In today's competitive market, organizations need to stand out. But for many, there are some obstacles standing in the way. Michael Vickers, executive director of Summit Learning Systems and author of Becoming Preferred: How to Outsell Your Competition, talks about these obstacles during many of his speaking engagements. In fact, he'll be presenting the opening keynote at the 2012 CRM Evolution conference at the New York Marriott Marquis (August 13-15, 2012). His presentation will not only cover these obstacles, but it will also help attendees figure out how to add three distinctive values to their customer experiences and how to employ "the five customer values," so organizations won't have to compete in a price war.
Vickers spoke with CRM Editorial Director David Myron about the biggest problems facing businesses today, such as the speed of change, misalignment of growth strategies across departments, and dysfunctional buying processes. Here's an excerpt from the interview:
Myron: What are the biggest business problems facing organizations today?
Vickers: There are several problems that they have, and they are all integrated and related. One of the first major challenges I see with businesses today is the speed at which things are happening—the speed of change, if you will. Companies can either change or be changed. Things are happening so quickly. Companies are having a lot of difficulty staying ahead of the curve on the old innovation model. So a lot of the old business models are becoming obsolete faster than companies are adapting.
The graveyard is full of companies like Polaroid, which should have invented digital photography, but couldn't even see it coming. Apple obviously revolutionized the industry with music and created iTunes. [This left] Universal Music, which was the traditional way of distributing music, barely in existence. Who should have invented the iPhone and iTunes is probably Universal. We're seeing it with publishing, we're seeing it with education, we're seeing it with healthcare. There are lots of examples of companies that are at the top of the heap today, but within a year or two, they will be basically falling behind the curve.
Then, we have a problem aligning our growth strategies within organizations. We've got lots of silos within organizations. In all the companies I used to work with, marketing is different from sales, and the service department is over here, and shipping is over there. Each one looks out for their own turf without aligning what the strategy is and what the profit picture is or what the cost-cutting measures are, or anything related to the growth of the organization. So, fundamentally, we end up with an organization that's just basically in a state of chaos—always trying to figure out what to do and what's going to be the next flavor of the month.
We also have—and this is one of the more important ones from my angle—a dysfunctional buying process. The whole entire buying process is dysfunctional because we basically have a dysfunctional selling and service process. A lot of competitors are coming to the marketplace, and they use price as an offensive weapon to gain market share and, then, consequently, it becomes a price or commodity issue. Those are some of the overall challenges that organizations face today.
Myron: How is the speed of change negatively affecting businesses?
Vickers: With the speed of change, we've got the innovation curve, where you've got the early adopters. What happens is organizations are typically scared to make that leap and be on the front side of that curve. So when a new technology comes into the marketplace, the early adopters are the first ones on it, and usually the smaller, more nimble organizations are the first ones out of the gate. Then once it hits critical mass, or the laggards come on, all of a sudden they're adapting. By that time, we're already working on a new model. It's like when social networking came into play—let's call that a technology, if you will, even though it's an enabling process—a lot of companies are still figuring out their social media strategy when we've had it for several years. Twitter has been around for five or six years. A lot of companies are using those technologies as part of their service processes, and we're seeing that more and more.
Companies generally have an R&D department; they put so much of their budget toward R&D. Really, innovation should be a companywide function and not just [belong to] a department. They need to put rewarding strategies [in place] for their employees to be innovative. A lot of employees who have great ideas are sometimes more creative than the people who are actually creating the products. We have a lot of left-brainers who are in the laboratories, but we have a lot of right-brainers who are on the front lines—these are the people who can actually see the practical applications of things. That's the challenge, and then obviously the investment: How do we choose a technology? But I would rather companies fail on the acquisition of technology than not try at all or wait and become a laggard. They have to make their best guess and maybe go with some of the [companies that] have been champions in the past.
Myron: Can you elaborate on the dysfunctional sales and service processes and how they are harming businesses?
Vickers: I ask organizations all the time, "Which are the most important functions and what should be our top priorities?" And I list on a flip chart all the different priorities that they have within an organization and all the things they have to do and list them in order of priority. What's the most important? They're never on the same page. They're never aligned whatsoever, even within departments themselves. If I were to ask the sales organization—"What is everything you do? And rate them based on order of priority [as far as] driving bottom line or margin or profitability within the organization."—they'll be completely different. So, if I ask 10 different salespeople, I'll get 10 different responses. We've got people off doing different things that they think are the most important things and we're not seeing that alignment.
Myron: How does this affect the way sales and service professionals interact with customers?
Vickers: What happens is the salespeople tend to project their processes onto their customers. For instance, if they're frugal in their buying, they tend to think everybody is frugal. Or if they apply a certain bias, they think everybody has that same bias. What happens is they typically come in thinking that price is the only reason that people actually make a purchase decision. And we know that is not accurate. It's created this dysfunctional buying process, because the salespeople and the service people teach us how to respond to them by virtue of how they conduct their business.
The challenge we have is this: Whoever has the highest service standard in business today just raised the bar for all of us. When I get off the phone with Dell or Apple or HP, and I'm having my equipment shipped to me by FedEx, and I'm booking a flight with JetBlue and staying at a Four Seasons hotel, and I'm going to Starbucks, and then I come to meet you at your place of business, I'm judging you by those same standards. What we've got to do is pull our heads up out of our own business models—don't look inside your own business for extraordinary—and look outside at who's extraordinary and then model it.
Myron: If left unchecked, how will these current problems affect businesses in the next few years?
Vickers: I'm a Darwinian when it comes to business. Sometimes, this is a necessary part of the evolutionary process. Basically, you'll get your lunch eaten and you'll be eaten by someone who's stronger, faster, and better than you. Maybe that's the way it ought to be.
If you look at the Fortune 500 from 25 years ago, these are the companies that we heralded as the very best in the world. Seventy-five percent of those companies don't exist anymore. Why don't they exist? Look at BlackBerry. It took one year for the iPhone to dismantle BlackBerry, and now BlackBerry is scampering. This is why companies can't rely on their old models anymore. They've got to become flexible and adaptable, look at those needs from their clients, and then fulfill those needs.
Myron: So what will your keynote presentation at the 2012 CRM Evolution conference focus on?
Vickers: I'm going to focus on a number of different issues that I think are important. I ultimately believe that people are our most important asset. The way we make intellectual capital grow is we focus on our people and we educate our people. So I'm going to focus on how do we up-level the brand experience. It's moved beyond service and providing product. It's really evolved to what we call the experience economy.
The best experience always trumps a service. So we've got to create a customer experience through all of our touch points. I will help them align and show them how to identify all of their touch points across the organizations. When I ask organizations, "How many touch points do you have? How many times do you come into contact with your customer?" I hear answers like "eight times," "seven times," "five times," "nine times." When we actually go in and do the math and we look at the touch points, we really see it's 30, 35, 40 times. So everything from accounting to marketing to customer service to every department within the organization, to our statements, our phone conversations—all of those things are touch points. How do we up-level those touch points? How do we determine which ones we are going to up-level? How do we create high-touch moments? We live in a really high-task, transaction-based economy and we have to move. To compete effectively, we have to move from a transaction-based economy to an experience-based one. We have to transform our business so that we create the best experience. The best experience really wins. Then, how do we create that distinctive value so we can fully differentiate ourselves in a highly congested marketplace?
Then I'm going to show them the different forms of distinctive value. There are three types: Number one is product-based distinctive value. How do we create that? Number two is service-based distinctive value. How do we win through our service? It's not just by copying someone else. Number three is knowledge-based distinctive value, because we live in a knowledge-based economy as well. How do we partner with knowledge so that we can make our value distinctive?
Lastly, I'm going to show them how to employ what I call "the five customer values." This list will show them how to add value to their offering and bring value as the customer defines it. The first is "money"—most of them know how to work with that. The one thing I will say about price, though, is that price is never the issue, unless it is the issue. And when it's the issue, it's the only issue. The question should never be, "What are we going to do to lower our prices so that we can become more competitive?" That should never be the question, because there can only be one price leader. The question should be what value do we need to bring to the marketplace that the market will pay a premium for? I want to show them how to build up that value. I look at what the market values, and I'll show them how to add four more customer values to their offering. The second one is time. I'll show them how to employ time from a value point of view. I'll also show them the currency of prestige, the currency of reliability or security, and the currency of knowledge.
When you can employ all five of them and align them into your offering, you have better experiences, and the customers feel like they're getting their money's worth and then some.
For more information, register for the CRM Evolution 2012 conference, where you can see Michael Vickers' complete keynote presentation, as well as more than 30 additional presentations from CRM consultants, analysts, and practitioners.