Amazon’s vision is to be the world’s most customer centric company and what this means in practice is they are always looking for ways to add value to customers. This year that has meant innovating in the physical world rather than just the online world.
One of the problems all online shoppers face is what happens when I get something delivered and I am not home? Missed deliveries……..
To address this need Amazon has begun expanding its physical footprint in the US by providing the Amazon Locker. This push first started with the 24 hour convenience chain, 7-11.
It recently announced a partnership with Staples to extend its locker footprint to their stores. Customers can opt to have packages sent to their nearest staples store, they are then emailed a code and have 3 days to pick up their package.
Given Amazon’s mission to save customers money, it is a great strategy designed to expand its options available to customers without increasing its costs substantially.
It is potentially an interesting win-win partnership with Staples who competes with Amazon in the online environment. Staples will get a fee and more foot traffic and Amazon a physical footprint to provide more convenience for customers.
From a competitive standpoint this development also makes sense as the major physical retailers get better and blending online and offline purchasing options. For instance more than half of the sales from Walmart.com are picked up at Walmart stores so customers clearly like this option.
The only way to compete in this environment is to innovate around the ever evolving customer needs, does your company have a customer centric culture?
If you can develop an ongoing unique understanding of your customer’s needs through discussion and observation you will have a competitive advantage.
A great small business example comes from Lex Dwyer, a Melbourne based fitness instructor who repositioned his services as a result of observing customers for hours at a time.
At first he was providing “light relief” at corporate planning workshops by giving executives tips on how to look after their health. He then added to this, physical challenges for managers working in teams, to achieve a specific goal like building a bicycle without assembly instructions. Each team would have an incorrect collection of parts, which needed to be traded with other teams to complete the task. These “games” added value to the planning sessions by incorporating leadership, collaboration and teamwork principles.
However, as Lex attended his clients’ working sessions he was able to design physical challenges as games that reinforced their business goals. He did this by listening to their discussions, observing their frustrations and disagreements and understanding their business challenges.
This insight enabled him to design exercises as a real-time responses to their observed needs and tie their thinking together in a more holistic approach. Lex found he had a particular talent for seeing the “big” picture and tying together his games with the client’s strategy. As a result he repositioned himself as a provider of leadership services and now works with corporate clients and with business schools’ executive education programs.
Net result – delighted clients and consumers, higher revenue and making a difference to people’s lives. Lex’s personal vision of “making a difference” is a reality.
To gain deep customer insights, you have to ask questions and observe customers in multiple ways with disciplined processes. Insight comes from integrating different pieces of information and gaining a multi-faceted knowledge of your customers. It is gained from knowledge of how they think and act before, during and after their purchase. It requires knowledge of the entire customer experience.
Customer insight comes from a deep understanding of customers’ needs and drivers of customer behavior at a level well beyond what customers themselves can explain. These needs are understood from what customers tell us, but more deeply from what we observe customers doing and the frustrations they have in using particular products, services and companies.
Richard Branson, when trying to identify industries to enter a new Virgin service, asks the brainstorming question – “What are 10 things that nobody would say about this industry?” He and his team then prioritize those ideas that would create value for customers and profits for virgin. The next step is decide if a Virgin service can be designed to deliver some of these unspoken values in that industry. It is a great example of outside in thinking, starting with the customer’s pain points or needs and working backwards.
At Mercedes-Benz, rather than asking customers “What do you think of Mercedes-Benz?” a standard question that gets the standard answers about high quality, luxury and so on, they reverse the question –
“What do you think Mercedes-Benz thinks of you?”
This unique twist on a common question results in much deeper insights. Many customers responded initially by saying thing like “ you think we are made of money … that we have all the time in the world”. These responses led the company to find ways of making its car servicing much more convenient for customers and to build in servicing costs to the initial purchase or lease arrangement.
In both cases these are questions designed to get customer insight that goes beyond what customers will normally tell us.
Are you asking the right questions?
Those of us that have worked in the product management world know too well how easy it is to add features to a product without adding value. This is one of the key challenges in business – how do we improve the value we are offering customers without adding cost?
Unfortunately this question is often answered by adding more features to an already feature rich product. The outcome is usually a product that is more complex and often less valuable at a higher cost (thanks to the costs of adding the new features!)
What drives this behavior? Usually is one or more of the following factors:
- The pressure to constantly increase sales.
- The pressure to lead the competition
- Trying to be all things to all customers. (Listening to that one customer that wants a special feature)
- Making assumptions about what customers want without really testing their validity
How do you avoid making this mistake?
Ask yourself three questions:
1. Does this new feature compliment the core purpose of the product?
In other words is it adding value to the problem being solved by the product. For example does it make sense to add a clock to a dishwasher? No! the product is not designed to tell the time, its job is to wash dishes.
2. Does adding this feature reduce the value of other features?
There are many examples of overly complicated solutions frustrating users. Logitech has built a whole business around simplifying remote TV controls which are notoriously difficult to use. It feels like 90% of the buttons on a TV remote are for features I would never use. This makes the whole device seem clumsy and over engineered.
3. If I add this new feature what can I take away?
Regularly review what can be removed from the product and still have it accomplish what the customer wants to achieve. Use the following criteria to prioritize which features must go:
- Features that are costly to support
- Features that detract from other value-adding features
- Features not used by customers
This same thinking applies to everything in marketing. Are adding value or destroying it?