Last time we explored how we can make IT more sustainable by improving data center energy use. Managing energy use is the most well understood form of sustainability we have but it is largely an internal form of sustainability practice. If we intend to make our businesses sustainable — i.e. able to function for a long time despite changes in the economy — then we also need to consider sustainability in customer facing business processes. That’s where treating the customer as a renewable resource comes in and it is the subject of today’s article. If you are wondering, the third leg of sustainability practice in business is sustainable products and it will be discussed later.
Whenever I think about sustainable customers I go right back to the idea of growth markets and zero-sum markets. To be sure, you can see revenue growth in both kinds of markets and there are few pure plays, most markets exhibit both characteristics though one dominates. In markets that are growing we see new category formation, new products and new services. In zero-sum markets the growth is internal. We grow product lines or we make products more affordable through various forms of value engineering.
If we can substitute for expensive materials with less expensive materials we can pass the savings on to the consumer. When we do this, a product becomes less costly and more customers can suddenly afford it. The same is true for putting more things into a product such as adding free applications to a cell phone. The value of the phone increases with the new software and the customer perceives greater value for the same price. This kind of value engineering helps keep commodity products affordable and profitable while providing differentiation.
Differentiation is important because it helps to maintain demand and that’s a good lead-in to customer sustainability. In a nut, how do you get the same customer to buy again? You might say it happens when old products wear out or become obsolete and that’s valid though those mechanisms might not provide sufficient continuous demand an economy needs.
In a zero-sum market, or in a market where demand may slacken for a time, understanding the customer and marketing to very specific demand patterns is an important tool. I see many markets turning from expansion to zero-sum, which drives my interest in customer sustainability. Simply put, an expanding market creates its own demand; this is just another way of restating the supply side argument. Unfortunately, no market expands forever and we need other explanations, beyond supply side, for times like these.
Not long ago, I came across a case study that describes how to implement a sustainable customer initiative, though it wasn’t called that. You might be surprised about the identity of the company that exhibited such good customer sustainability characteristics. It’s Walmart.
By now you are no doubt familiar with Walmart’s marketing campaign slogan, “Save money. Live better.” But have you considered how it came about? A few years ago the retail giant was seen in some quarters as a bad guy, its tactics of extracting lower prices from suppliers, which it passed on to customers, was not always seen in a positive light.
Walmart needed to get beyond commodity pricing and deliver to customers a vision of why they shop at its stores or it would simply be another low cost retailer. Walmart’s advertising agency, The Martin Agency teamed with social technology pioneer, Communispace, to get into the heads of Walmart’s customers.
Moms are the primary customer at Walmart. They deal with limited budgets and have to find ways to stretch their resources as far as they can go. But what Communispace and Martin discovered through deep conversations with community members was that Walmart Moms don’t see their limitations as a burden, they see them as a “badge” according to Katherine Wintsch, The Martin Agency Group Planning Director.
The deep research paid off. According to the case study from Communispace, the research showed that “…the value message isn’t about price, but about what she [the mom] can do to create fun and meaningful family times with the money she saves. Buying food at Walmart saves her enough money to feel fine taking the family to the movies.”
From that research, “Save money. Live better.” was easy. But no amount of brainstorming in a conference room would have yielded the result. In the process of asking customers what they thought, Walmart and its consultants practiced sustainability at the customer level. There’s no doubt in my mind that the research and the branding it generated will enhance Walmart’s competitive position. And to prove the point, consider this, again from the case study, but you could look it up.
“Walmart continues to outperform the market even in a difficult economic environment, increasing total net sales by 3.8%, and same store sales have risen for 24 straight months. Ranked as the most valuable retail brand in 2008, it was only one of two companies among the Dow Jones Industrial Average to post overall gains in share price for the year.
This gets to the heart of practicing sustainability at all levels of the business and it shows why, even in a difficult market, your company doesn’t have to be part of the malaise. When you think about it, Walmart’s slogan applies equally well to its customers and to itself. And it is primary evidence in favor of practicing sustainability at the customer level.
Using emerging technologies to foster more sustainable front office business processes.
Sustainability might be the next big thing in CRM. I’m betting it is and Beagle Research is initiating an award for sustainability in CRM. Today. Now.
Everywhere we look we see not just an industry but also a civilization straining under the demands of growth. Now, growth is generally a good thing for an economy but one of its hidden characteristics is that it periodically forces us to change the way we do things. What is affordable and practical one day can become expensive and cumbersome overnight. We’re living in one of those times. The solution to such challenges is to find ways to make what we do more sustainable, to substitute, change and innovate new and better ways of doing things. In business that means our processes and then some.
The things we take for granted in our business dealings are becoming less constant. Customers are tapped out, the new product engine has stalled and travel is becoming so expensive that it may soon squeeze margins and affect our ability to meet with people. Some of this is blowback from the recession but other aspects may be a long-term trend forming. Regardless of the causes, as business people we need to discover and develop solutions that mitigate these influences so that we can continue doing business.
We’ve given these issues considerable thought and in response, today, Beagle Research introduces a new award and report focusing on sustainability and the things that CRM can do to help every business to become more sustainable.
The award and report are called ThinkForwardä. We borrowed the idea of “think” from Thomas Watson, Sr. of IBM fame and from Steve Jobs each of whom asked us to think and then think differently at critical points in the evolution of our industry.
We believe it’s time to think again but this time we need to think ahead about a world that will be resource constrained in many dimensions. The conditions we watch and write about in the report show slower growth and rising transportation costs coupled with a customer-base that is growing less interested in absorbing more goods.
Just in time, we also see a market brimming with front office technologies that help vendors and customers to identify opportunities and satisfy them with maximum efficiency, using resources wisely. We think sustainability provides the organizing principle for the next phase of CRM, a phase filled with opportunity if we focus on crowdsourcing, social media and strategies for substituting intelligent technologies for travel.
We see numerous front office software companies bringing products to market that by themselves may not garner a great deal of attention from the mainstream market but we also see these solutions as keys to a more sustainable business environment.
The ThinkForward report identifies seven companies whose solutions typify the kinds of solutions that, in some cases, may not be core to CRM today but which will be essential in the future. In one way or another these companies evidence solutions that help vendors better understand and target opportunities, marshal resources and engage customers in new and more sustainable ways.
The award winners include Brainshark, Cloud9 Analytics, Communispace, iCentera, Kadient, Salesforce.com, Unisfair and Zuora. As our report documents, each of these vendors offers solutions that help their customers to do business in more sustainable ways either by treating customers more like renewable resources, reducing the travel and energy requirements of many front office processes, or by capturing and leveraging crowd wisdom to enable companies to better hone products and messages.
We salute these pioneers and encourage you to consider how making your businesses more sustainable can help drive new revenues and profits as the world continues to change around us.