Create image of a dynamic and proactive business o Strategy impacts main drivers for his business o Every letter generates on average €25 of business
v Results: A clear Win-Win for Essilor They make love with their Customers, not War with their Competitors! Participating opticians250 # consumers in Dbase2.500.00 0 Active consumers in program450.000 # mailings per month80.000 # different mailings per month2250 Conversion6% ROI For every letter sent, the optician gets €25 business in return. On average an optician invests €10k per year and generates an extra €120k turnover > 300%
v Conclusions o Knowledge (consumer, shopper, customer) is Power. When put to work with the latest technology it’s Profit! o Essilor focused on a sales channel that was seen as losing versus consolidated chains, understood their needs and provided a solution o By providing a Total Customer Solution to the independent Opticians (A to Z Direct Marketing Programme), Essilor actually locks-in the Channel as no one else has such a direct access to their customers o Know the value chain of your business and where you can add value! A couple of questions for your own reflexion o Is my Business B2C or actually B2B2C? o In B2B2C, How can I combine my strengths with B’s knowledge (and systems?) to enhance my consumer knowledge, create more value for B and create additional consumer contacts for my business? o The value chain: how often do I question the classic business models and think about different models allowing me to capture more of the value?
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