Reinventing Customer Models to Be Relationship-Centric

Why Groupon is not a model for your customer engagements

Solution CTO, IBM

At this point, Groupon has become a punching bag for pushing offers that are clearly not of interest to its audience: dog grooming for people who don’t have a dog, paddleboarding for people who don’t like sports—you get the idea. But here’s the thing: while it’s easy to pick on Groupon for this, are you really doing anything different? Probably not. Many businesses have a model that basically goes like this: “We have a product, and we need to find ways to push it to potential customers.” Same as Groupon (minus, perhaps, its attempts at humor). I’ve been spending quite a bit of time cooperatively challenging businesses to be honest about this dynamic, because I don’t think it is going to be viable going forward. In markets where products have been commoditized or where substitutes are freely available (which covers a lot of ground these days), the switching costs for customers will continue to fall, which means you need other ways of keeping customers and increasing wallet share. You have to provide an engaging customer experience—and spamming products at customers is not consistent with an engaging experience. I had a chance to spend time with representatives from a financial services company recently, and I walked them through this dynamic using some of my experiences as examples. (I’ll share those in a later post.) After the working session ended, a very senior person pulled me aside and confided that they were trying to fend off an initiative to push random product offers to customers at every touch point. Yikes. Of course you have to get your products in front of customers. However, trying to increase impressions dramatically without sweating the details on relevance always backfires. Over time, this approach will simply desensitize customers to what you are offering—not to mention reinforce customer suspicions that you care more about your products than your customers. What is the solution? I am not going to suggest that it’s a simple thing, but I do think it must be done: businesses must implement a relationship-oriented, need-centric approach to engaging customers. Instead of products, the customer should be the core focus. Products should be viewed through a lens of service and need fulfillment. The entry point for a product conversation should be the knowledge that the product actually serves a real customer need, and that this is the right time to introduce it. Determining the right time involves both customer need and customer receptivity, which includes being aware of the customer’s state. At this point, you may be asking: How does this approach relate to your data repositories and analytics? The answer is that adopting a relationship-oriented, need-centric approach directly affects these environments because it changes what information you need to store and how you need to store it. It also changes how often your systems interact with the data. For example, does your enterprise data warehouse (EDW) include a notion of customer state—the receptivity to a relevant and timely offer? Probably not. Figuring out the customer state isn’t a task that natively expresses itself in SQL structures. In fact, creating a notion of customer state requires collecting and analyzing a large amount of big data, including lots of spare data, semi-structured data, unstructured data, and time-versioned data. NoSQL technologies are well suited for these tasks. And that brings us back to a Fit for Purpose Architecture discussion. Successfully implementing a relationship-oriented, need-centric approach to engaging customers might require businesses to augment existing systems and deploy technology solutions designed to address a particular need—determining the customer state. Incorporating these new solutions might appear to be a challenging task, but I think it is an inevitable change that will help many businesses move beyond models that repeatedly push irrelevant offers at customers. Does your EDW include a notion of customer state? How do you plan to increase the relevancy of customer offers?   [followbutton username='thomasdeutsch' count='false' lang='en' theme='light']

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