Over the past 6 to 12 months, we’ve had a lot of conversations with Life Sciences leaders about customer strategy. Based upon these conversations, we’ve noticed something interesting and, perhaps, obvious: it’s a lot easier to define customer strategy than it is to implement customer strategy. In our view, struggling to implement customer strategy may be an indication that something is wrong with the definition. .
Through our work in and outside of the Life Sciences industry, we have developed a customer strategy process that first defines what it is, and then lists 3 key steps to implementation. Let’s start with a definition:
Customer strategy is a decision making process in which corporate assets are invested in the delivery of experiences against a portfolio of segments and customers. These experience investments create an expected economic return and have a direct impact on overall business performance.
Note that customer strategy is not simply “getting the right message to the right customer at the right time”. Customer strategy is bigger than that, focusing on managing each customer experience in an optimal way that drives sales and profit.
The 3 key steps to customer strategy implementation are:
- Enterprise Segmentation. Developing a single view of the customer across the entire organization is the critical first step in enterprise segmentation. This will ensure that each brand and customer service group are all looking at the customer the same way. Enterprise segmentation should include attitudinal information (e.g. why they buy, why they engage in promotion, beliefs about your product vis-à-vis the competitor’s, etc.), customer value, and how consistently the customer has been engaging with the product over time. Other dimensions can also be added, but these three need to be included in every enterprise segmentation solution.
- Portfolio Strategy. Next, we need to determine how much to invest in each customer segment. To do that, we first need to understand the opportunity for sales and growth across the portfolio. This is done through a comprehensive data analysis that produces indices enabling easy comparisons across the segments. Next, a portfolio financial model – a pro forma – is developed showing the revenue, cost, and profit from the portfolio promotion. This model aggregates the financial gain from each customer segment to obtain the portfolio view. Once finalized, the pro forma metrics are then used to benchmark actual campaign performance. Based upon the pro forma, the portfolio promotion strategy is finalized.
- Segment Strategy. Lastly, the portfolio strategy is then mapped to a detailed segment strategy. This strategy focuses on defining the products, media, promotion, and experiences that will be developed and targeted to each segment. The segment strategy is tailored to specific characteristics of the customers within the segment and as the campaign unfolds, will continue to be optimized for that segment.
Developing a customer strategy, which is of the first step in our connected CRM (cCRM)™ framework, is critically important for the following reasons:
- It gives leadership a systematic way to manage their customers
- Strategy is built around experiences delivered to segments and customers with an expected return
- Provides clear direction on where to invest against segments
- Provides direction on promotion and product mix
- Provides consumer insight into the overall experience delivery, - the next step in the connected CRM framework
For more information about developing your customer strategy or to view case studies from companies such as MetLife, Citizens Bank, and Disney, please click here.