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Rising competition and introduction of new ways of capturing large amounts of customer data has necessitated advancement in capabilities of organizations to foresee and fulfill customer needs and wants.

Ever more B2C concerns are going all-out to Design Customer-centric organizations.  Organizations pursuing Customer-centricity depend on some type of Market Segmentation.  Market Segmentations assist in understanding the customer more intimately.

This understanding has to be based on solid data.  Even though the collection of customer data is at its highest of all time, organizations are still finding it difficult to apply the insights being offered by Customer Segmentation to propel Change and enhance Performance.  This is the Customer Data Paradox.  With more customer data, it has ironically become more difficult to derive useful insights from the data.

Data-driven enterprises are sensing that their Segmentation endeavors have been unable to provide anything near the extent of benefit they should.  Cause for such failure is development of Segmentations founded on contradictory Business Purpose; purposes that are not widely comprehended or communicated or cannot be immediately acted upon.

Segmentation is indispensable to the process of dealing with the intricacies of constantly evolving and dividing customer clusters and their diverse demands.  Need for developing a company-wide Operating Model that is able to transform this extensive data into valuable information so as to enable improved Go-to-Market decisions is essential.

This intricate Segmentation process can be handled more effectively by following the 4-phase approach to Customer-centric Segmentation:

1. Delineate Purpose
2. Plan around Purpose
3. Functionalize Segmentation
4. Control Implementation

Segmentation offers clarity and insights regarding customer behavior, tendencies, and proclivities.

Customer Segmentation also amplifies the chances of effectiveness of Marketing and Customer Experience management campaigns, and impelling Brand Positioning and Product Development.

Let us look at the 4 phases in detail.

Delineate Purpose

Clearly defining and understanding the Purpose of Segmentation is necessary to set the base for the type of Segmentation effort that is required to be undertaken—i.e., Strategic or Tactical or both.

Strategic Segmentation is applied for all-embracing, enterprise-wide purposes.  Tactical Segmentation is adopted for a far more precise purpose.

Goal is to guarantee that Segmentation results in distinct processes and actions that augment Performance.

Plan around Purpose

Segmentation research needs to be meticulously planned to manifest the Purpose decided, and to make certain that the outcomes are insightful, practicable, and discernable.

Segmentation research has to encompass several dimensions such as behaviors, outlooks, demographics, channel use, inclinations, and profitability.

Functionalize Segmentation

This phase involves determining changes that will take place in the decision processes and communicating them to the concerned business partners so as to deliberate on and devise adjusted metrics that reflect the new capabilities.

Control Implementation

Means for administering change—directed and customized communications arranged to stimulate understanding, interaction, and approval—are required to be utilized completely.

Interested in learning more about Customer-centric Segmentation?  You can download an editable PowerPoint on Customer-centric Segmentation here on the Flevy documents marketplace. 

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“Strategy without Tactics is the slowest route to victory.  Tactics without Strategy is the noise before defeat.” – Sun Tzu 

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics.  Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy.  Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations. 

These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

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– Roderick Cameron, Founding Partner at SGFE Ltd

Potential opportunities always surround leaders.  It is up to them to pounce on those or regret overlooking them, when someone else takes advantage of them.

Leaders’ personal beliefs and assumptions often clash reality.  The trait is categorized as “confirmation bias” in Psychology, where individuals pick the data that supports their existing opinions and approaches and doubt information which defies their mindsets.  Leadership needs to develop themselves to the level to consider the slight hints of the opportunities surrounding them.

There are 10 hidden strategic opportunities that—exist in all businesses and geographies but—are often overlooked by the leadership due to personal biases.  These opportunities go unnoticed because they are often disguised in the form of anomalies and contradictions to leaders’ existing beliefs and assumptions.  It’s up to the leaders to control personal bias; explore anomalies; and develop capabilities to uncover and seize these 10 Hidden Strategic Opportunities before rivals do.

In this article, we will discuss the first 3 strategic opportunities.

Opportunity 1: Assuming a product already exists, but actually it doesn’t.

Most people assume that a certain product already exists.  Its only when an organization ventures into that segment—with a new value proposition—that people realize that there was a void there.  Such gaps are there in almost all industries, but only visionaries are able to recognize and capitalize on them—through innovation and creative product development.  A number of well-known inventions—e.g., tablet computers—were thought to have already existed, but actually didn’t.

For instance, Kate Brosnahan, accessories editor for Mademoiselle magazine, realized in the 1990s that the handbag market lacked stylish yet economical functional bags.  The market at the time was replete with expensive but impractical bags from top designers and functional bags deficient in style.  Kate left her job and founded Kate Spade LLC, with her partner Andy Spade.  Together they began creating fabric handbags which were practical as well as trendy.  Soon, their products started getting appreciation from customers, including media icons.

Opportunity 2: Customer Experience should be anything but strenuous, costly, or irritating (but most of the time it is).

Fragmented and delayed customer experience results in customer churn.  Annoyance caused by poor Customer Experience presents potential strategic opportunity to win customers by fixing it.  They are able to see the bigger picture and strive hard to relieve customers’ aggravation and offer exemplary Customer Experience.

For instance, creation of Netflix Inc. was the result of Reed Hastings having to pay a fine of $40 as late fee for a rented video cassette he had lost.  Leading organizations, such as Netflix, offer quality offerings and provide their customers seamless, quick, and pleasing experiences.

Opportunity 3. An item is often priced low only because not many people know about it.

Hidden merits of a location offers an opportunity for sharp people to invest in for future appreciation.  One of the reasons for inexpensive resources or items is the lack of their awareness and cognizance of their true potential among people.  When people recognize the potential of a property or resource, its price rises steeply.

Interested in learning more about the other hidden strategic opportunities?  You can download an editable PowerPoint on 10 Hidden Strategic Opportunities here on the Flevy documents marketplace.

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– Roderick Cameron, Founding Partner at SGFE Ltd

Research by PwC indicates that leading companies are in a near perpetual state of Reorganization.  This upsurge in Organizational Design initiatives is owing to the accelerating pace of strategic change caused by disruption of industries, changing competitor landscape, customer behaviors, and distribution channels.

Companies opt to commence efforts to restructure their organization in the hopes of enhancing efficiency, perpetuating growth, and surviving in future.  Some shift their Business Models, few alter their focus from products to customer-centric; whereas others adopt new behaviors, systems, or IT architecture.  However, merely a quarter of the Organizational Design initiatives succeed in achieving their anticipated objectives.

The reason for this high failure rate is simple.  Reorganization is not about changing a company’s organogram.  It’s a methodical processes that necessitates transforming / streamlining the decision-making process, mindsets, talent pipeline, reward structures, reporting lines, and the way responsibilities are assigned.

There is no cookie-cutter approach to Reorganization that can work across all organizations.  However, research and management best practices reveal 10 principles that are critical for developing an effective Organizational Design, applicable to any enterprise:

1. Don’t get caught in past Reorganization initiatives
2. Consider Organizational Design elements
3. Transform Organization Chart in the end
4. Don’t overlook top talent
5. Converge attention towards controllable factors
6. Encourage responsibility
7. Use best practices with care
8. Harmonize organizational hierarchy with Strategic Objectives
9. Give due emphasis to intangible elements of organization
10. Make efficient use of company culture and practices

Let’s dive deeper into these guiding principles.

1. Don’t Get Caught in Past Reorganization Initiatives

Leaders at most organizations tend to keep discussing and focusing on the old reorganization initiatives.  This takes away much of their time and energy which should rather be spent on making the current Organizational Design a success.

Organization Design should be created on the basis of an enterprise’s sense of purpose, strategy, core competencies, products, competitive advantage, and experience offered to customers and employees.  Senior leaders need to be able to see the broader perspective, set clear organizational objectives, and steer the workforce to achieve their personal as well as organizational objectives.

2. Consider Organizational Design Elements

Reorganization is a complex undertaking, but a structured approach to Organizational Design assists in identifying and prioritizing key priorities.  Organizational Design has 8 fundamental elements that are important for all organizations, Business Models, sectors, or regions.  These elements can be categorized into 4 pairs.  Each of these 4 pairs constitute a formal (tangible) and an informal (intangible) element:

• Decisions team up with Norms (the way people act).
• Motivators (the way people are influenced to work) pair with Commitments (what affects people’s thoughts about work).
• Information (the way data is processed) pairs with Mindsets (how people process knowledge and meaning).
• Structure (reporting lines) pairs off with Networks (how people collaborate).

Leaders should select fewer, prioritized Organizational Design elements to work on that have the most impact on their organizations.

3. Transform Organization Chart in the End

Most leaders consider Organization Structure to be the most critical element to Business Transformation.  In reality, there are other key organizational elements that need to be tackled first to improve effectiveness.  Revisiting the organogram does not have much effect on the way business is done—or to improve it.  Structure depicts reporting lines and changing it can reduce costs temporary.  Changing structure alone—without transforming other organizational elements—allows the redundant reporting lines to reappear and put the organization back to its earlier state of affairs.  Instead of changing the organogram, core organizational issues should be prioritized and confronted first.  Structure will adjust accordingly once the issues resolve.

4. Don’t Overlook Top Talent

Top talent often go unnoticed when it comes to Reorganization.  The skills and traits of the senior leadership has a profound impact on Organizational Design.  Mapping of technical capabilities and leadership abilities of top leadership is an important step to Reorganization.

Interested in learning more about the guiding principles critical for Organizational Design?”  “You can download an editable PowerPoint on 10 Principles of Organizational Design here on the Flevy documents marketplace.

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“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

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– David Coloma, Consulting Area Manager at Cynertia Consulting

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– Roderick Cameron, Founding Partner at SGFE Ltd

Mergers and Acquisitions enable numerous opportunities for growth.  Organizations pursue these initiatives for a number of reasons—e.g. to expand further, attract more clients, or to broaden their product / service offerings.  Scores of M&A transactions materialize across the globe each year, but not all of them achieve the synergies such deals promise.  As a matter of fact, the success ratio is just around 27%.

The M&A Growth Framework is a structured approach to enhance the odds of a successful M&A transaction.  This approach is instrumental in helping organizations capitalize on growth opportunities locked in M&A deals.  The framework comprises 10 phases scattered across 3 timeframes:

1. Pre-deal Preparation
2. First 100 Days
3. Post-deal Closure

The 10 phases of the M&A Growth Framework organized under the 3 timeframes include:

• PRE-CLOSE PLANNING & PREPARATION
  1. Growth Opportunities
  2. Go-to-Market Strategy
  3. Customer Experience Strategy
• FIRST 100 DAYS
  1. Customer and Partner Readiness
  2. Cross-sell Strategies
  3. Pricing Management
  4. Brand and Digital Presence Building
• POST-DAY 1 ENVIRONMENT
  1. Product and Service Roadmap
  2. Sales Force Transformation
  3. Long-term Revenue Synergies

The M&A Growth Framework facilitates in finding growth opportunities, aligning them with Go-to-Market Strategy, reinforcing Customer Experience, and enabling Organizational Readiness for integration after the M&A.

Let’s dive deeper into the first 3 phases of the M&A Growth Framework for now.

Growth Opportunities

The first step in achieving growth from a Merger or Acquisition deal is to identify and analyze the opportunities essential for growth.

Identification of growth opportunities necessitates:

• Gauging the ability of the new company to enter target markets.
• Conducting one-to-one interviews and Focus Group Discussions with key people from the management and customers to develop points of reference for existing key competencies.
• Identifying and translating growth opportunities into initiatives.
• Quantifying growth with timeline requirements.
• Prioritizing opportunities based on their magnitude, viability, and potential for effective execution.
• Utilizing clean teams to ensure confidentiality of data.

Go-to-Market Strategy

Identification and prioritization of growth opportunities necessitates delineating the Go-to-Market Strategy of the combined entity.  This phase assists in achieving the newly-formed company’s stated growth targets, business continuity objectives, and proficient utilization of unified team and resources.

Key steps involved in this phase include:

• Combining the acquired entity’s product/service portfolio with the buyer’s offerings.
• Ascertaining and prioritizing strategic inputs.
• Translating the information and inputs available into prioritized action items.
• Segmenting the customers and their needs.
• Creating Go-to-Market plans.
• Connecting the sales channels with the unified company’s product mix.
• Ensuring resource readiness, sales targets, coverage, and channel mix.
• Finalizing marketing plans: communication, branding, targeting, product mix.

Customer Experience Strategy

As part of integrating the 2 unified companies, it is critical for the senior leadership to develop and deploy a Customer Experience (CE) Strategy.  A consistent Customer Experience derives more value from existing customers, aids in the continuation of operations, and boosts customer spending.

Key steps in this phase entail:

• Appraising the existing customer experience, interactions, and customer pain points.
• Developing a customer-focused organization by creating seamless CE “personas” and customer journey maps.
• Identifying and ranking CE improvement initiatives.
• Implementing CE enhancement initiatives, monitoring outcomes, and correcting the course.
• Integrating the customers and Customer Experiences of the acquirer and the target companies.

Interested in learning more about the other phases of the M&A Growth Framework ?  You can download an editable PowerPoint on M&A Growth Frameworkhere on the Flevy documents marketplace.

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Most organizations aren’t ready to deliver great Customer Experiences across all channels.  Many of them have invested heavily in conventional methods of doing business, backed by in person or over-the-phone customer experience.  This has led to creation of siloed operational structures within companies, where each silo operates individually.

With the advent of digital channels, these organizations set out to use and proffer their services via digital channels.  They did this by creating discrete digital-product groups in their existing operational infrastructure.  However, their siloed infrastructure falls short of meeting customers’ requirements in terms of seamless communication and interaction across all channels.  The reason being:

• Customers’ utilization of multiple channels and touchpoints across Customer Journeys.
• Requirements of personalized services / products by the customers.
• Anticipation of impeccable coordination and communication by the customers no matter how they interact with the business.

This necessitates the businesses to not only provide great Customer Experiences at each channel, but also make the transitions across these channels simple to improve the overall Customer Experience (CX). However, improving the overall Customer Experience isn’t that simple a feat, especially with silo-based operational infrastructures.  Providing consistent amazing Customer Experience warrants:

• Creation of a robust operational ecosystem through Transformation of internal operations, to respond quickly to customers’ expectations.
• Meticulous design and delivery of Customer Experiences.

Most organizations understand the significance of Transforming their Customer Experience—however, they lack the direction and support required to realize this goal. Organizational leadership can make use of the Customer Experience Pyramid to guide their CX Transformation.

The Customer Experience Pyramid is an empirical research based framework, which is quite effective in not only improving individual touchpoints but streamlining the entire Customer Journeys.  The CX Pyramid entails 2 core dimensions:

• Focus Areas – the organizational spheres that must change to enable provision of amazing digital Customer Experiences.
• Strategic Building Blocks – the strategies that define how this change can take place and made part of the organizational processes to deliver exceptional Customer Experiences.

The 4 Focus Areas crucial in a business to change in order to deliver top-quality Digital Customer Experiences at scale are:

1. Vision and Strategy
2. Talent Management
3. Operations
4. Technology

Let’s discuss the first 2 individual Focus Areas of the CX Pyramid in detail for now.

Vision and Strategy

Redirecting focus on making Customer Experience a part of the Organizational DNA necessitates creating a Vision statement and Strategy to depict, clarify, and plan out the purpose and objectives of serving the customers.  The senior leadership needs to come up with a short and crisp Vision statement.  The Vision sets out the foundation that reflects the leadership’s focus, importance the organization gives to Customer Experience, and the high-level objectives associated with the provision of quality Customer Experiences.

Next, the leadership should work on developing strategies to build fundamental competencies within the 4 CX Building Blocks—i.e., CX operations, metrics, CX-centric culture, systems and governance protocols.

Talent Management

Once the Vision statement has been agreed upon, it’s time to work towards carrying out the required actions to produce customer-centric outcomes.  The first step in that direction involves linking all employees who work in discrete silos (in conventional structures).  To align all employees, there is a need to create a Transformation team and define new roles / CX groups.  The Transformation team should train and direct teams responsible for the different stages of the Customer Journey, instill new ideas, and foster desired behaviors in them.

Senior Leadership need to also assign a CX Team to run the CX program.  The CX Team has to lay out processes and yardsticks to foster cross-functional collaboration and coach functional units to adopt customer-centric design practices in their operations.

Interested in learning more about the other focus areas of the CX Pyramid Framework?  You can download an editable PowerPoint presentation on Customer Experience Pyramid here on the Flevy documents marketplace.

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“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”

– Michael Duff, Managing Director at Change Strategy (UK)

Marketing, these days, is shifting towards developing great ideas and creating customer experiences that consumers discuss further in their circle.  The focus of the marketing effort is on building a brand image.  To supplement this organizations need to develop a culture that lives the brand.

Top brands have been built by communicating their message to the most loyal customers who then shout it out to their friends and a chain starts making the brand a known name.  Leading brands, today, strive to win a place in the minds of their consumers.

Building a brand necessitates a robust Marketing approach.  Prioritizing the main benefits of a product that an organization wants to concentrate on is a critical decision to build a brand.  The Consumer Benefits Ladder (CBL) is one such method that informs the leaders on how to position their customer benefits in their Marketing campaign.  These benefits should be those that are offered to the customers, and are not that the organization gets.  The benefits transferred to the customers bring positive outcomes for the organization as well.

The prime focus of the Consumer Benefits Ladder is to identify the key benefits of a product.  The framework classifies consumer benefits into 4 broad types—symbolized by the rungs of a ladder:

RUNG 1 – Product Availability

RUNG 2 – Product Features

RUNG 3 – Functional Benefits

RUNG 4 – Emotional Benefits

The Consumer Benefits Ladder functions on the principle of developing insights incrementally to build Brand Loyalty in customers.  The concept of the Consumer Benefits Ladder originates from the “Laddering interview” technique used in Psychology and Marketing Research.

The Laddering technique explores an individual’s inner views through a battery of interrelated queries. The responses obtained against each query are further probed more deeply.  The data gathered is refined to build insights, revealing the individual’s fundamental beliefs and ethics, without the person knowing it.

Let’s dive deeper into the individual rungs of the CBL.

RUNG 1 – Product Availability

The initial rung of the Consumer Benefits Ladder ensures the availability of the product in the target market.  This step of the Consumer Benefits Ladder focuses on making people understand what the product is and how they can get it.  It is a straightforward yet effective approach to Brand Building where leading organizations employing this strategy:

• Focus on product availability.
• Add some tone and humor in the delivery of their marketing campaigns alongside their simple product availability-centric strategy.
• Emphasize on price as a huge driver for its customer base and value creation.
• Consistently execute their strategy and strive to win their customer loyalty and repeat business.

RUNG 2 – Product Features

The second rung of the CBL identifies the physical characteristics of a product, its unique offerings, and describes what it does.  Most organizations tend to focus on benefits instead of plain product features.  However, product feature strategy is quite effective when:

• The customers are aware of their exact requirements and they do not want organizations translating their product features into benefits.
• The product features are quite evident.

The Product Strategy based on product features entails clearly listing all the features, brand assets, and competitive advantages that a product offers.  For instance, it outlines the material it is prepared of, its weight, and color.

RUNG 3 – Functional Benefits

The 3^rd step of the CBL Framework identifies the promise you make to the customers and the value (rational benefits) that the customers get from the brand.  A focus on the functional benefits of the Consumer Benefits Ladder necessitates careful deliberation of the brand features, screening them from the consumers’ point of view, and their utility for the consumer.

Interested in learning more about the key steps and rungs of the Consumer Benefits Ladder?  You can download an editable PowerPoint presentation on Consumer Benefits Ladder here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”

– Michael Duff, Managing Director at Change Strategy (UK)

Product Managers are responsible for defining the features or functions of a Product and for overseeing the development of the Product.  The role of Product Managers spans many activities from developing Product Strategy to tactical plan and can vary based on the organizational structure of the organization.

Typically, Product Leaders are involved with the entire Product Lifecycle.  However, the Product Management’s primary focus is on driving New Product Development.  To successfully execute these roles, it’s important for Product Management to collect and synthesize proper, relevant data to make informed Product decisions.

Product Managers need to evaluate 10 categories of Key Performance Indicators (KPIs) to determine the most appropriate KPIs relevant to their work:

1. Product Stickiness
2. Product Usage
3. Feature Adoption
4. Feature Retention
5. Net Promoter Score (NPS)
6. Leading Indicators
7. Top Feature Requests
8. Product Delivery Predictability
9. Product Bugs
10. Product Speed and Reliability

Let’s discuss these Product Management KPIs in a bit detail.

Product Stickiness

KPIs around Product Stickiness determine whether users are re-engaging with our product.  If a product is successful, it exhibit “stickiness.”  That means users don’t just sign up and forget about it.  They continuously live inside the product, such that it becomes part of their daily routine.  A good product should not long attract new users, but to also continuously re-engage with its users.

Product Stickiness is often measured by taking the ratio of our Daily Active Users (DAU) to Monthly Active Users (MAU): i.e., DAU/MAU.  This metric calculates the percentage of our monthly users who engage with our product on a daily basis.

Product Usage

It is inevitable that not all features of a product will be utilized the same.  Some features are more heavily used, whereas others are not.  The only way to know what product features are important to users is by measuring how our product is being used.  Measuring user engagement across the product allows us to answer what features should we enhance, which ones to eliminate, and which features to promote to increase users awareness of the product functionality.

Product usage is measured by using 3 key metrics—Breadth: refers to the number of active users for a given client within the last 90 days.  Depth: Captures whether users are using key features that make the product sticky.  Frequency: e.g., number of logins across all devices within the last 90 days.

Feature Adoption

These KPIs seek to understand and set feature adoption goals.  Key question to clarify these KPIs is whether users are adopting the newly released features.  Feature adoption data of recent feature launches is critical to determine appropriate feature adoption goals.  It is important to look at feature adoption at both the user level and account level.  For instance, different customer groups with an account may exhibit different levels of adoption for different feature sets.

The key metric to measure feature adoption is the percentage of users using the feature.  This should be evaluated across multiple features on a timescale (typically for at least 30 days following the feature release).

Feature Retention

Feature retention KPIs reveal true adoption of features vs. the initial promotion-driven adoption.  Feature Adoption seeks to measure initial use of a feature, whereas Feature Retention seeks to measure the long-term, persistent usage of a feature.  Measuring feature retention helps us identify at-risk users who have started to disengage from the product after the initial promotion is over.  We can then take action to re-engage these users.

Feature retention can be measured across different customer segments, e.g., by pricing (Free vs. Paid), by organization size (Startups vs. Enterprises), by position (Analyst vs. Manager).

Interested in learning more about the other KPIs critical to manage and develop a Product Portfolio?  You can download an editable PowerPoint presentation on Product Management KPIs here on the Flevy documents marketplace.

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Enterprises invest in Analytics to improve Decision Making and outcomes across the business. This is from Product Strategy and Innovation to Supply Chain Management, Customer Experience, and Risk Management. Yet, many executives are not yet seeing the results of their Analytics initiatives and investments.

Every organization putting on investment in Analytics has experienced several stumbling blocks. This differentiates the leaders from the laggards. Analytics-driven Organizations have clearly established processes, practices, and organizational conditions to achieve Operational Excellence. Their commitment to Analytics is creating a major payoff from their investments and a competitive edge.

What It Takes to Be Analytics-driven

The Harvard Business Review Analytic Services conducted a survey of 744 business executives around the world and across a variety of industries. Their focus was on the performance gap between companies that have struggled to get a return on their Analytics investment and those that have effectively leveraged their investment.

The survey showed that Analytics-driven Organizations get sufficient return on investment in Analytics. In fact, they have been highly successful in gaining a return on Analytics investment. This is gainfully achieved as organizations use Analytics consistently in strategic decision making. Executives of Analytics-driven Organizations rely on Analytics insights when it contradicted their gut feel.

Essentially, Analytics-driven Organizations have reduced costs and risks, increased Productivity, Revenue, and Innovation, and have successfully executed their Strategy. Yet, in evolving the organization’s Analytics approach, there can be 4 core obstacles that can affect their drive to getting a greater return on investment in Analytics.

The Core Obstacles to Finding Return on Analytics Investment

There are 4 core obstacles to being an Analytics-driven Organization.

Let’s briefly take a look at the first 2 obstacles:

1. Communication and Decision-making Integration. The lack of Communication and Decision-making Integration limits the integration of Analytics into workflows and decision processes do not reach decision-makers. As a result of these core obstacles, the use of Analytics is limited in specific areas.
2.  Skills to Interpret and Apply Analytics. A second core obstacle is the inadequate skills of business staff to interpret and use Analytics. In fact, the survey showed that only one-quarter of frontline employees use Analytics with only 7% using Analytics regularly.

The other two core obstacles are siloed and fragmented Analytics and time delay. These are two equally important core obstacles that can hinder the use of Analytics to maximize return on investment. Further, the 4 core obstacles are barriers to analytic success.

Are You Ready to Be an Analytics Leader?

Leaders use Analytics consistently in decision making. In fact, based on the survey, 83% of executives use it in business planning and forecasting. On the other hand, laggards only use it 67% of the time. Even in various aspects of the organization such as Marketing, Operations, Strategy Development, Sales, Supply Chain, Pricing and Revenue Management, and Information Technology, laggards use Analytics only half the time compared to Analytics Leaders.

Analytics Leaders always ensure that they establish the processes and organizational conditions to allow them to successfully deploy Analytics. In fact, to increase return on Analytics, organizations must undertake the use of four interrelated initiatives that will drive greater return on investment Analytics. These are four initiatives essential to building an Analytics-driven Organization.

One is building an organizational culture around Analytics. To achieve this the organization must have clear, strategic, and operational objectives that are set for Analytics. Second is deploying Analytics throughout all core functions of the business.

Starting with an Analytics-driven Culture can greatly facilitate cross-functional deployment of Analytics.

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With startups ready to disrupt traditional players, established firms need to form an even stronger bond with their customers, instead of waiting for customers to reach out to them.

The traditional Customer Experience model — referred to as the “acquire what we make” model — is characterized by occasional interaction between the companies and the customers, once a customer ascertains her/his needs and looks for products or services to fulfill them. In this model, companies do all they can to offer quality products or services at a competitive price, while their marketing and operations are based only on brief engagement with the customers. Because of the occasional connection with the customer in this approach, the vendor has little knowledge of the difficulties a customer faces to procure a product or service.

With each passing day the tactics that organizations use to connect with their customers are undergoing rapid transformation. Technology and customized digital interactions provide companies the means to build deeper relationships with customers. Organizations pursuing Customer-centric Design, today, are addressing customers’ needs the moment they occur — or even before that by virtue of “Connected Customer Strategies.”

Connected Customer Strategies call for the companies to maintain customer relationships round the clock (24×7). These strategies demand from the organizations to develop an assortment of new capabilities (e.g., invest in Big data and Analytics), connect with the customers on a regular basis, track their activities, and offer customized experiences and offerings. These strategies are not about using modern technology, rather the methods companies should adopt by using technology in creating delightful experiences and long-standing associations with the customers.

There are 4 distinct Connected Customer Strategies that are instrumental in developing exceptional Customer Journeys:

1. Fast Response
2. Personalized Recommendations
3. Proactive Recommendations
4. Automatic Execution

Let’s take a deeper dive into the first 2 strategies, for now.

Fast Response

Organizational Leadership needs to carefully consider adopting the most suitable connected customer strategy. The Fast Response strategy, as the name suggests, is about prompt and flawless delivery of required services and products to the customers. To adopt Fast Response strategy, organizations need to ascertain the customer requirements carefully and simplify their purchasing process.

The core capabilities needed to implement this strategy include prompt delivery, minimal friction, flexibility, and precise execution. This strategy is appropriate for knowledgeable yet authoritative customers who dislike disclosing their personal information. Using this strategy, a prompt response to a customer needing replacement of a product should be a simple yet accurate, couple-of-click online ordering process and the order should be delivered a few hours later. The aim of the Fast Response strategy is to reduce the amount of time and energy the customers spend on procurement as much as possible.

Personalized Recommendations

Organizations using Personalized Recommendations strategy help customers identify their needs by presenting various options to them. The strategy involves active involvement of firms in assisting their customers by offering a menu of customized offerings — as soon as the customers have finalized their requirement but before their decision on how to fulfill it.

This strategy is suitable for customers who are willing to share their data with the company and value advice but still hold the final say. With the Personalized Recommendations strategy at work, the journey for a customer needing a product replacement could simply involve the customer’s visiting a company’s website, automatic suggestions to customer about the correct product based on her/his prior shopping history, the customer ordering the suggested product, and receiving the delivery a few hours later.

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The use of the Internet and other online tools have turned consumers to be more empowered and are now shopping differently. Customers are becoming more demanding and accustomed to getting what they want.

With greater access to reviews and online rating, customers are better equipped to switch to new products and services. Consumers now want to buy products and services when, where, and however they like. They expect companies to interact with them seamlessly, in an easy, integrated fashion with very little friction across channels.

As customer expectation continues to evolve–accelerated by the amplifying forces of interconnectivity and technology–markets are becoming increasingly fragmented with demand for greater product variety, more price points, and numerous purchasing and distribution channels.

Companies should be able to adapt to these increasingly disparate demands quickly and at scale. Staying close to the Customer Experience across an increasingly diverse customer base changing over time is no longer a matter of choice. It is a business imperative and a matter of corporate survival.

The Age of the Customer now calls for companies to be a Customer-centric Organization. Successful ones have discovered that driving customer-centricity depends, first and foremost, on building a Customer-centric Culture.

The Case for Customer-centricity

In the Age of the Customer, business as usual is not enough. Customers expect companies to interact with them seamlessly. Customers want companies to anticipate their needs and technology must have lowered barriers to entry to allow unorthodox competitors to disrupt markets.

The Age of the Customer has made it imperative for companies to have a customer-centric culture. A Customer-centric Culture can empower and control employee behavior. It is a culture that prioritizes the common understanding, sense of purpose, emotional commitment, and resilience. It is a culture where leaders and employees understand the company’s brand promise. Finally, and most importantly, a customer-centric culture is a culture that is committed to delivering exceptional customer experience.

Companies with a customer-centric culture must integrate, within its core, primary and secondary cultural attributes essential to complete its customer-centric culture framework.

The Corporate Culture Framework: Its Primary and Secondary Cultural Attributes

In a customer-centric Corporate Culture framework, the primary cultural attributes are critical in building a customer-centric culture. It also has 4 Secondary Cultural Attributes to complete that transformation.

The 4 Primary Cultural Attributes

1. Collective Focus
   This is a shared vision articulated on what it means to deliver great customer service. Significant resources are devoted to communicating the customer value and all employees understand their role in delivering value.
2. External Orientation
   External Orientation is having a full understanding of the company through the customer’s eyes. Outside-in perspectives are taken, seeing themselves as customers see them.
3. Change and Innovation
   In Organizational Change and Innovation, the corporate value system is in place that values failing fast and learning quickly. The notion that mistakes are learning opportunities is embedded in the organization.
4. Shared Beliefs
   Shared Beliefs is an attribute where employees share a common ideology and commitment to core values. The company strongly encourage strong service mentality and the desire to help others.

The 4 Secondary Cultural Attributes

1. Risk and Governance
   In Risk Management and Governance, the company must have a strong collective focus and shared beliefs about the boundaries of acceptable risk and appropriate behavior.
2. Courage
   A Customer-centric Culture with this secondary attribute has the resilience to bounce back when things don’t go as planned.
3. Commitment
   Commitment is the third secondary attribute where employees show dedication to the customer-centric ethos.
4. Inclusion
   Inclusion, the fourth secondary attribute, is one attribute that reinforces values diversity, authenticity, and uniqueness.

Inculcating these attributes has become imperative to achieve a successful transformation towards a Customer-centric Culture. Organizations just need to master the necessary practices to instill these attributes and the essential reinforcement to ensure that it is sustained.

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