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In The News

From chapter two

It is obvious to most business leaders that the business climate is different today than in the recent past. However, in an effort to compete, most do not adequately consider how the context of the customer has dramatically shifted. They fail to consider how this has changed what customers value. This new value is not what many businesses are delivering, nor is it what they are optimized to deliver. This disconnection, this failure to get in-sync with customers’ context shift, relegates a business to compete in an accelerating commodity marketplace where the indifferent buying personality reigns and doesn’t award loyalty.

When company profits and growth are below expectations many business people view customers as the culprits. These days customers are often viewed as more demanding and less loyal. In fact, a Conference Board survey of CEOs ranks customer retention as the number one challenge for their companies.1 Even for repeat customers, each new transaction can become a zero sum game, with the business sacrificing profits for the sale. Untenable, unprofitable, and unsustainable. Ready for a surprise? Customers don’t like this situation any more than vendors do!

Here is the conundrum: in response to globalization and rapid commoditization, many businesses feel extreme pressure. They use price, convenience, and incentives to win customers from their competitors—in essence, bidding for customers’ business. Customers, in turn, see abundance and choice for virtually all products. When competing businesses vie to win customers, they encourage prospective customers to shop around and to do so every time they need that type of product. There is a mismatch between this strategy and the expectation of loyalty.

Sustainable profits and growth require the pursuit of compatible “endgames,” where all parties reach their desired outcomes. Businesses need to realign their efforts from selling “things” to cultivating relationships that position their companies as valued resources to customers. Customers expect the companies to sell products. But companies create value for customers by fostering fulfilling and meaningful customer experiences. Valued customer experiences address the challenges customers face in today’s context.

The path to sustainable profits and growth for most companies is through differentiation on the customer experience. The process of cultivating “addicted customers” will separate a company from the efficiency-oriented “low-price leaders” of the world. Let Wal-Mart deal with the indifferent personality. Differentiate your company by focusing on the personality that wants to be engaged. Addicted customers will scrimp on commodities to splurge on experiences they desire.

Value no longer means a good product at a good price. The challenge for companies is to understand the new concept of value. Most companies do not. The good news is that a number of highly successful companies have already cracked the new value code. The result for them is rapid growth, high profits, and a core customer base that indicates that their business model is sustainable.

These companies are not attempting to find, and sell to customers. They focus on attracting and nurturing customers into long-term, win-win relationships, and they treat the process as a journey, not an event. As this journey progresses, the customers increasingly act like addicted customers, as profiled in Figure 2.1. What this profile reflects are customers driven by intrinsic desire which is emotional in nature, not pragmatic. Certainly purchases are made for practical reasons, but it is not utility or price that underlies committed customer relationships. The type of commitment exhibited by addicted customers is emotional.

Addicted customers do not develop when a business tries to “buy” the customers’ business. Rather, developing addicted customers requires a deliberate cultivation process, one designed to turn customer indifference into emotional and psychological engagement.

There is a basic premise behind the new value code that drives many successful companies. They recognize that this is a new era in which customers face abundance, overwhelming choice, the uncertainty of rapid change, and the stress of a fast-paced life. In this context, value is in the overall experiences customers have in buying, using, and savoring that widget. Utility and quality are still important, but are “givens” these days. What separates one offering from another for customers is the psychological process and the emotional consequences of the involvement. Products are a means to an end—experiences are an end in themselves.
“Addicted Customers led me to water... and it made me drink. John Todor uses clear and persuasive writing to really cut through the cookie cutter business writing ‘how to’ clutter and captures the essence of building true, long term customer relationships. I think it should be on everyone’s ‘must read’ list.”

David Curran, CEO
Data Commnuiqué International