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McMann & Ransford’s Christopher Fox explains how your company should approach the Customer Intimacy Journey™:

The following guest post is by Chris Fox of McMann & Ransford.

One of the first questions we get is "Where in our business would this apply?"  

It's a good question - because in many corporations, multiple customer engagement models co-exist in support of various parts of the portfolio - and will continue to do so.

To answer the question, it helps to think about the nature of a customer relationship when a Customer Intimacy Engine™ is in place:

  • Is your Account leader embedded in the account?
  • Do you have a high level of knowledge, trust, and cooperation with your customer?
  • Do both you and your customer feel you're achieving  the full impact of your company's portfolio, and your work together is informing decisions on the future direction of your portfolio?
  • Are your relationships  with the people who control and direct the resources (e.g. with Business GMs and/or the C-suite) built on substance, not just camaraderie?
  • Are you able to monetize these relationships, pulling through or renew less differentiated or transactional business, at fair prices?
At first glance - one might say "I want all my customer relationships to be like that!", but, except for certain service businesses, that is rarely the right answer. 

An examination of the customer and offer portfolio will show that there are likely certain lines of business that won't just benefit from this model, but actually require it in order to succeed.  And, very often, it is in areas where the company has said they need to own a greater piece of the opportunity space for strategic reasons 


Taking a company through an enterprise-wide business model transformation to the Customer Intimacy Engine will remind you of that celebrated Beatles song - The Long and Winding Road.  [The performance above is post-Beatles, but Sir Paul delivers.]

Anything worth doing is, by definition, challenging and requires fortitude. How do you keep the organization focused and maintain the momentum?  

Let's keep in mind that companies have difficulty focusing for long periods of time and (like children) want immediate gratification. Therefore you and those who are like minded must be responsible for getting them on the journey and keeping them on the path.  

Because firms under invest in most new things, your effort may not be different. The journey is like building a skyscraper - lots of time spent building the foundation to support growth before significant financial outcomes are realized. (FYI, I'll discuss underinvestment as a root-cause of failure in the next post).

As you know, the true impact of the solutions-led Customer Intimacy Engine business model is pulling through the other products of the company. Therefore until critical mass is created and significant dollars are pulled through the business will not be viewed as significant - even a hundred million of new intimacy services will not be material for most large firms.

Add to these factors the truth that you are going to make some mistakes. You are going to select some solutions that don't work - particularly as you learn the business model.  Further, you'll hire some expensive talent that won't work out. 

Finally, you will screw up an account or two. 

So you find yourself with an undeniable truth - if your company does not become successful in the  Customer Intimacy Engine business model there will be troubled waters ahead. And, the challenge of keep the company moving forward when you are underfunded and many don't believe.  A way forward must be found. 

Let me provide some ideas:

  • In the year one plan - provide trade-offs for approval - fast growth big investment - slow growth smaller investment.  Always, remember to explain much of the investment is in what would be considered R&D for a new product.
  • Develop specific road signs for each step of the program - this will focus them on the steps toward success:
    - Hiring consultants that provide expertise in the vertical area in question
    - Developing first True Solution
    - Taking solution to market and validating applicability
    - Getting first sale
  • Force 90 day critical reviews with broad leadership audience focused on what is and what is not working - do not fall into trap of selling them all the time on how great you are doing.  This is a difficult and critical journey, and it is silly - not to mention fatal -  to put all the risk on those assigned to make the transformation work.
  • Develop a newsletter of the journey to tell everyone about the current successes and next steps
  • Budget into the organization education time to go around company and evangelize through education on business model, value to organization, current steps, challenges, successes and what's next.  
  • Be quick to make corrections - one of the things several of our clients have had difficulty with is adjusting organization charts, compensation plans, key offers, etc as needed.  Large corporations of very structured around the annual planning process.  The  Intimacy Engine model in the beginning must be flexible and agile.  You will be forced to make many changes throughout the year in the early stages.  This is going to frustrate the larger corporation, but make sure you continue to educate about the reasons for changing in mid-stream and why you will fail if you cannot adjust to new information.
  • Don't fight city hall - every company has things that must be done to be a good citizen - whenever possible do the right thing
  • Die on the right hills - as you know (if you have been reading this blog) there are several things that must happen in order for the journey to be successful and those can't be compromised.

On a positive note, I have witnessed several executives make their careers fighting for this journey but each time they had to keep the organization moving with them.  Each of them become both experts in the model (could speak to anyone - internally and externally - on why it is important and how it works) and were aggressive, in-the-trenches leaders - they went to see customers and assisted their teams in understanding how things work and what to do in different situations.

I hope this helps.  Next up, we look at under-investment and its consequences.

beacheadnormandy44.jpg

Today I want to discuss the importance of establishing a beachhead - a successful safe place to expand into a market. 

This is important for an early solution business and for any new market/customer segment you go after.  You must focus early offers on the market exclusively - it is so easy to ignore the needs of the executives in your market - we call this getting above the safety line - and focus on the products or abilities you have now.  We've seen firms struggle in the first year of their Customer Intimacy Journey because they did not create anything meaningful for the market. 

The Customer Intimacy Engine business model can take into account that your customer facing people are not used to selling to the executives, it can take into account your brand does not give you legitimacy in the executive-suite solving real problems, but it cannot make up for poorly planned offers - those with no real value to the executive.

The beachhead begins the process of establishing your legitimacy and proves to your organization that you can do it.  The early focus should be on getting reference-able accounts that believe in what you offer.  By the way you must be able to implement the new idea also - please see the blog entry on staffing and talent

How do you select the first offers for a new market ?

You need to do a thorough review of what leading thinking for the market is focused upon.  This would include:

1.    Reviewing current thinking by consulting firms - this can be accomplished by reviewing their info in the market place and meeting with representatives from large and specialty firms.
2.    Meeting with executives in the industry that are solving key new issues - these discussions must be done differently than market research and require market experts in the room on your behalf to interpret the comments.
3.    Diagram the business - this should include org charts, supply chains, major processes, etc.

Once this exercise is complete and a diagram of potential opportunities is created,  I suggest you meet with people who represent best practices for these areas within the market segment - these will usually be lower level people and or people who have left the industry and are working on these problems as adjuncts to the industry. Also, see what the associations are doing on these issues.

Now you should have a reasonable list of opportunities and enough information to begin the offer evaluation process.

The challenge with establishing a beachhead is that companies usually don't have the patience for spending time doing this and they want meaningful revenue now - this is usually because they look at Customer Intimacy Engine as "solution selling" - a go to market issue only. I suggest that you talk about this phase of the journey as R&D spend.  A True Solutions™ portfolio is not that different from bringing a new product to market, similar phases are involved and similar investment is required, although the way in which the evaluation and creation activities are accomplished differ.

So how do you go about leveraging the beachhead?  Once several accounts have purchased the new offer(s), you can trumpet the release of the offer, increase the staff involved and move towards leveraging the beachhead.  This will include creating those offers that more directly pull through your products or outsourcing.  This begins with building a strategy (portfolio document) of where you plan to take the market, which includes identifying how each offer area impact the safety line and/or builds critical mass, and/or drives solution revenue/profits, and/or pulls through products. This document in turn becomes the vision that drives the market activities you undertake for the business.  It also provides a communication document for educating and discussing the business with your company on broader basis.

In summary, focus first on establishing a firm beachhead and then on the broader business offerings that expand your influence.
Eighty-eight percent of all CEOs say getting closer to the customer is the most important dimension to realize their strategy in the next five years.  According to an IBM study, "The most successful organizations co-create products and services with customers, and integrate customers into core processes. They are adopting new channels to engage and stay in tune with customers. By drawing more insight from the available data, successful CEOs make customer intimacy their number-one priority."

This is not news for anyone who views customer intimacy as a business model and not just a sales technique. One of the key tenets of a superior customer intimacy practice is to constantly maintain a tight linkage between service delivery and value creation.  In fact, by definition, you can't have real customer intimacy if you're not solving your customer's most strategic issues.

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The diagram above makes the following point: there must exist an optimal balance between your promise and your delivery, i.e., you gotta walk the talk.  Further, the value proposition you bring to your client must impact your customer's value drivers in a perceptible way.  Once you have convinced the customer that your idea will in fact deliver value (idea selling), then you must in fact deliver what you promised.  In our case, we say that you must offer True Solutions™ and be an intimate partner in solving problems and bringing new ideas to your clients. Of course, you also have to keep in mind that your ideas or propositions must be screened to ensure they meet your criteria for fostering customer intimacy.

If your solutions don't deliver on your value proposition, you're guilty of marketing hype.  This can be a fatal mistake.  Far too many companies believe their own marketing propaganda, and don't know how to deliver on their marketing promises.  90% of the time, this is why customer intimacy gets a bad rap.

Now, a few words about customer value drivers. We're all indebted to the academician Jag Sheth's theoretical model that explains the five values that drive customer choice:

  1. Functional value: the perceived utility that derives from a product's physical, utilitarian, or functional attributes.
  2. Social value: derived from an alternatives association with an identified demographic, socioeconomic, cultural, or ethnic group.
  3. Emotional value: derived from the ability of an alternative to arouse an emotional or affective state.
  4. Epistemic value: acquired by an alternative as the result of its ability to arouse curiosity, provide novelty, and/or satisfy a desire for knowledge.
  5. Conditional value: derived from the specific situation or context of the purchase decision. 
At McMann & Ransford, we help our clients build True Solutions™ that meet all five customer values.  Unfortunately, far too many companies are focused on functional value alone, a classic symptom of the product-driven company.  In our next post, we'll look at an industry which is addicted to innovation and examine the consequences of this behavior.
I'm often asked by senior executives about how they should assess their company's progress on the Customer Intimacy Journey.
path2intimacy.gif
A quick Customer Intimacy Assessment can be done by answering the following set of questions. Executives should be familiar with the key milestones for each phase, and, most importantly, they need to be as objective as possible in order to come up with their next set of actions.

Getting Started

  • Does your organization understand that this is a business model and not a sales technique?
  • Does the executive team understand what it takes to be successful?
  • Do you have buy-in for the long term transformation?

Forming the Business

  • Do you have ideas that are strictly applicable to the niche (vertical market) you want to compete in?
  • Do you have proof points to differentiate your company?
  • Are you selling to the key executives in your target market?
  • Can you upsell more solutions to the executives you currently serve?

Commercializing the Business

  • Can you save disaffected accounts?
  • Do you add new accounts through solutions?
  • Are you pulling through significant product deals?
  • Do you have a portfolio that touches several key executives in the vertical?
  • Can you grow rapidly?

Scaling the Business

  • Do you have integrated verticals where key accounts are run by a Customer Intimacy business model?
  • Do you have large transactions sold without sales activity?
  • Have you eliminated some corporate cost by leveraging solution teams to do them?

Dominating the Market

  • Are you running the company/business in a new way?
  • Have you changed your performance metrics?
  • Are you still running to business models - old and new?
  • Are you promoting Customer Intimacy leaders to top leadership jobs?

At McMann & Ransford we guide our clients throughout the Customer Intimacy Journey - from getting started to dominating the market. Do you know where you stand?  

Thanks to those of you who asked me to elaborate on how to get a company motivated to embark on the customer intimacy journey, especially if you are not the CEO or the executive with the authority to directly move the organization. 

I have discussed how to make the case for change earlier, but getting employee "buy-in" is just the beginning.

path2intimacy.gifI believe there are three things to consider:

  1. Determine where your company is in the journey,
  2. Identify your next specific steps in the journey, and
  3. Motivate the organization to take action.
I am not minimizing the effort to accomplish this by trying to discuss all three in one blog post.  Further, this discussion is not indented to be exhaustive, but I wanted to at least provide an introduction to the topics and  some guidelines to assist those of you who asked.

Where Are You on the Customer Intimacy Journey?
Of course you must understand where you are in the journey before you begin to motivate the organization.  As you know not all companies are starting the journey without some experimentation with the concepts - many have taken tentative steps even if they do not fully understand the journey.  As you know, companies have been struggling with the drug of innovation for a long time. 

The following are a few simple questions to assist in assessing your progress on the journey. The point of these questions is to help you understand the scope of the transformation.

  • Have we undertaken the effort to determine if the Intimacy Engine is the appropriate business model for the evolution of our company?
  • Are we (as a team) interested in the future state model and do we have consensus on a shared-vision going forward?
  • Do we know what the journey requires to be successful?
  • Are we are willing to undertake the effort (resources, time, commitment) required?
  • Have established a competent professional services group? 
  • Is the professional services group growing at a sustainable, expected level?
  • Is the professional services pulling through enough product revenue? 
  • Are we focused on the right industry segments?
  • Have we developed key insights to the level to drive ideas or Service Chains?
  • Have we added bundling and product-related solutions?
  • Have we moved up the impact/intimacy scale with our target clients?
  • Are we implementing some form of solution-selling and has it impacted the business in a significant way?
  • Is our product "pull-through" strategy predictable and repeatable?
  • Are we still working in two different business models?

The Next, Specific Steps
This is much more difficult than determining where you are in the journey. It is not simply the effort of determining which phase you're in; this is a much more specific activity.  Remember this will be used to motivate the company to take action - therefore it must be specific, actionable, and important enough to capture the attention of the organization.

Examples of these are:

  • Evaluating and deciding upon potential move to Intimacy Engine model
  • Trying different customer relationship in key market
  • Leveraging our professional services group to pull through product 
  • Determining the segments that should be in the Intimacy Engine model
  • Develop detailed plans for the "Form" phase of the effort
  • Embark on pilot
  • Leverage pilot milestones for educating the rest of the organization
  • Determine post pilot next stage roll out - verticals, markets, etc.
  • Integrate the sales force into new business model
  • Reorganize the go to market business units 

Motivating the Organization to Take Action
Let's assume you have a clear objective - for the next phase of your company's journey - and you want to get the organization on board.  Either the change-champion is the key executive with the authority to take action or more commonly the champion is someone who must influence the organization to take an interest in the idea. 

The champion may be a key executive but not necessarily the one with the authority to make the decision, or she might be the staff executive that sees the organization more broadly and knows what must be done, or the champion might one of several roles but knows in their hearts that the Intimacy Engine must be evaluated as a possible road map for the company.  

I believe the process of getting the organization moving is in stages:

1. The viral stage - This is educational and interactive.  Others you respect must begin to share your views.  This can be accomplished by getting them into the discussion - reading what's being said about the Journey and its benefits, or conducting knowledge-sharing events (see earlier blog entry). 
2. The pro-draft stage - This is about getting the executive audience - usually the few key executives that can affect the organization into the discussion and turned on to your view.  This is accomplished by getting them into discussion and educating them about what you all are thinking, then commissioning a quick what would it look like benefits analysis.  By asking them to let you undertake an action you are gaining an understanding of their motivation,
3. Get the organization behind you stage - Get the broader audience - spread the discussion liberally through the broader organization - use all means available - discussion boards, new letters, blogs, wikis, etc  This makes again makes the effort more real and prepares the organization for action.
4. Draft a strategy stage - Get the key executives to entertain a proposal of drafting a strategy, planning document on the benefits, risks, etc of the idea. The specifics of the document must align with the way your company examines opportunities.
5. Executive focus stage - get the executive team focused on the idea in an in-depth way.  The best approach is to get them away for a couple of days - to first fully understand the idea of  Intimacy Engine, then present your findings, then do a working session selecting where to pilot the concept.  This provides them a detailed understanding - strategically, tactically and the work session allows them to guide the pilot and buy-in.
6. Get agreement to proceed to the pilot planning phase - Close stage 6 with the direct proposal of planning the pilot - budget, time-frame etc.

As product-based companies embark on the customer intimacy journey, their success largely depends on how attractive the value propositions for their services are and how well they are presented to clients to convince them to buy. Unfortunately, far too many companies remain relatively opportunistic in their approach to the marketplace.

Service chains are a key building block to becoming less opportunistic and more deliberate in your go-to-market approach.

Let's examine what we mean by the term service chain.

A service chain is a pre-planned set of offerings that have an entry offering with linkages and methods that pull-through the other offerings. Service chains formalize implied client value propositions by providing a framework to aid in the transformation from an opportunistic selling approach to a pre-planned, deliberate selling approach that delivers to clients the total value proposition offered by your company.

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The service chain framework consists of the following sequence:

Entry Offering:
a compelling idea that should apply to the client is presented,

Project 1: Proof that the idea impacts the client is developed and quantified,

Project 2,3...: The client's problem is fixed,

Managed Services: Ongoing support to manage the fix.

Service chains provide for greater client intimacy resulting in long-term, trusted advisor relationships. They maximize the pull-through of streams of work and minimize the sales investment, thereby enabling the sales team with pre-planned outcomes and predictable client revenue.

Here are some considerations based on our service chain framework:

General

  • It's in the client's best interest for us to provide our services over a long period of time.
  • It's the only way for the client to realize our total value proposition.
  • Clients buy based on industry. Therefore, service chains must always be industry focused, even though the actual services provided may well be 80-90% horizontal in nature.
  • One exception to the previous point regarding industry focus is pure technology services sold to the CIO organization (example - certain Microsoft services).
  • Initial projects in the chain, including the entry offering, should start relatively small and lead to very large "fix it" and deep "support it" engagements.
  • As a going in position, all service chains should lead to managed services engagements if that is the company's strategy.
Idea - Entry Offering

  • Ideas must be expressed in business terms, not technology terms. They must address a key business problem.
  • Ideas must be industry specific.
  • Results of the idea must "scream" for the client to take action.
  • The entry points into the client must be at the highest level, preferably the C-level, and the idea must speak to what they will be interested in - again, not technology.
  • Entry offerings do not need to be projects in a traditional sense. They can be white papersexecutive briefings, seminars, etc. Consideration should be given to what forum best fits the particular industry.
  • As a going in position, entry offerings should be paid for by the client. If their interest is peaked by a great idea, they will be willing to pay.
  • Thought should be given to legitimizing your idea by having an independent, recognized name in the field speak or comment on the idea.
Proof - Project 1

  • The proof must not only prove that the idea applies to the client, but it must quantify the results he/she will realize as a result of the fix. This serves as the linkage to the next, much bigger project.
  • Assessments are often very good proof projects. However, unless the idea is extremely unique and revolutionary, the proof project should not be named an assessment.
  • Assessments have been popular for over a decade and the business world is tired of being assessed. Think of unique, idea-specific names for proof projects.
Fix It - Projects 2,3..x

  • Fix it projects are often defined based on the methodology used to deliver the solution. Example - Architecture leads to design leads to construction leads to implementation.
  • Within the parameters for managing risk on large projects, it is usually best to minimize the number of fix it projects as the client often gets weary of too many phases.
  • Pilot projects are often excellent ways to deliver solutions, not only from a methodology standpoint but also from a service chain linkage standpoint. Value demonstrated in a pilot naturally links to much larger rollouts.
  • Additionally, pilots open up the opportunity to link to a managed services opportunity. Often, pilot projects are disruptive to a client's normal business infrastructure. If this is the case, you can offer to host the pilot for the client. This gives you the entrée to link to hosting the full rollout.
Support - Managed Services

  • Managed services is a logical extension to the fix it projects for companies with a managed services strategy.
  • In such companies, for every service chain the Practice Principal must challenge himself/herself to find a way to link to a managed services offering.
In summation, the service chain is a key driver of go-to-market activity for customer intimacy. It represents the best way to sell and deliver your company's value propositions to clients. When the model is properly executed, the results are:

  • increased pull-through revenue;
  • larger, repeatable deals;
  • reduced sales costs;
  • more profitable operations; and many more
Once again, service chains are opportunities to build long-term relationships with clients. They are the ingredient that will allow services organizations to scale and gain the critical mass they need to become dominant leaders in the industry.
path2intimacy.gifDuring the first stage of the Customer Intimacy Journey it is important to create and deliver solutions that have a visible impact with your clients

As you know, terms like "solutions" and "customer intimacy" are overused in the management consulting industry, and I believe often mean too little.  In this blog, we'll try to distinguish our thoughts with not-so-clever use of the terms True Solutions™ and Intimacy Engine™.  I want to talk about what True Solutions™ are and how it is crucial to the building of the Intimacy Engine™ business model.

truesolutions.gifAs you can see by the chart as you move up and to the right you are both making a greater impact on your client and requiring greater intimacy ability to get them to buy and implement solutions.

True Solutions™ - represented on this chart as business solutions - must address a true important business opportunity or correct a business problem for your client.

It is not the bundling of your product and services, it is not adding professional services to implement your service or even assist in product selection (although all these are valuable and will be part of your portfolio).   Further, a True Solution™ should be focused above the Line of Safety in the clients business:

lineofsafety.gif
The problem or opportunity that the True Solution™ addresses must add something that is crucial to someone (hopefully more than one) above this line.  Also, you'll require their support and purchasing power to engage you on the problem.  Fall below the line of safety and you're easily replaced - by technology, price, or salesmanship. Stand above the line of safety and competitors will find it difficult to dislodge you.
 
This means developing True Solutions™ requires deep understanding of the business sector your clients occupy, and profound knowledge of the unique issues in that sector - not how they use your product! 

Over the last decade we have spoken to literally hundreds of senior executives on behalf of our clients, from all industries: Food and Beverage, Retail, Pharma, Insurance, Healthcare, Financial Services, Heavy Manufacturing, etc. - and the common requirement from this broad group is that they want to partner with experts in their industry who bring them new ideas and the staff to help them through the realization of the benefits of those ideas.
 
Too many companies think they understand their clients' business but in reality their investments tell the story. They are heavily invested in product-driven R&D, and their interactions are far too shallow to uncover real value. They invest in product focus groups, product user meetings, and low-level interactions with transactional salespeople.  The few executive interactions ave mainly "dog-and-pony shows" to show support and get feedback about what is irritating customers.   I'm not saying these are not important, but I am saying that this sort of engagement does not build a deep understanding of your customers' business - or the drivers, challenges and methods to solve key business issues. 

A case in point: I was once meeting with the CEO of one of the largest companies in the world and he stated that he had intimacy with his customers - he could meet with any of them for dinner at any time - it was just that others would not follow up on the promises he made.  This statement told me everything; he was not intimate at all; rather, they were being polite and leveraging the meeting for concessions.  Intimacy means actual daily presence in the trenches, solving real client problems.
 
Think through your own experience: who is your trusted advisor to you? Who do you reach out to for advice and help? Usually it is someone that understands your problems and issues and has proved themselves by providing impactful solutions in the past.  Remember, our goal is to become an extension of our clients' organization - to be treated as part of the body with no anti-bodies seeking us out and trying to exterminate us.

Let me tell you about a personal experience which illustrates my point:

I live outside of Houston, Texas and have large tract of land. I was building a house on the land and wanted to add some flower beds - nothing unusual.  I contacted three companies to come out and talk to me about it.
 
  • The first company spoke to me for about 30 minutes and focused on where you want the beds and how they were the best buy in town.
  • The second company came out and showed me some pictures of other work they had done and suggested different plants that would look good and a little work qualifying my willingness to invest.
  • The third company sent two people - one a land architect and one water architect and they brought a custom layout with pictures and video of what my land should be.  They took the approach that I had an opportunity to make this into something to be proud of and that it was important for me to understand and be educated about the many options and what they would say about me and my view of the land. They encouraged me to think of the native positives of the land and how the acres of trees need to be brought work in harmony with new meadows.  They encouraged me to build a natural looking acre pond for birds, etc.
The three companies saw the problem differently - I met with someone trying to solve a cost problem, someone trying to solve a color problem, and someone trying to get me to take advantage of an opportunity.  I chose the third company and have had a long (expensive) but rewarding relationship with them.  But, I must add, had they not used the proper approach to educating me and bringing me along, it could have appeared that I was being manipulated. I call that putting the client first: they genuinely wanted to show me what was possible for my family and were passionate about it.

You've been hearing for years that your organization must be client-focused - but the Intimacy Engine™ is the business model that actually makes that possible.  A common reaction from many of our clients goes like this: "We get the concept, they say, "but we do not have the ability to deliver these True Solutions™, even if we could identify them." They often want to start where they are and slowly move towards solving the more important issues.  There is truth in these statements.  As stated earlier in the blog, getting and maintaining support for the revolution is paramount and never ending.  But, there are multiple truths here:

1) as solution provider, we must find the key ideas that impact the client above the safety line, and, 2) we should take into account what results ave achievable today. 

We'll take up that question in detail later on this blog.

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