In top level sports, they talk about the little things making the difference. For the elite, the difference between winning the gold medal and just taking part can be tiny. They know, at their level, all athletes are talented, work hard and follow the best diets and training regimes. In one sense, those attributes are ‘commoditised’ – all the competitors have them or practice them so that there is very little ability to differentiate. So what do they do? They concentrate on identifying the small things which, cumulatively, can make a difference to their performance and then do these as well as they can.
I think this analogy holds when you think about the dynamics of competitive commercial markets. Just look around. So often, customers see very little discernible difference in the major elements of what is being offered to them. The place to differentiate is in the mass of small things within a product or service which can make a difference to customers.
But which small things will make the difference? It would seem starting with the customer would be a logical place-Sir Terry Leahy, ex Chief Executive of Tesco, used to say “follow the customer and the profits will come”. I’d been told about the following example, but was reminded of it’s impact a recent event I attended.
The world of pensions and annuities is complex, competitive and not overly dynamic. It is defined by the market norms with little or no innovation. When a customer has to purchase an annuity they will typically follow a reasonably painful process where they phone around a number of providers to individually obtain quotes from each. These will last for 30 days. There then follows a period of careful consideration since this is a hugely important financial decision-it is about your future income in retirement so has massive implications and will not be something you want to rush.
A certain pension provider did something in recognition of this. Call centre staff said that individuals holding a pension with the provider were first obtaining an annuity quote from themselves before ringing around a number of other providers to check out what else was available. They would then think about their decision for a few weeks before ringing the provider back to tell them what they were going to do. It was from here that call centre staff spotted the opportunity. Very often, the amount of time people had taken in making their decision exceeded 30 days. This meant if they wanted to choose a different provider, they would need to ring back and obtain a fresh quote. Staff noted that customers would get exceedingly frustrated at this point since they could not now get what they wanted without another loop of time and hassle. So staff advocated a simple change in the business: they made their quotes valid for 60 days. This meant that when a customer was getting frustrated, staff could immediately give customers an option by simply saying that their quote was still valid. And guess what many customers did? Despite the fact that a customer could, presumably, still get a better deal by obtaining a new quotation, the provider’s own conversion rates increased.
By providing a simple solution, or alternative, at a point where the customer really wanted it, they were able to generate positive benefit to their business. And in competitive markets, it is this type of little thing which can be the difference between glory and defeat.
Lexden is a marketing strategy agency which creates unordinary propositions to motivate customers and deliver commercial advantage for brands.
For more information on how we can help you, contact christopherbrooks@lexdengroup.com or ajairanawat@lexdengroup.com, or call us on T: +44 (0)20 7490 9123. And you can follow us on Twitter @consultingchris or @consultingajai.
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