Customer experience

Jaffe Flips the Funnel of Marketing

Its nice when you listen to a podcast and the thoughts of the speaker completely resonate with your own.

This happened to me recently when I listened to Joseph Jaffe speaking to John Wall at Marketing Over Coffee. Jaffe spoke about the need for businesses to Flip the Funnel (the title of his latest book –  I must get a copy to review here!) and focus their marketing efforts on servicing existing customers rather than spending often huge $amounts£ on new customer acquisition. The 80/20 rule shows that 80% of your profits (more than likely) come from 20% of your existing client base so why do so few businesses focus their efforts on that 20% they already know and work with?

Its an issue that increasingly perplexes me and hearing Joseph Jaffe argue this point so passionately was one of those magical, reassuring light bulb moments – I agree wholeheartedly that customer experience WILL be the single biggest competitive advantage in business for the next phase. If you are a business leader or entrepreneur you simply must listen to this podcast interview.

Somewhat spookily, no sooner than I took the ear-plugs out from listening to this podcast, I opened a parcel containing an advance copy of Delivering Happiness from Tony Hsieh to review on this blog.  Zappos is a company that single-handedly brings WOW! customer experience to central stage and is a shining light of tomorrow’s business – much in the way that Jaffe sets out.

Two breaths of fresh air just moments apart – I love it when a plan comes together!

What’s in a price?

Getting the price right for your products or services is key if you are to survive – let alone thrive – but how do you achieve this?

Most businesses reverse-engineer pricing – put simply, they work out how much it costs to buy and / or assemble the raw materials or goods, factor in other indirect costs (e.g rent, power etc) and then add a profit margin. This approach is widely accepted and, although its a reasonable start, it is fundamentally flawed.

There is a far better way. But it’s harder as it takes imagination. It also requires that you step away from the safety of the herd.

1. Customer experience = Customer value (Price)

YOU should not dictate YOUR perceived value (aka price) for YOUR goods / services onto me as a customer.

Think about it – if you start from the perspective of:

YOUR cost of purchasing goods + YOUR rental (+ other indirect costs) + YOUR perception of the ‘right’ profit margin = Price

then you completely miss MY (all important) customer perception of value. There’s far too much of you as the business in this equation and too little about me as a customer. This is exactly where most businesses go wrong – and ultimately end up in a price-war because they’ve no other competitive-edge.

What if you could:

  • Single out the aspects of your service or product that are unique or different?
  • Make it a pleasure to deal with you.
  • Change the rules.
  • Focus on those aspects that your competitors are blind to.
  • Ask for my opinion.
  • Be a game-changer.
  • Ask for feedback and suggestions for improvement (and act on them).
  • Innovate.
  • Engage me as part of your community.
  • Listen.
  • Support me and the initiatives and interests that are important to me.

How could this be different for your business?

Clue: me (+ lots like me) will become blind to your price and loyal to you + your business. Trust me.

2. Potential for exponential growth

Once you’ve cracked point 1, the (ingrained) correlation between YOUR costs and price become disconnected. This is key.

  • Now your price is determined by your customers.
  • Your customers determine the market value and this has nothing to do with your ‘behind the scenes’ costs or how hard you are working. This is irrelevant (and quite right too!).
  • Value and therefore price is driven by customer experience.
  • This makes the competition irrelevant.
  • The rewards for being the best in your market are disproportionately high.
  • Combine this with the fact that technology opens your market to practically six billion + customers

and you have the recipe for exponential growth in your business.

Cracking No.1 is the hard bit. But its worth it. What the world needs now is Soul Businesses that deliver exceptional service like no other. Its an open goal…

Reblog this post [with Zemanta]