I found this
article “Know what your customer wants before they do” very interesting. This
article talks about how the advancement in technology can help a business get
competitive advantage over their competitors. It introduces the new concept of
marketing effort called “next best offer” which means directing customers to
the right product or services at the right spot at the right time and at the
right price. Businesses are able to provide next best offer to their customers
by utilizing the data they gather on customers’ demographic and psychographics
which they are able to retrieve using the clickstreams on web by their
customers. The advancement in technology have provided businesses with such a valuable
information that if utilized, businesses are likely to have success rate much
higher than any time before.
The article
talks about how Microsoft succeeded on advertising through email offer of their
search engine "Bing". The email send by Microsoft was customized in a certain way
that when the recipient opened the email, within 200 milliseconds the advance
analytics software collected all the demographic and psychographic information
of the recipients and tailor the email according to that information along with
the most recent response of the customers. The article suggests that “the use of
such technology for marketing have lifted conversion rate by as much as 70%
which is substantially more than similar but uncustomized marketing effort.”
Author also
talks about Tesco, a UK based retail store, which uses club card to keep track
of the purchasing pattern of customers such as which stores they go to, what
kind of product they purchase and so on. Tesco uses this valuable information
to customize the store according to the need of the customers such as adjusting
merchandise to local taste. I found it interesting that at one time Tesco send
coupons of beers to the customers who bought diaper and toys because the new
fathers are more likely to spend more on beers because they are less likely to
spend time at pubs. Such information can be very valuable to the business if
utilized properly.
Although the use
of Next best offer is evolving gradually, companies are implementing it very
poorly. During the research on the NBO
strategies of retail software, financial services and other companies, it was
found that although some companies had implemented NBO, they were implemented
very poorly and not target to the right target market. The author suggests that
while building the next best offer, the objective of the NBO has to be
specified, data on customers have to be gathered, analyzing tools have to be
used to match customers and offers and execute the NBO in a way that will help achieve
the goal set and evolve the NBO according to the need of the business.
Managers have to
realize that the use of NBO as a marketing strategy is increasing and if they
don’t act on it quickly they are going to lose their customers to their
competitors. If this technology can be exploited well, business can get a lot
out of it. From a marketing perspective no information can be as valuable as
knowing the product that a customer desires and offer the exact product to them
when they want it. With the advancement of technology managers can get this
information with few clicks and they should learn how to exploit such
technology.
Davenport, Thomas H, and Leandro Mule,
and John Lucker. "Know what your customers want before they do." Harvard
Business Review (2011): 24 Jun. 2012
<http://theinformationdj.com/wp-content/uploads/2012/02/know-what-your-customer-wants-before.pdf>.
The article is no doubt very interesting, but also very useful for managers to gain knowledge about very important concept of marketing required to understand for the successful survival of business in this world of acute competition. The concept of “next best offer” is based on the idea to offer a product demanded by the customer, and make the product available at the right time and at the right place. This concept, if used effectively and efficiently will help the organization’s to increase the profitability by creating more demand for the company’s product. With the advancement of technology, it has become very easy and fast for the organizations, to collect information about their customers, and their likely demand\choices for the products or services in the near future. If the information collected about the customers properly analyzed and used timely, will help the organization’s to make business strategies in the future.
ReplyDeleteThis article reminds me of the article I presented, The Incumbent’s Advantage. Basically, the incumbent’s advantage is a competitive advantage that incumbent firms have over new entrants or potential invaders, by being having a gold mine in terms of your customers. The incumbent’s advantage talks about creating an advantage through your existing customer. Knowing your customers and being able to rank them by profitability gives incumbent firms a huge advantage.
ReplyDeleteThis article talks about pretty much the same thing. If you know your customers, you can hone in on their needs to deliver the exact products they need, leading to increased profits for you firm.
Well done, Binu!
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ReplyDeleteThe next best offer is a good concept. It will help increase revenues by targeting those customers who will most likely want to buy specific products. I would be interested in knowing how many companies are already using this marketing strategy today. In my opinion, this strategy would work better for convenience goods, because the customer is more likely to settle for a different product from what they sought out for. In contrast, I do not think the next best offer strategy would work as well for specialty goods. Consumers are usually more particular about the characteristics of these kinds of products and will put more effort into finding a good deal. For example, a potential car buyer looking at a Mercedes is less likely to buy the next best offer of a BMW, than is a candy-bar buyer looking at a Snickers and given the next best offer of a Milky Way.
ReplyDeleteYes you are right Kimberly about customers who already know what exactly they want the next offer might not be a good tool to influence them. But what if two similar prestigious car lets say Audi uses nest best offer and offer a unique feature that even that customer did not know that he wanted it but Audi figured it through customers click stream over the internet. Do you think in that case using next offer will help Audi to win over that customer?
ReplyDeleteYes you are right Kimberly about customers who already know what exactly they want the next offer might not be a good tool to influence them. But what if two similar prestigious car lets say Audi uses nest best offer and offer a unique feature that even that customer did not know that he wanted it but Audi figured it through customers click stream over the internet. Do you think in that case using next offer will help Audi to win over that customer?
ReplyDelete