Owning the customer from 2017

Owning the customer from 2017

I was asked the other day what I believe one of our biggest challenges in business for 2017 is likely to be.

As I pondered my response it drew me to consider an article that I read last year, post Brexit, where it largely covered the challenges of the turbulent Chinese economy.

We all saw the volatility of the Chinese markets last year, with uncertainty in the validity of financial reporting and forecasting demonstrating much lower growth rates than expected for this fast expanding economy. There were also weaknesses being reported in the level of investment that the United Kingdom will see this year from Chinese investors, largely due to the volatility of the London Housing markets, in light of lower than average return growth rates from high valued properties.

This will all no doubt provide some challenges here in the UK and European economies, but what interests me more is one of the reasons why this is happening, and how it reflects challenges that manufacturers in this country also experience.

I believe there are two flaws in the current Chinese business model:

  1. Lack of ownership/loyalty of the customer
  2. Lack of innovation IP

What few of us maybe aware of is that China is going through an awakening. They have realised that if they are going to be a true sustainable, global, superpower, they now need to compete in the wider world of technology innovation and manufacturing, not just compiling or copying technology.

If we take the IPhone as an example, looking closely you will see the words on the back “Designed by Apple in California, Assembled in China”.

In fact, you may be surprised to hear that only 5-10% of components of the IPhone are actually manufactured in China. Processors are made in Korea by Samsung (some irony in that), memory chips and processors come from Toshiba in Japan, and the motion sensors are made in the Netherlands. So we could say that China is not a world manufacturer it is a world “put togetherer” of things.

So what big benefit does the brand IPhone brand have over that of the Chinese businesses that are contracted to put these pieces of technology together? Put simply, they own the IP of the technology, but (arguably more importantly) they also own and heavily influence the customer. Either by trading directly or, at the very least, influencing them to remain Apple centric, not only to that product, but also to the many software applications and other supportive devices available.

What that means for all manufacturers.

This is where our challenge at Varia emerges, Apple is a good example of how a manufacturer has control over the customer relationship, but that is unusual in this sector.

Within the Manufacturing sector that sells product via Wholesale, Retail and, indirectly, online, there is a growing desire to influence the consumer. The Manufacturer, although they may not necessarily want to trade directly with end consumers of their product, they will want to start cultivating a relationship and loyalty with the consumer.

I like to call this “Consumer Engagement Beyond the Retail Experience”, where a relationship can be born with a customer, regardless of the retail channel that they have decided to purchase a product through.

But, before you get started on this, what is even more important is that the strategy, plan, execution and outcome process is managed end to end. What kind of relationship do you want with the consumer? What information would you like to get from them, and how will you use this to better engage with them post purchase?

In the past I have been a cog in a much larger wheel, but have not had sight of the end customer in order to better understand directly the nuances of their brand or campaign reach. This was sometimes very unrewarding and not particularly commercially beneficial for the effort or ideas created.

This left us a little bit like our friends in China putting the IPhone together….. somewhat one step removed from the whole customer experience.

So my primary commercial challenge for 2017 is to get more Manufacturing C level executives bought into strategic approaches for customer Engagement, Acquisition and Retention. We’ve seen this multi-channel approach deliver greater customer insights and increased customer lifetime value through improved loyalty and repeat purchase.

And just as a footnote. Did you know The Communist Party requires a representative in every company with more than 50 employees, good job we don’t work in China !!!

I’ll let you know at the end of the year how I get on !!!


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