Three steps to define your partner in life strategy
The ‘Offer You Can’t Refuse’ model of my new book consists of four layers: product quality, digital convenience, partner in life and changing your world.
The minimum is of course to provide customers with a good product, good service and a good price. On top of that, digital convenience is important, but at the same time it is becoming a commodity. In my model I describe two strategies to differentiate your customer strategy in the next few years: a partner in life strategy and a change your world strategy. In this article, I would like to dive into the partner in life strategy.
The three steps to a ‘partner in life’ approach
To successfully implement a ‘partner in life’ strategy, you need to generate a continuous process of movement, consisting of three steps:
- Developing an excellent understanding of the needs and frustrations in the life of your customer.
- Use this understanding to describe in detail the customer’s life journey.
- Implement ‘partner in life’
In other words, you need to acquire insights that will allow you make a concrete description of your customers’ lives, which you then seek to influence positively through concrete actions. If correct, these actions will prompt new behaviour in the customer, leading to new insights, a revised description and a further set of concrete actions. And so the gradual refinement of your ‘partner in life’ strategy continues. The faster and more effectively you can repeat this circular process, the easier you will find it to differentiate your company from your rivals in your sector.
- Developing an excellent understanding of the needs and frustrations in the life of your customer
Every customer has dreams, fears and ambitions. As the first step in your ‘partner in life’ approach, you need to put in place a system that will give you continuous insight into the emotions of your customers. A one-off market research study or a closed questionnaire will not give you the information you need. This can only be obtained by observing consumers in their day-to-day lives.
Many companies still focus their market research almost exclusively on the relationship between the consumer and the company. A bank will look at the extent to which its apps and online tools are suitable to meet the financial needs of its customers. A retailer will look to see if its range and the way it is offered still match customer expectations. A car manufacturer will look at whether its brand is still sufficiently attractive and whether all the functions of its cars are sufficiently well known.
Of course, all these questions are highly relevant but they concentrate on the company’s transactional relationship with the customer. To become a partner in life, it is necessary to understand the bigger issues that play a role in the customer’s thinking. For example, as a bank it might be interesting to learn about people’s dreams and ambitions – a new house, a trip around the world, etc. – so that you can see how the bank can help to achieve their realisation. In much the same way, the customers of retailers might be interested in living a healthier lifestyle, but without exceeding their monthly budget. And the customers of the car manufacturers might have more questions about improved mobility than about the performance of the car itself. Gaining insight into the wishes, dreams and fears of people that relate in some way to your sector is the first step towards becoming a partner in life.
- Describe in detail the life journey of your customer
In recent times, companies have invested huge sums of money to map out the customer journey. This is the path that a consumer follows to finally purchase a particular product or service. The object of this mapping exercise is to allow companies to better optimise their own sales, marketing and service processes. In due course, this leads to transactional perfection. For this reason, the exercise is a valuable one and it forms the basis for transactional perfection.
But to become a partner in life, what you really need to map is the customer’s life journey. This no longer has anything to do with the optimisation of your operational processes. Instead, it aims to reduce the frustrations and help realise the dreams in the life of your customer. The following visual highlights the differences between the two journeys.
- Implementing ‘partner in life ‘ actions
Once you have a thorough knowledge of the dreams and fears of your customers, you can describe their life journey. Having done that, you then need to move on to the development and implementation of ‘partner in life’ actions. There are four possible strategies by which you can achieve this. These strategies can be used individually but you can also combine several or even all of these four strategies.
Strategy 1: from product to service
The evolution from ‘selling products’ to ‘providing access to services’ has already been taking place for quite some time.
Thanks to Netflix, we no longer need to buy DVDs, because we have access to an almost limitless library of video content. Thanks to Spotify and other music streaming services, we no longer need to buy CDs, because we have access to their massive digital music archive. Companies like Spotify are now partners for music-lovers.
At the end of 2019, I was able to interview Tien Tzuo (you can listen to the full interview via my podcast). Tien Tzuo is the founder of Zuora, one of the leading software companies in the subscription economy. He is also author of the book Subscribed. Tien is convinced that in years to come almost every industry will be able to make the transition to the subscription model. ‘This might sound like a big step,’ he explains, ‘but when Software-as-a-Service (SaaS) and Cloud were first introduced they also sounded like something from another world. But today most companies do not want to return to a model where they are the owners of their own servers and software. As a result, the entire software industry has already made the switch to subscription.’
In a world where transactional perfection is crucial, the key question is: ‘Will my pizza be delivered quickly and correctly?’ As soon as services become crucial, the question will be: ‘When I am hungry, can I choose what I want to eat from a good range of meals?’ With this second question the customer is looking for a partner in life for food. He or she already takes transactional perfection for granted, because it is the new minimum.
Strategy 2: from services focused on the core to solutions for the entire problem
During recent times, many companies have focused on top quality for everything related to the own direct service provision. Of course, this is fantastic and logical. But often what the customer really needs is more broad-based help.
A few months ago, we noticed that our home internet was working very slowly. It took ages to upload and download even relatively straightforward files. Clearly there was something wrong with both the internet connection and wifi. We phoned the helpdesk of our telecom provider and were helped in a friendly and efficient manner. An appointment was made and a few days later an equally friendly and professional technician visited our house to assess the problem. His conclusion was the same as ours: the internet was much too slow. He checked the modem in the garage and all the intermediate connections, which allowed him to reach a second conclusion: ‘Your modem is working and the connections are all in order. Your problem must have some other cause.’ It was hard to argue with this analysis, but we were curious to know what his next step would be. ‘I’m afraid that means there is nothing more I can do for you. You will have to call in an IT company to see if they can find out what is wrong. All I can say is that our company is not the cause of the problem…’
With that, he closed up his toolbox and left. In terms of process, friendliness, speed and professionalism, it was hard to criticise his service and, by extension, that of our telecom provider. Everything was perfect, transactional optimisation at its best. Even so, we, the customer, were still left saddled with our problem. So where to go from here? Honestly, we had no idea. ‘Call in an IT company’ was his advice. But what company? And what do you tell them? It is at moments like this that a partner in life will investigate the problem until he has discovered the cause and provided a solution. A partner in telecom needs to look beyond his own modem and connections. He needs to keep on looking until the customer has been helped.
If you agree with my contention that human energy is a scarce resource, then helping customers with a ‘total package’ is a smart strategy.
The providers of financial services nearly all segment their customers on the basis of their available capital. The largest group consists of what might be called ordinary customers, followed by a group that can invest a sum of 250,000 euros and a further group that has capital in excess of one million euros (private banking customers).
Private banking customers know what it is to have a financial partner in life. They can call on their bank for all kinds of financial, legal and fiscal advice. The challenge for the banks of the future is to provide this same personalised service on a much larger scale to its ordinary customers, who only have limited capital resources.
Robots are likely to play an important role in this evolution. Powerful algorithms and automated systems will give the banks much greater potential to offer even its largest group of customers personalised advice. The difference in comparison with private banking is that the human dimension will be missing. A private banking client has a personal adviser, which is simply impossible for ordinary customers, given their much greater numbers. Even so, the new technology makes personalised advice for all a realistic possibility, and this can be – or rather must be – supplemented with broader advice about matters other than banking products. In short, the banks will need to help their customers with their wider financial problems.
Strategy 3: from focus on the core to the blending of industries
During recent decennia, the companies in most industries have remained true to their core. Although they may have evolved slightly, car manufacturers have continued to make the same great cars they have always made, just as retailers have continued to sell the same kinds of great products. Media companies that started as pure media companies have, by and large, remained pure media companies.
The past ten years have shown how difficult it can be to transform within that core. The advent of new digital business models has placed many companies in an awkward position. Retailers have found it difficult to make the switch to e-commerce. Media companies clung on to their linear approach for far too long. Car manufacturers took years before deciding to invest in electric vehicles and the sharing economy.
Toyota has chosen to be a partner for mobility in the lives its customers. With this aim in mind, the Japanese car manufacturer intends to build an experimental city. Work on the greenfield smart city, known as Woven City, will start in early 2021. To implement this project, Toyota is collaborating with the Japanese telecom player NTT. The total investment of both companies amounts to 1.8 billion American dollars.
This innovative city will be constructed close to Mount Fuji, on the site of an abandoned Toyota plant. It is planned that 2 000 people will live there in the not too distant future. Toyota’s city of the future will be an experimental environment, where real-life research will be carried out into countless innovations that will influence our daily lives in the years ahead. The city’s energy will be generated by hydrogen fuel cells and all other facilities will reflect a need for greater sustainability. Day-to-day life will be organised by smart technology. Everything will be connected – people, vehicles, buildings, etc. – and all communication will be via smart sensors.
The purpose of this remarkable initiative is to see how the full potential of a city can be most efficiently utilised, whilst at the same time offering high standard of living to its inhabitants. To travel around the city, the residents use fully autonomous, zero-emission vehicles, while all deliveries of supplies are made by these same self-driving vehicles and robots.
With this project, Toyota wishes to show how the company can become a partner in life and mobility for people. Or as the CEO of Toyota put it during the launch of the Woven City concept at the 2020 CES technology fair in Las Vegas: ‘Today, a city is built around the motor car. In the future, we will build cities around people. People must become the focal point of every city.’
The idea of a car manufacturer investigating the potential impact of a city that is no longer built around the ‘car is king’ model is an inspirational one. By leaving its core in a focused and strategically targeted manner and by taking the future into its own hands, Toyota is paving the way that will allow it to become a partner in mobility for the world of tomorrow.
Strategy 4: from individual companies to networks of companies
Offering a wider range of services to customers is only scalable if companies collaborate. At the moment, company A competes with company B. In the future, the competition will be between ecosystem A and ecosystem B.
When Amazon launched its smart voice assistant Alexa, initially it was little more than a fun gadget. Suddenly, we were able to talk with a machine and its answers were logical and interesting. But right from the very start, Amazon was determined that Alexa would evolve from a neat gadget into a full-blown platform. Other companies were allowed to develop applications for Alexa and even to make use of Amazon’s speech technology. By the end of 2019, more than 100 000 Alexa skills had been developed by Amazon partners.
Google has the same ambition with its Google Assistant. The company wants as many partners as possible to make use of Google technology to offer services to their customers. When I visited the CES trade fair in Las Vegas in January 2020, I was struck by the fact that almost every physical product on display bore a sticker with the words: ‘Google and Alexa compatible’.
Of course, it is not only the large technology companies that are now working in partnerships and ecosystems. Since 1 January 2020, BMW and Daimler have integrated their mobility services in a new joint venture: Your Now. Within this new framework, they have already developed a number of interesting projects.