Manufacture Customer Insight: Industrial Revolution Principles for Today's Information Age

The industrial revolution happened over a period of about 200 years starting in the mid-1700’s and lasting to the mid-1900’s. The core pattern of this period was the application of mechanical methods to meet the needs of the many in a more scalable, cost-effective way. For example, the first industry to kick off the industrial revolution was textiles. In the early 1700’s all garments were made by hand. The wealthy could afford extremely high quality, comfortable, tailored, and expensive handmade garments. However, most people could not afford these clothes and had to make their own. The idea was to apply machines and water (later steam) power to produce many garments at much higher quality than home-made ones with an extremely high degree of consistency, but less quality than those created by the high-end, skilled tailors of the time. The result was a complete transformation of business and society.

Today’s Problem – Providing Your Customers with Valuable Information and Insight

Today’s problem is that supply exceeds demand for many products, driving prices so low that companies are under massive margin pressure. As a society, we have migrated out the industrial revolution, past the age of mass communication, and are in the early stages of the information age. Yet, the methods most companies have to develop, create, distribute, and manage valuable information is very much in the same state the textile industry was back in the 18th century.

Truly valuable information that will help targeted buyers solve problems is mostly “home spun” by sales people in the field. They are supplied with some basic ingredients (product information, positioning, corporate branding, etc), but how these materials are woven into something meaningful for customers is extremely inconsistent. In most organizations, 80% of their new revenue comes from 20% of their sales force (the people who have perfected the craft of tailoring the information provided into valuable insights for customers). The other 80% of the sales force has varying degrees of capability to create customer insights from mountains of information.

How are Companies Combating Commoditization Forces?

Most companies have realized they need to add more value to their clients to create differentiation. They are retooling their sales organizations, investing in tools to sift through data sources to collect intelligence, lowering their costs to provide greater pricing flexibility, and are packaging their portfolio into “solutions”. While these efforts are showing modest improvements, its also creating greater expense and waste in the sales and marketing system – the groups who are ultimately responsible for creating and communicating those insights critical for developing sustainable competitive advantage.

The Current State of Developing Customer Insight is Very Similar to how Clothes Were Made in the 18th Century.

Companies are really struggling with creating differentiation, and in today’s overloaded world, one way to be different is to sort through the variety of information available and turn it into valuable insights to customers. The big opportunity here is to modernize the customer insight development process into something more consistent and scalable.

The concept isn’t new – it’s a value-added process similar to assembly lines. How effective would Henry Ford have been if all of the carburetors were created by hand to one specification and drive shafts were created by another team with similar design principals? The result would have been a car that was too expensive that required heavy tweaking once completed because the different design points between carburetor and drive shaft would have to be ironed out before being shipped. This would defeat the whole purpose.

Today, companies are pursing similar, poorly coordinated approaches to customer service and sales. And very similar to the textile problem that helped launch the industrial revolution; real customer focus is a luxury that can only be afforded for a few key large accounts. It requires a 100% customized approach (just like the high quality garment makers who could satisfy the needs of the very wealthy). Today companies are making investments in strategic account programs but stop short of figuring out what is required to make the whole engine efficient enought to be rolled out to all customers.

Model, Map, and Match – Three Steps to Building a Customer Insight Assembly Line.

There are 3 high level steps to follow to begin building a “customer insight” assembly line in your company.

• [u]Model[/u] your customers – you don’t need to be an expert in their business, only an expert in how you can help their business. Find common patterns across your customer base from all levels and dimensions. Understand the steps both individuals and groups go thought to solve problems, secure budgets, and initiate buying processes. Package the “know how” that you have (or can get) that will make their problem solving process easier and you’ve got a solid framework to work from.
• [u]Map[/u] your messages and content to the framework – The mountain of information you have (content, reports, data feeds, you name it) in reality lacks a suitable structure to provide the “fuel” which will power your customer insight assembly line. Use the model of a successful customer outcome to identify cross-function inputs and outputs, process and application integration opportunities, and develop a more dynamic way to present information in the context of customer patterns.
• [u]Match[/u] customer patterns to mapped content – The key issue here is simple. With a well structured value framework (based on best practice client outcomes), you can develop simple tools to help sales people identify common patterns in your client base and match those patterns to the right information, for the right person, at the right time.

Just as the assembly line created huge competitive advantages for first movers, so too does developing customer insight assembly lines. We’ve tremendous results downstream of this process – with sales performance. Some results include:

• 100% increase in revenue in one year for a $25M company
• 400% increase in operating margins from 8% to 30% for $30M Unit
• 43% improvement in average selling price for a $200M company
• 50% reduction in sales process time for a $200M company
• 25% increase in close rates for a $150M company

The bottom line here is that we are rapidly approaching diminish returns by trying to maximize point issues (training sales people, new demand generation techniques, pocket tool investments, etc). The low hanging fruit for higher yields is to begin to look across the silos of your organization, and build a blueprint of your value communication process so you can see how all of the information you are providing to your customers adds or doesnt add value to the people you are trying to influence.

From there, spend the time to create an authentic, actionable framework to add value and then focus on producing, distributing, and maintaining the information required that will genuinely help your customers. If you take a customer first view point, and find simple areas to pilot the approach, your can get going quickly and begin to “fix the plane while it’s flying."