One would think that running a business is easy – just maximise revenue and minimise costs! However, this simple formula is incomplete without the essence of what makes your business unique – it’s not just about the product, but also about the price, the place and the positioning. These “4 P’s” were coined by Neil Borden in 1964 as he illustrated how companies can use marketing and advertising to generate revenues. We add two more letters to this – “Analytics” and “People”. Holistically, this new mix now centres around customer experience, ensuring that any activity of the business is firmly centred around the customer and underpinned by data and analytics.
Product and Customer Experience
Products (or solutions in a B2B context) can be thought of as solutions to a problem. Do you know what problems your customers face? Is your solution the right fit to solve that problem? By solving a problem, you not only meet a basic need but also open up avenues to prevent the problem from recurring in the future -this value-enhancing activity attracts and keeps customers to your brand. This is where most data scientists spend their time – building models that predict customer take-up rates and churn rates. A question I will leave you with: if all companies are building these models, what’s next?
Price and Customer Experience
Pricing is tricky – it’s moved away from the cold mathematics of finding the optimal monetary amount where your revenue exceeds your cost as customers want to get value from what they purchase. Prices are simply the intersection of supply and demand and unfortunately can have an extreme impact on perceived value. For example, a bottle of water at either R1 or R100 would raise eyebrows (for different reasons), indicative that people intuitively place a value on the goods and services that they purchase. Value is also driven by quality – one would expect to pay a higher price for a higher quality product or service. At the very least, you should be able to price your products and services at the point where you have a positive margin, while still maintaining a competitive edge. However, the business that will succeed combines this optimisation with what the customer expects and perceives. Do customers feel that they get value for money after purchasing from you? This value doesn’t only have to be in the price – a simple “thank you” or confirmation of the good purchase decision or tips on how to use the product or service effectively goes a long way in creating value. Data drawn from research generate valuable insights into “segmenting” your customers into smaller, more tangible groups, after which you can apply different treatment strategies to ensure that each group is at its optimal.
Place and Customer Experience
As we have learnt with lockdown, businesses limited by geographical location face dire consequences if their clientele cannot reach them. This was actually an opportunity to innovate, by assessing whether your products and services can generate the same appeal virtually. Naturally, this is a trial and error experiment with many as some customers may simply not be digitally inclined whereas some products can “never” be sold online. This rise in digitalisation of businesses also generated significantly more data for use. The use of digital and geographic data is currently on the rise, as more businesses see the value of placement in offering enhanced interactions with their customers. Imagine a world where your route in the mall is “laid out” for you based on your previous purchase history, hobbies and interests
Promotion and Customer Experience
Marketing, in a post POPIA world, is no longer about spamming potential customers. It’s about gaining trust with your existing customers by only communicating what is relevant and timely. For prospective customers, your brand and corresponding advertising also need to be targeted at who you wish to attract. To determine your existing and potential clientele, it helps to not only segment your customers but also combine their psychographic data (values, needs, wants, aspirations) with their interactions and purchasing history.
People and Customer Experience
It is naturally important to focus on delivering on what the customer wants, but an often overlooked factor is ensuring that you have the right people to execute on that promise. Irrespective of the size of your business, your business is unique – it has a DNA, a culture, values and principles that differ from any other. Finding others who are aligned to this experience is critical to ensure success – it never ends well to hire a salesperson who hates talking to people! How do you know you have the right people? While interviews and personality traits can inform you of who to choose, you as the entrepreneur must know what your business’s DNA looks like.
Getting these 5P’s is by itself not a winning recipe. However, by focusing on putting your customers (and employees) first, it can certainly get you into the competition. How far you progress through it depends on how capable and changeable you are.
About the Author
Professor Yudhvir Seetharam
Head of Analytics: Insights and Research
FNB