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The Level 4 Customer Value Proposition

Posted by Bill Lee on February 12, 2013 at 01:44 PM

from the February Issue, Reference Point (and adopted from my HBR blog post, "Building Customer Communities Is The Key To Creating Value")

Caution: lengthy post!

'How do we keep our customer reference and advocacy pipeline full?" and "How do we avoid reference burnout?" are two of the most common questions I hear.

 The short answer to these is to make it worthwhile, even compelling, for customers to engage in reference activities. But let me be clear: resorting to incentives, discounts, special deals, freebies, extravagant gifts, and the like are NOT what I have in mind. Such things can seriously undermine the integrity of the reference process. How would you feel if a colleague recommended a cell phone service to you, and you found out later he was being compensated to do so?

Companies who succeed at getting customers to do amazing feats of referencing and advocating are doing so by reinventing the customer value proposition: they're developing what I call a Level 4 Customer Value Proposition. Here I'll outline what this means with a few examples. and included some graphics (below).

Btw, I've presented this to several executive audiences recently--at forum's like Forrester's Technology Marketing Council in San Francisco, an invitation-only Executive Breakfast at the US Net Promoter Score Summit in Miami, and at a meeting of the Dallas Chapter of MENG (Marketing Executives Networking Group), as well as posting on this on the Harvard Business Review site (from which this article is adopted)--and it was greeted with great enthusiasm. Feel free to use this post and the graphics on my blog in your own communications with your boss and senior management (with proper attribution--thanks).

Here's how the progression to Level 4 works, and I think you'll see why companies are finding that this is both effective at getting customers passionate about advocating while preserving the integrity of the process.

 At Level 1. . .

Buyers perceive you as the supplier of a commodity. They're entirely price sensitive. And more companies are at this level than think they are. Think PC makers, who load their computers with features and functionality believing they're adding value and creating differentiation. In fact, the vast majority of their customers not only don't care about such features, but find that all the clutter detracts from the user experience.

At Level 2 . . 

Buyers perceive you as helping them get a job done. They associate your product or service with their desired outcome, and the fact that you help them achieve that in some way that makes you stand out. Significantly (and ironically) companies that reach Level 2 often remove features or functionality that competitors provide. Think Apple, or Southwest Airlines, or for a more recent example, Zipcar.

At Level 3 . . 

You engage the customer emotionally, which strengthens loyalty and retention. And here's where it gets interesting. Some firms have such great offerings (at least, great compared to the competition) that their products or services alone are enough to create significant emotional attachment, again, such as Apple and Southwest (when I fly Southwest, I can actually feel my blood pressure drop as I interact with their friendly people.) 

But not everyone can create such awesome products or services - and even when you do, maintaining that emotional connection through your products and services may be fleeting. (With TiVo, for instance, customers have come to rely on the service so much, they don't even think about it.) Firms that excel in the new world are discovering that they can create strong emotional attachment by moving to the next level...

At Level 4 . . . 

You're helping customers build their social capital - that is, helping them to build and expand valuable support groups and communities.

 Helping customers build social capital may seem far removed from the concerns a competitive business--or a customer reference program--should occupy itself with. But think about it: these days, buyers and prospects are open to receiving, and are even seeking, information from your customers--their peers. Helping your customers build social capital is the way to make it attractive to them to provide this information. Here are some specific ways companies are doing this:

Help customers build their reputation

When Jeff Bezos made the controversial decision to allow customers to post reviews of the books they bought on Amazon's site — a seminal event ushering customer-based marketing into the online world — he reasoned simply that ordinary reader reviews were what buyers wanted. To encourage more of this, Amazon now designates top reviewers on the site and a reviewer Hall of Fame (based in part on ratings from readers), lets reviewers set up their own pages showing their reviews of other books, provides them with a distinctive badge for their pen names, and more — all of which builds their reputation in the book buying community. Top Amazon reviewers are often more powerful than traditional media reviewers. 

Help customers build their affiliation networks

Customer advisory boards — in which a firm's customers provide input and guidance on products and strategy — have been around for years and are often an effective way to gain "buy-in" from customers. Firms like Microsoft are taking this up a notch, with industry councils. These are groups that focus not on Microsoft's products, services and strategy, but rather on a compelling industry issue that is top-of-mind with people in the industry — a significant difference with great appeal to buyers. In particular, Microsoft formed a council that focused on one of the most vexing of all business technology issues: interoperability (the council is called the Interoperability Executive Council or IEC). Once people were convinced that this was a serious attempt to address the issue (and not a vehicle to push marketing), Microsoft was able to attract a marquee list of senior technology executives from around the world. At times, the IEC will address issues that Microsoft can't help with — and the firm will go so far as to bring competitors into the discussion who can.

What's in it for Microsoft? Over time, the discussions and work performed by the IEC have given the firm insider access to the best thinking on this issue, which informs its product decisions, helps it establish thought leadership, and burnishes its standing as a constructive force for the industry. 

Help customers build status in the community

When marketing services and software firm, Eloqua, for example, decided to start recognizing outstanding work and results achieved by firms in its industry with awards, it decided to go whole hog. And for good reason: helping customers build status is an exceptionally valued aspect of one's social capital. Eloqua patterned the awards ceremony after the Emmy awards (it even hired the firm that designs the Emmy statues — calling it the "Markie"). They're awarded at a lavish black tie ceremony at a posh location, where some 20 awards are handed out over the course of the evening. Over the years, the event has built substantial media attention. 

Give them a say

High glamour isn't the only way to help customers build social capital. CSC, which creates financial services software, has built a tier of for-customer communities that allow customers to exchange ideas and best practices, and have a say in new releases. As products or updates are being developed, customers can subscribe to RSS feeds keeping them apprised of new release progress, and provide input — which CSC takes seriously. This can slow the process down, but it creates enthusiasm, as borne out by the numbers. After implementing the process, request rates for new software releases increased 50%.

What do all of these efforts have in common? They build communities that exert positive peer influence across all the relevant companies' markets. The ability to create this kind of Level 4 customer value proposition is the key skill set that companies will need in the new world of marketing.

Here are a few graphics I use to help make this clear to audiences

 

Level 4 CVP-rev_Page_1
Level 4 CVP-rev_Page_2

Level 4 CVP-rev_Page_3
Slide1

Creating the World's Best Customer Video

Posted by Bill Lee on February 6, 2013 at 11:00 AM

Lisa Weber is an Emmy nominatd broadcast producer and writer with over 13 years experience in reality/documentary programming, broadcast news (former television reporter), writing, corporate video work, theater, blogging, and public relations  Her work has appeared on HGTV, the Food Network, DIY, Travel Channel, Dish, CMT, CNN, Britain's ITN, and soon - Destination America.  She strives to find the "story behind the story" in all her projects.  She has also written hundreds of scripts and has interviewed countless people ranging from the "average Joe" to the "high-maintenance politician."  Based in Denver - Lisa holds a master's degree in broadcast journalism from the University of Colorado.   

I'm happy to say she's one of the judges in our World's Best Customer Video contest winners to be announced t the 2013 Summit next month. 

In the meantime, Lisa and I e-chatted about how to create great customer videos. The following is a rich soruce of information for anyone wanting to take their video production to the next level.

 Q. You’re an accomplished story teller through the medium of film and video: in addition to your experience creating corporate videos, you’re also a reality producer and in your previous career, a television news reporter. You know how to move people emotionally. What are the 4 or 5 biggest mistakes you see in corporate videos of their customers?

1 Customers struggling to say an uber-long, super-technical sentence in one breath.  In reality television, we call this phenomenon “verbal diarrhea.”  (Excuse the term but it’s true.)  It’s almost as if they have memorized an extremely long thought and they are trying to spit it out in one take.  

2 Customers sporting all-black or all-white shirts.  These colors look bad on everyone - making everyone appear pale and blah.  Wear bright colors like blue, red, or green.   These shirts look even worse if there’s a white wall behind them. 

3 Bad audio.  Sorry, but the microphone in a laptop is NOT going to do the job.   Neither is the one on the top of the camera.  And don’t hold a microphone in your hand either.  Buy a lavalier mic and clip it under your shirt. 

4 Customers who are NOT smiling.   The customer must be smiling!  This is not an interrogation session, it’s a customer testimony meant to inspire other potential clients.   

5 Customers “not knowing where to look.”  Their eyes are wandering…eyes moving from the person conducting the interview back to the camera lens.  Very shifty looking.  Very distracting.  A big no-no.  

Q.  If you want a compelling “sound bite” from a customer, how do you get one?

 Step 1 is picking a person who is articulate and comfortable.  Think about someone who is comfortable speaking in front of groups.  These individuals are usually comfortable on camera.  

If you are interviewing customers – do your homework.  Write out your interview questions and be prepared.  Also, “lead” the customers into the sound bite.  Have them repeat back the question in their answer.  Tell them ahead of time they need to speak in complete thoughts and sentences.  No “yes” or “no” answers.  Before you know it, they’ll be giving you what you need.  Ask them questions about the new technology or solution made them feel.  Don’t be afraid to ask them to repeat their answer with a smile.  Also, joke around with them in person.  Your mood helps dictate their mood on camera.  Also, stick to one point at a time.  Assure them you will lead the way and bring up all the important points and topics. 

Q. How do you get customers to loosen up and be, well, interesting?  

 Conduct the interview at a convenient time.  Make sure the customers have time to eat breakfast or lunch, dress nice, apply make-up, and feel confident about their appearance.  If it’s a bigger shoot, hire a makeup artist for your customers.  Women love this and will always be in a good mood!  Periodically, ask everyone to stand up and stretch.  Listen to music ahead of time, crack jokes – have some snacks around.  Ahead of time, tell the customer what topics you’re going to be covering.  But do not allow them to hold any notes or cheat sheets!  They will sound like a robot trying to memorize lines if you do this.  Phrase your questions so the customers talk about how the technology or product affected them personally.  How did it make them feel?  Talk benefits instead of listing endless features.  If customers are having a hard time organizing their thoughts, tell them to answer as if they were talking to a 4th grader or a high-schooler.  (Sounds silly, but suddenly people become more animated and simplify their answers.)   

 Q. How hard is it to get a great video of a customer remotely (for example, by having a crew on site but conducing the interview through phone or perhaps skype)?

I would recommend hiring a local producer to conduct the interview.  Over the phone, you won’t be able to see the customer’s facial expressions or mannerisms.   Using Skype could be a possibility, but you don’t want the customer to feel obligated to look at the camera lense…then at the Skype screen.  I think listening in over the phone with the producer is a good way of knowing what’s going on…but ultimately relay on someone in the room to get the best sound bite.    

Q. What should a company expect to pay (ball park) to get 3 good, short videos of a customer, with minimal background shooting (that is, no complex graphics or animation—just a few shots of the corporate campus and perhaps the customer walking or talking to colleagues in the distance)

This is a tough question.  Basically every shoot is different.  Let’s assume though – this is a very basic one-day shoot with a producer and photographer.  They are interviewing three people separately in one location (no moving lights, etc), then shooting some b-roll at the same location in a different area.  (In other words – no driving.)  After this the producer will have a day to write, organize the footage and review sound bites.  Then the editor will have one day to package all three videos, add transitions, insert music, add basic graphics, etc…

 Photographer $1400 per day – 1 day of work (this includes all gear, lights, etc)

Producer $400 per day – 2 days of work 

Editor – 1 day of work (editing the piece)  $600

Total - $2800

If more than one person is being interviewed at a time – hire a soundman for $450.  If you need to producer to “research” and prepare ahead of time – consider that a pre-production day at $400.

Q. Are some customers simply hopeless when it comes to video? (Not articulate enough, not compelling enough) If so, is there any way to screen them before you invest in trying to make a video of them. 

Yes, some customers are hopeless.  Casting is key when it comes to picking the “perfect customer” for the video.  There’s a reason all reality shows (even the ones on HGTV, Food Network, etc) have casting departments.  These producers actually submit casting videos of potential people before they start shooting.  You must find someone who is well spoken, energetic, looks healthy, and knowledgeable.  If you think that’s hard – it’s really not.  For example, think about your family…who would be great on camera?  Everyone has a fun uncle or passionate cousin.  Think about customers the same way. If you’re not entertained in person…you won’t be entertained on camera…trust me.  If you need to “screen them”… talk to them in person, use skype, ask if they’ve ever spoken in front of groups, etc..  Video production companies now often use skype to weed out people…also don’t be afraid to whip out your iPhone and ask the customer a few questions to see how they express themselves.