Tag Archives: attracting customers

Have our universities lost their purpose and become value extractors?

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It was reported on the BBC this morning that fewer than two in five students think they are getting value for money from their courses. This is based on a survey of 14000 students. The students want more teaching time. They want more contact with the teachers in return for their £9250 a year.

York University - Value Extractors

Graduates outside the university library at York

What is going wrong?  One response was quite alarmingly complacent. The spokesman said that things were getting “better” as 38% of students were satisfied with the value for money vs 35% last year. This is a statement that seems to miss the point about the 62% who are dissatisfied.

This reminded me of my son’s recent experience at York University and his reaction to what he was offered and how the institution related to him. He liked his teachers, he wanted more input from them. He received about 5 hours a week input. But he felt the university was more preoccupied with new buildings and a massive plan to expand the capacity of the university. Today the Universities Minister Sam Gyimah, warned universities about generating courses just to put bums on seats

My son also noticed the very high salaries paid to the top management who remained invisible to students and he felt did not contribute much. (The vice chancellor received £293,000 last year, so it needs 32 students fees cover this alone).

So what is wrong? Why are so many students dissatisfied or frustrated? I wonder if the government and the new professional management has created a whole new breed of value extractors who have lost sight of the purpose of the universities. The focus seems to have shifted from quality research and education to expanding the numbers and generating income to fund the expansion.

I believe the future value of our universities is the research they do and education they provide to students. Both of these are a public good that benefits the whole of society. This is their purpose. The fact the students report dissatisfaction with the education should be a major cause for alarm. The students have pointed to one thing that would raise quality and that is more contact time.

My daughter had a different experience at Cambridge. The students at Oxford and Cambridge are more satisfied as they get double and treble the contact time offered by other universities. This is largely funded by Alumnae grants and donations. But again their higher satisfaction indicates that contact time matters.

My definition of value is based on what value the universities add by what they do, the research and education. This is very different from the value definition provided by ministers and the universities. This is just about the price that students can charge for themselves when they leave. The value is about the higher earnings that the students will enjoy in later life. Interestingly, the Institute for Fiscal studies is going to produce a report on how different courses and universities deliver on this.

This distinction is important.  A value-adding brand or organisation starts by focusing on its purpose which should be based on what it can do to help its customers (in this case teach them well). A value extracting approach just looks at the numbers and says what is the least I need to put in to get the highest price and quickest return.

The problem for the value extractor is that the customers tend to rumble what they are up to and look elsewhere. There were 4% fewer applicants for university places in 2017.  In contrast, a value adder attracts more customers and keeps the ones they have. They create long-term value.

I hope our universities are paying attention, we need them to work for our country.

Pensions firms will they attract and educate or just extract?

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Rob Gardner RedingtonRob Gardner of Redington has just thrown down a challenge to the Pensions industry. click here. His quote (below) is in response to the success of Auto Enrolment.  Auto-enrolment is handing a whole new batch of customers to pensions firms.  Will the firms lean forward and seek to help these customers with great products and advice that help them secure their retirement.  Or will they just take this new crowd of customers and work out how much money they can extract from them.

 

 

Rob puts it differently in his article in Pensions Expert

For the first time in decades, we have a captive audience of pension savers. We could do what we have always done and hope some of it sticks. Or we can take up the challenge and recognise that the workforce of today will want to engage in a different way.

We could simply direct employers to the Pensions Regulator website, or we can start to develop communications fit for a world where Siri and Alexa capture the imagination of a new breed of savers. On the whole, the population lacks both the confidence and knowledge necessary for financial security. 2017 must be the year we really start to address this.

Redstart Financial EducationAs well as being a pensions investment consultant and co-founder of Redington, Rob is campaigner for better financial education (Redstart) so we can all create a more secure financial future for ourselves.

Disrupt, produce, fulfil – boosting productivity

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From time to time I go looking for events where I might learn something new and get a different perspective.  I also try to combine going to these events with meeting a friend, so we can discuss the subject.  The LSE provides some great events and attracts interesting speakers.  I try to avoid famous politicians as they tend to only say what we have already heard.  I look out for people with expertise and something to say.  Especially if it is about something I know little about.

Timothy Massad Chairman of CFC

Timothy Massad with President Obama

Last night I went to hear Timothy Massad who has been on the front line of the U.S. effort to combat the financial crisis and reform the international financial regulatory system. He was appointed by President Obama as Chairman of the U.S. Commodity Futures Trading Commission and was formerly as Assistant Secretary for Financial Stability at the U.S. Treasury. However, President-elect Trump will replace him as is customary with a new president.

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Why the ski industry needs better products to attract more skiers?

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On Tuesday 5th May, I gave a short talk at Listex on how ski companies, tour operators and resorts can attract more customers.  Listex is a forum where the ski trade meets to discuss business development and why customers and suppliers do business

The talk discusses how the ski  industry has focused on keeping its loyal customers, but now needs to recruit new enthusiasts into the sport.  The sport is at risk of its current baby boomer customers retiring from the activity and not replacing them with younger blood.

Here are the slides with the transcript of the speech attached to each slide in the notes.

Attracting more customers

Attracting more customers

Here is the transcript of the talk

The idea for this talk was promoted by two articles that I saw in Planetski last week. The first was a quote from the 2015 International Report on Snow & Mountain Tourism which stated that visitor numbers in ski resorts have been declining year on year for 5 years in all the major ski markets. Even France and the US which had been doing better are now in a 5 year decline. The second story was from Phil Smith of Snowworks in Tignes. Phil reported he had enjoyed a great season and things are looking up. In fact skiing is so addictive, that people will always want to come skiing and there is nothing to be concerned about. How can both of these things be true?

The subject of this talk is how can we attract more people to skiing, whether as an industry as a whole, as a resort in particular or for your own business. If numbers are down, this is a matter we need to address.

For those of you I have not met yet, I founded Differentiate as strategy consultants to help CEO’s and business owners to learn how to buy a shares and bridge the gap between the insights they have about their customers and the creative decisions you make about developing products and creating marketing plans to attract customers. I used to be a marketing director at Pepsi and since I have consulted with global brands like Mars as well as high end B2B service providers in Finance, Law and Technology. I am also a director at Henry’s Avalanche Talk teaching skiers how to stay safe and have more fun off-piste. This involves avalanche awareness and off-piste equipment training.

My aim today is to prompt a debate about within the ski industry about the need for game changing new products and services that will attract more people to skiing and get some lapsed skiers to come back to the sport.

I will talk about the subject in three different sections.
First I will discuss why the numbers of skiers are down
Second I will talk about a principle of good marketing. I will discuss the debate about penetration vs loyalty and show why it is essential for good marketers to focus ion increasing market penetration. Or in simpler language, attract more skiers to take part.
Third, I will discuss why having better products is essential before discussing better marketing. I will show some tips on how to start the process of developing better products.

So are the numbers really going down? This report from Crystal shows estimates of the numbers of British skiers going on holiday over the past 5 years. Whilst there was an expected drop with the recession and a bad snow year, this is starting to look like a trend. Numbers are difficult to get here, but this is a trusted source.

The 2015 International Report on Snow & Mountain Tourism looked at all visitors to ski resorts in every country across the world. So this includes locals visiting the resort as well as people on longer holidays. What is interesting to us, is that the alps has shown a consistent decline over the past 5 years. There is growth in Asia, but everywhere else is down. So why might this be happening.

Skiing is often thought of as a younger persons game, just for fit people. Well in my experience, you need to be fit, but you don’t need to be young. When I am in ski resorts, I increasingly see large numbers who look more like this group here. A lot of us were recruited into skiing as young adults in the 1980’s and 90’s. This generation of Baby Boomers and GenX have fuelled the growth of snow sports, by joining in the then choosing to go skiing more often each year. But some of this group mare getting less able as they get older. And I am not convinced the sport is recruiting younger adults to replace them.

And younger people have a far greater choice of things to do than we could do in the late 20th Century. Exotic adventurous travel options have exploded, from Asia and America’s back packing to surfing to kit surfing, mountain biking, charity and physical challenges, yacht racing. All these things are competing for the adventurous travellers pound. Many of these activities are more accessible and less expensive than they were due to cheaper flights and the internet helping people discover ideas about what to do.

Another element in the mix is that sometimes people have bad experiences when they go skiing and it puts them off, especially if they are on the first or second trip. This research by the ski club measured net promoter scores for tour operators and resorts. This was done among 15000 skiers and they found that for some the experience was not good and they would not recommend it. This variability will be putting some people off.

So that covers my first point and offers some reasons why the numbers are down. I am sure there are other reasons you could come up with, but this is a start.

My second point is to discuss the marketing debate around Penetration vs Loyalty. There is quite a fashion for loyalty programmes and CRM. Now these are all useful to a point, but we must not lose sight of the fact that business only grow when they attract more customers. This was established as proven fact by an early marketing academic, Andrew Ehrenberg in the 1960’s. His work has been followed up by Byron Sharp who published a book on it in 2010. Study after study has shown that the difference between bigger businesses and small businesses is not how loyal the customers are, but how many customers they have. It is not possible to get growth without increasing your market penetration or in other words attracting more customers.

A second study conducted by the Institute of Practitioners in advertising has confirmed this. This study looked at 1000 entries for their marketing effectiveness awards. The winners were selected for the business results and cost effectiveness, not for their creativity. And 95% of the award winners had set as their objective to increase market penetration.. Only 5% of the awards went to campaigns that had set loyalty as their campaign objectives. Loyalty programmes did not win effectiveness awards.

So this is my second point, No-one ever achieved significant growth in their business without attracting additional customers. We have to attract more skiers if we are to grow the industry.

Now my third point is about why the best and easiest way to get more customers is to create better products, we cannot just rely on better marketing. It is better products that attract customers first. And as shown by Michelle in an earlier presentation, most great marketing campaigns either draw attention to product improvements or use product improvements as a tool to communicate the brand value and the brand attraction.

I will start by asking you how you view your customers? Do you see them as a target to be lassoed into your business and then you must find ways to attract as much money as possible from them? Are you like this cowboy looking to entrap and ensnare customers? I call this approach value extractors.

Or do you see your job is to find out what customers need and want, to find out what would really help them and then develop something that delights and surprises them. People buy things when they have a problem to solve or a need to address. If they see you offering the perfect solution to that need, if you offer the missing piece in the jigsaw, then all you have to do is let them know about it and then they will just buy it. I call this approach value adders.

In my experience prime value extractors are banks, insurance companies, utility companies, mobile phone operators. These businesses exploit our reluctance to switch providers. So they focus on how much money they can charge and how little they can do to help to ear that money. Whereas big successful branded companies like Apple, Google, Unilever P&G, Mercedes, Mars, they all know we have the freedom to switch, they cannot trap us so they invest in attracting us with better products.

Now all the big game changers in every industry are value adders. They are people who put … better products before better marketing.

So what are the characteristics of better products? What makes a product better? Here are a selection of brands and products that have all shaken up their industry when they launched. They each looked at their markets and said, “there has to be a better way”, “we can make the customer experience better”, “we can make it quicker, easier, better value”.

Easyjet challenged legacy airline carriers by making it easier to buy the tickets and removing all the complex terms and conditions that were designed to trap fliers into spending more money. Fridays speeded up property conveyancing to help people get their homes more quickly, Netflix ensured we could watch what we wanted at any time and made it easy to use, Paypal made it possible to transfer money and easier to pay for things online.

So these are characteristics of game changing products and services, I am sure you can think of some more.

And last week I saw this guy present the game changer in power supply. This will disrupt the energy supply industry. Elon Musk used the money he made from selling Paypal to invest the Tesla car, but he is now going further and has just launched the Tesla PowerWall. He looked at energy supply and climate change and said we have to do better. He noticed the sun provides more energy than we need. Solar panels are getting better, the problem is it does not work at night and we had not found a way to store energy from the sun.

This product is the first battery than you can install at home to plug the gaps when the sun does not shine. Read more here http://chrisradford.net/using-better-products-not-better-marketing/

The phrase he used repeatedly is “It just works”. This is I believe the ultimate attribute of better products. Iron out the glitches, find the disruptions, improve the customer experience, re-engineer the product, then you will find the game changer.

So how do we develop better products? Where do we start? The first principle is to start with the problem or need the customer has. No-one ever spends money without a problem to solve or an occasion to sort out or a need to fulfil. When you go to the supermarket, you do not have a list of products, you have a series of occasions and needs to fulfil. There are kids coming home from school, meal times to feed, people coming round, clothes to be washed etc etc. The start point for product development is understanding these problems and needs.

What might these problems be for skiers and ski holidays?

The first one is that we all like to spend time with our family in a nice way and are looking for ways to do that.  Skiing is a great way to do this.  People also love to spend time with friends and an activity like skiing is a great way to do it.  But you will notice that skiing is not the only answer to these problems.    But ensuring ski holidays  address this need in the best way is one way to develop better ski holiday products and services.

The second problem is that it is often a bit grey and gloomy at home in the winter. Many of us are looking for ways to escape the gloom, get some sunshine, get out doors and cheer ourselves up in the winter. Again, skiing is great for this, but it is not the only way to do it. This is a powerful driver for ski weekends as well I think.

The third problem that skiing addresses, is that increasingly we are looking to push ourselves a bit harder, we are looking for a physical challenge. Again skiing is a great answer, but not the only one. Other adventurous sports or charity challenges can do this equally well.

So that covers three problems and needs that people have that ski trips can address. But what are the things that stop people going skiing, what puts people off. This will provide some insight into developing ideas for better products and services.

It was hard to find research on this, but I tracked down two studies. The first is a report from the Ski Industries Association in the US, this looked at reasons regular skiers did not go in any one year. The top reason reflects the fact that skiing is a social activity and they said they had no-one to go with. They also cited that other activities sometimes seem like a better option. A significant number thought they were just getting too old for it. This is that Baby Boomer generation who are opting out of skiing. The last point was a fear of getting injured because of the consequences in the aftermath and the following months.

The second report I found was published by the University of Edinburgh and looked at PE students and teaches and what put them off going skiing. They raised quite a few points but this slide starts with the cost of the holiday and importantly the cost of acquiring the clothes and associated equipment. The sport is difficult to learn and this a big psychological hurdle. Some complained that the slopes are getting too crowded these days.

So these are examples of insights that can support and help product development and can help in the creation of better products.

So please remember “no-one ever achieved significant growth in their business without attracting additional customers”.

Customers are looking for something that solves a problem …

Our job is to solve it for skiers and prospective skiers and we need to provide something that is better than the alternatives.

So in this talk, my aim was to provoke a debate about the need for a game changer in products and services for skiers. This is the key weapon to attract more customers into the sport, into the industry and into your business. I have talked about why the numbers of skiers are declining, I discussed the need to increase market penetration and not just get more customer loyalty. The best way to this is to develop better products not just rely on better marketing. The start point for better products is to understand what problems and needs customers have that skiing holidays can address. Our job is then to develop better ways to solve these customer problems.

You can find a copy of this presentation and talk on my blog on ATTRACTIVE THINKING at www.chrisradford.net.

If you are interested in doing some research into customer needs or turning your insights about customers into better products and better marketing, then please do get in touch
You can Sign up at : chrisradford.net, you can follow me on Twitter : @chrisradford10 and I always welcome connections on LinkedIN

Contact: Chris Radford chris@differentiate.co 020 8432 9772