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CEM and Branding
Conoco's Leadership in CEM
Mr. Paul Ward
Vice President, Customer Experience, YourMusicOn
G-CEM International Partner (US)
www.Pkward.com
This article is exclusively written for G-CEM.
The Real World
From a management analyst's point of view, customer experience management (CEM) is the next evolution of customer relationship management (CRM), the latter being a well-tested and generally well-understood enterprise initiative. But management analysts often aren't the people in the trenches at a business trying to put together all the pieces that make for a solid, branded experience. It's hard work. But that explains why so few companies are doing it really well, throughout the enterprise, turning branded experiences into a true "experience of the brand" that feels, to the customer, like expressions of a singular personality to which they can relate, and about which they truly care.
For all of CRM's talk about "relationships", CEM, in fact, can indeed be an approach to business management that creates and sustains relationships between customers and the companies they keep.
The challenge is clear when you realize that people, processes and technology must all come together in a unified expression of a company's brand at a touchpoint. Figuring backwards, a touchpoint represents the efforts of a whole bunch of people, with different budgets and responsibilities, who must figure out who really owns the key performance indicators, and how to build cross-silo plans and feedback systems to make the touchpoint effective. Implicit as well is the incentive system that motivates people to improve the touchpoint's performance against what may well be a shifting performance benchmark.
But this challenge, daunting as it is, pales in comparison to what CEM is really asking of companies: understanding customers. Whereas CRM typically measures behaviors - usually transactions - only recently have such systems tracked attitudes. And, as my colleague John Chisholm says in our CEM certification courses, "If you want real business results, look for the customers who have both the right behaviors and the right attitudes." I'm not talking just about tracking attitudes, though, I'm talking about shaping them - and that means companies have to understand how to develop a brand that truly appeals to the minds and hearts of their target customers. And so we must lay out the process for converting brand values into a true, measurable strategic asset based on a deep understanding of consumer psychology.
Brand Values Analysis
Brand values are the conscious and unconscious values that motivate people to consider a company, organization, product or service, and help frame how people remember. If two organizations have similar brand values and both organizations are well known, for example, then people would have a difficult time remembering - or caring about - the relevant differences between them. Such two organizations become interchangeable, and - for the purposes of the customer - commodities.
The idea of a brand has seemed to many companies either an uncomfortable concept best left to the marketing department, or at the very best something that board rooms and executive teams should care about (or in fact do care about), but still with only a mysterious connection to things like competitiveness and financial performance.
Even the leading brand valuation firms focus most of their work on figuring out how much a brand is worth when it comes time for their clients to merge, to sell themselves, or to make a fundamental change in their market position. When the event is monetizing for a company (in a merger and acquisition scenario, for example), the brand valuation comes as a part of assessing the intangible assets of a company, and so is often primarily an accounting process, with steps that only scratch the surface of what the brand really means to the company and to its customers.
And when brand valuation or assessment comes as a shift in strategy, such as the introduction by the Coca-Cola Company of New Coke, the market research focuses on what market surveys say about an old brand (something that realistically could be said better in a poem than in a survey) - or, more challenging, what people say about a new brand that hasn't been on the market, hasn't proven its place in the ecosystem of the market's mind, hasn't been supported by people and processes that can make or break a brand ? the list of challenges goes on and on.
CONOCO's Leadership in CEM
Conoco sells gasoline, including Diesel, around the world, offering consumers the usual mix of product options through gasoline stations, some of which have retail stores.
Conoco faced an unenviable task when they set out in the late 1990s to differentiate their gas stations, but they did a fantastic job. Here's their story.
In the late 1990s, gasoline retail had become both more competitive and fundamentally defeated. From my own research I've learned that people choose where they pump their gas primarily by choosing the store that's most convenient to them. So, the initial strategy was location, location, location - put your gas station where people are most likely to go. Of course, as soon as Exxon/Esso opens up shop on a street corner, you've got a Shell, an Amoco - and a Conoco. Talk about competition - there?s a lot of "branding" going on in terms of logos, colors, shapes - but it's all defensive.
Even the next iteration in the competition, which is expanding wallet-share by offering quick purchases in a convenience mart setting only forestalled the inevitable. When shareholders want increased profits, or sustained dividends, these public oil companies have to go beyond just offering the same thing.
Conoco realized that creating a memorable experience at key locations was going to give them market advantage, because it could turn the general "brand" visibility that comes with advertising and reinforces it at a key touchpoint they could actually design, manage and measure. This fundamental insight was the guiding principle for their next set of activities.
First, they identified their target markets - based not on things like profitability, or wallet-share, alone, but primarily on how and why they shopped. They took a look at how people buy gasoline, of course, but also how they shop for convenience store purchases, and what best practices were for those experiences.
As Kathryn H. Feakins and Michael Zea describe in Designing the Branded Experience: How Conoco Broke the Convenience Store Mold, Conoco found a segment they wanted to target with a new retail buying experience. Called connoisseurs, "this group represented just 18 percent of all convenience store customers, it represented 24 percent of gasoline sales and 33 percent of convenience store purchases. Market research showed that these customers viewed the convenience store as a destination in its own right, and stopped in an average of 14 times a month. Eleven of those visits did not include a gasoline purchase." At this point, I would have told Conoco that - surprise, surprise - maybe they weren't in the business of selling gasoline. While this might have been big news for the board, the executive suite and shareholders, it wouldn't have surprised customers, particularly the ones that run into the mart to pick up whipping cream for a homemade dessert, or that extra large coffee for their commute (even if they didn't buy gas for that commute). Interesting, isn't it, just how far away from their customers many companies can be?
Another thing that Conoco learned was that these regular customers really wanted to be remembered as "regulars" - a kind of privileged status, it might seem, but really just a business practice popular in the old days of mom-and-pop, locally owned stores. Interesting as well, isn't it, that the business values of creating scalable operations, and buying up local market share by buying out local proprietors, actually created a market demand by customers to feel - how shall we say it? - that they're not customers, but people.
The key brand differentiation opportunity here is that most people up until this time had of stores attached to gas stations as convenience stores - that is, time-saver where they have no expectation of being treated as a human being, and where getting in and out quickly while their gas was pumping was the intention.
Now that Conoco targeted a customer based primarily on how they buy and how they wanted to feel about the retail touchpoint, Conoco had to prioritize how to make the retail touchpoint memorable to the brand and meaningful to the customer. This essentially means assessing which moments in the retail experience are most important - to the customer, and to the brand. These moments of truth carry enormous psychological weight to the customer, and leveraging that weight provides a lift to the brand that other marketing activities such as advertising cannot.
Once these moments were uncovered, Conoco realized it had to design the in-store experience in a blue-sky way. Tossing out old ideas, it looked at the customer research that had looked into words that people like when thinking about an ideal retail experience. Two words that resonated were "break" and "place".
In my own CEM consulting, I talk about touchpoints having three faces, and one of those is the frame. Taking my cue from extensive psychological and mind modeling research, I've developed the concept of frame in great detail, and one of those details is that the most effective, memorable experiences communicate clearly some set of values within time, and within an environment that either evokes a meaningful space (say, a couch with a lamp that makes the space feel like home), or becomes a meaningful place - such as a Conoco station whose managers recognize you and know what you like.
You'll note that the two words Conoco hit upon from the research have everything to do with time and environment: a break is some undetermined length of time where, in fact, people give themselves permission to cease thinking about time; and place implies a sacred - or at least friendly and comfortable - location that may even be attractive enough to be a destination. Instead of a convenience store with anonymous workers selling as quickly as possible to time-pressed - and equally anonymous - customers, Conoco found a new positioning that might just give them the brand differentiation they needed for their target market of so-called connoisseurs.
Using the two concepts of place and break, Conoco came up with a series of trademarked names to be associated with their new retail design, most notably breakplaceTM, which baldly puts these two market-loved concepts into a single term. And so, in piloting this new kind of convenience store, Conoco called them all breakplaces, and a new retail model was born.
Calling it so doesn't make it so: Owning language and authentic experience
Conoco also came up with the term coffeebreak (as one single concept, hence the lack of a space between the words), and similar terms freshbreak (for their pastry area) and thirstbreak (for their cool drinks).
It's tempting to create terms you can own, but that's primarily a defensive measure against competitors, unless the name is truly a new concept and able to be heavily marketed. For me, coffeebreak as a term is far less important a marketing tool than actually creating a time and space in the store where people easily fall into "break mode" - time becomes more fluid, or even stops, as people get out of the pressure of meeting deadlines, getting to work, and so on. Truly owning an experience is more powerful than just owning a clever name.
IKEA is a good example. The round-about walk is an experience IKEA came up with and is so strongly associated with the brand that they could change the name of every single product and you?d still know you were at IKEA.
The right way to approach this is to go beyond defensive naming and supplement your experience frame (remember, that?s your values hierarchy expressed in time and space) with a semantic space. A semantic space also uses words, but not primarily for legal defense should your competitors want to sneakily grab any brand value you create with a term like break. No, the reason is much stronger. If you can create a group of concepts and words, with a hierarchy of meaning among them, with real values associated with them, then you've created an ecosystem in your customers' minds that will be nigh upon impossible for competitors to break into.
If you doubt me, why don't you order up a double tall nonfat latte and have a seat here next to me on the couch? That's it. We can talk over the barrista's noisy foaming.
Do you see just how much Starbucks has gotten into your head? They did with by owning a semantic space having to do with coffee and coffee modifiers. I don't think most Americans who drink Starbucks associate these terms heavily with Italy (where many of them come from) - and certainly Italians don't use some of these terms, and certainly not habitually in a premium coffee shop. Nor are these terms intrinsically Pacific Northwestern, even though Starbucks is a Seattle, Washington company. No, Starbucks blended terms that promote the concepts of coffee, of Italy, and of Starbucks, to the point that the entire mishmash is now so closely associated with the brand - and with each customer - that you can hear people talk about their preferences for mochachinos or frappacinos for, well, entirely too long.
Test, Execute, Assess
Conoco's work with their breakplaceTM retail model wasn't done. As most companies involved in CEM do, they treated this initiative as a pilot - something to do, to measure, and to assess. This lets them determine return on investment, strategies, insights and points of failure, so they can make stronger business cases in the future.
And so Conoco started with one store. "Conoco minimized its investment risks by learning from a prototype store in Chattanooga, Tennessee, which opened in January 1997. The company has since rolled out 45 more stores," according to Feakins and Zea. "Financial results have been impressive. While the breakplace initiative still contributes only a fraction of Conoco's total revenue, both convenience store and gasoline sales have grown rapidly at breakplace stores. In Denver, where breakplace has built a critical mass of stores, the independent rating firm MPSI in 1998 ranked breakplace as number one in effectiveness compared to other gasoline convenience store brands."
Modern CEM
The Conoco story is a classic, even though it isn't recounted often enough. It cuts to the heart of so many CEM best practices, that I'm offering it as an easy way to remember key CEM principles that involve branding.
First, remember that you have to truly understand your customers and their needs, and when you've done this, you next have to choose the customer segments that mean the most to your CEM initiative. For Conoco, they were interested in a group that was large enough, and profitable enough, to make a business case, but because they were doing a pilot study of how to compete on experience, they didn't need to be all things to all people - they were selective.
The intersection between the profitability model of convenience stores and the experience model of the "break place" is where Conoco found its opportunity to express core brand values. So, the third step after understanding and selecting customers is to focus on what's important to both your company and to those selected customers. Finally, you want to understand the moments in your experience that matter the most to the psychology of your customers. These moments of truth, handled correctly, can keep customers happy - emotionally charged up and with a higher propensity to buy and to recommend you - and, just as importantly, can keep you top of mind and within their hearts.
A lot of the work I do, in fact, is market research that combines qualitative and quantitative assessments of what customers want. You need this kind of research, but here's a warning: People often don't really know what they want, and just as often cannot articulate the things they do truly want.
That's yet another magical part of CEM work. Beyond figuring out how to implement a touchpoint across the siloed departments you manage, you have to know how the mind works. It takes special techniques, and lots of commitment, to do this. But in the end, you'll be able to do something that mom-and-pop stores do so well, and so easily: actually create a relationship with a human being.
Doing that, at a profit, is what modern CEM is all about.
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About the author
Paul is a strategist providing customer relationship management (CRM) and customer experience management (CEM) consulting for growth-focused enterprises. Currently VP of Customer Experience at a new high-tech consumer startup. He leads management strategy seminars in Asia, Europe and North America.
Paul is a graduate of the TRIUM Global Executive MBA program (ranked #3 globally by Financial Times) through London School of Economics, NYU-Stern, and Hautes Etudes Commerciales (HEC). His studies took place in Shanghai, Sao Paulo, Paris, New York, and London. As part of TRIUM he also studied with Hong Kong University of Science & Technology and in Sao Paulo with Funda??o Dom Cabral [FDC]. Currently head of the TRIUM alumni steering committee, Paul is organizing events in Shanghai, Florence, San Francisco and Paris. He lectured at Cornell University on Internet trends, social networks and the impact of the Web on economics and globalization. He also lectured at American University (Washington DC) and Robert H. Smith School of Business (University of Maryland, USA) on customer experience management, competitiveness and brand equity. Paul is also the editorial board member of CRM Today.
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