5 ways boards go wrong with their customer strategies, according to marketing specialist Justin Papps

2. Don’t overstate your brand

In the (popular) rush to devise the purpose of a company or a product, companies and boards can often overstate the role a brand plays in a customer’s life.

“Where it starts to go off the rails is where the role of the brand becomes either too worthy or too lofty, or too far away from the service that’s being provided,” Papps says.

An insurance provider should not kid itself that it is helping customers to live their best life. Customers simply want to know that if their home or car is damaged, the insurance company will help them resume their normal life as quickly as possible. A manufacturer of kitchen towel should not kid itself that it is helping a customer to be the best parent or partner they can be. The customer just wants to be able to clean their kitchen bench.

Lyndall Spooner, chief executive of data consultancy Fifth Dimension, says: “Relying on trying to win customers with brand messages that have no relevance or cut through is pointless.”

Product utility is key when it comes to attracting customers, says Spooner. Fifth Dimension research shows that consumers often buy from brands they don’t like, over the ones they do, to access the best products and services for their needs. This is particularly the case in Australia, although it is likely to change over time.

3. Don’t try to be all things to all customers

Papps says: “I think where brands go wrong is that they try and be everything to everybody. At the end of the day, you stand for pretty much nothing. You just blend in with the rest.”

Take a muesli bar. The maker could market it for being low in sugar, great tasting, nutritious, a breakfast alternative, a healthy afternoon snack and gluten-free. But, says the former PWC partner, the company is better to plump on one selling point and be known for that.

“Be the tasiest gluten-free muesli bar,” Papps says, pointing to the Omo brand of washing powder, which “has always owned whiteness and bright colours.”

“So if I’m standing in front of 55 different detergents, it triggers a memory for me which says: ‘That’s about bright colours.’ So I’ll reach for that.”

Papps adds: “Make sure that you stand for something that people attribute to you, not to everybody else. And do that consistently.”

4. Too many metrics

If directors are looking at more than 10 metrics to determine the success of their customer strategy, they are looking at too many, says Papps, (and they usually are). The trick is to find the most meaningful ones.

For customer acquisition, once the desired customer type is defined, it is the size of the potential audience, the current share of that audience and the cost to acquire those types of customers that count.

For retention, it is critical to look at the churn rate of specific customer types, as well as the revenue churn rate, to determine the financial impact of their loss. The other measure to look at can be the net promoter score.

For growth, directors should focus on share of wallet or products per customer, as well as lifetime value and average revenue per user or customer.

5. Don’t forget the long term

Papps says that since the global financial crisis, boards have become “quite obsessed” about short-term metrics. The risk is that management might miss long-term opportunities and trends, such as customers’ changing attitudes to the environment, climate change, diversity and social justice. To Papps’ mind, 60 per cent of a company’s efforts should be on its longer-term customer strategy and 40 per cent on shorter-term sales boosters. Such boosters might include discounts and handsouts of gift cards if an item is bought immediately.

“[That will mean that] if your management comes to you and says, ‘We want to invest in these three new product innovations,’ your question is, ‘How does this help us in the long term, rather than just deliver a quick result now?’

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