DIAMOND
RATING
Senteo Rating 4.5
04/27/23
views 21939
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Author:Nicolaj Siggelkow, Christian Terwiesch
04/27/23
views 21940
comments0
Author:Nicolaj Siggelkow, Christian Terwiesch
DIAMOND
RATING
Senteo Rating 4.5

Connected Strategy
Connected Strategy: Building Continuous Customer Relationships for Competitive Advantage – Nicolaj Siggelkow and Christian Terwiesch, May 21, 2019
Senteo’s Review information

Nicolaj Siggelkow and Christian Terwiesch are both professors at the Wharton School of Business at the University of Pennsylvania, where they serve as co-directors of the Mack Institute for Innovation Management.

Siggelkow and Terwiesch begin by identifying the problem that they seek to solve: the traditional approach to customer relationships used by most companies (aka the “Buy What We Have” approach) is based on episodic interactions which prohibit the emergence of stable relationships with the customer. The authors argue that this approach to customer relationships has two glaring weaknesses: a temporal gap, because customers have to spend their own time picking the right solution for their needs and then wait for delivery; and a value gap, because the customer is more often than not forced to settle for what the company has available, rather than what they actually want.

Siggelkow and Terwiesch propose a framework consisting of 4 different pathways for transforming episodic interactions into continuous customer relationships. The different pathways are intended to match differences in customers’ preferences for contact with companies. The four pathways are:

  1. “Respond to Desire”: Minimizing friction in a customer’s journey, delivering what the customer wants as quickly as possible. The authors note that this pathway works best for customers who have already made up their minds about what they want and how they want to achieve it, and are simply looking for companies to make that happen as quickly as possible. The value proposition consists of ensuring that the customer receives their desired outcome as quickly as possible.
  2. “Curated Offering”: Targeted at customers who know what they need but have not decided how to fulfil that need. The objective for companies is to offer customers personalised, tailored recommendations. The value proposition of this approach is that it enables companies to ensure that their offering to the client is meaningful and relevant, helping customers reach the desired outcome.
  3. “Coaching Behavior”: Targeted at customers who “need some nudging” – companies should proactively contact customers and remind them to achieve their goals. Crucially, this requires both an understanding of customer needs and the ability to gather and analyze contextual information (“what has the customer done / not done?”). This information needs to be gathered promptly so that the company does not miss the right moment to act. The value offering of this approach involves a clear understanding of customers’ desired outcomes.
  4. “Automatic Execution”: This involves meeting customer needs without their involvement, by gathering data and making certain purchasing decisions based on that data. The authors use the example of HP including a feature, wherein the printer monitors ink and toner levels, and when they hit a certain point, automatically orders a fresh cartridge for delivery.

The authors further stress the importance of repetition and consistency in establishing a close, connected customer relationship – any one-off experience, no matter how positive, is not enough. Repeat interactions with customers create a positive feedback loop, wherein companies can use interactions to gather data about customers, using it to improve customer experiences; improved experiences lead to more interest from customers, which in turn enables companies to gather more data and further improve customer experiences.

The framework Siggelkow and Terwiesch offer is a solid one, both comprehensive and nuanced. This book approaches customer relationships from a strategy and operations perspective, and makes a solid case for how continuous contact with customers enables companies to streamline their operations and reduce costs while creating value for customers. The authors are also right to underscore that different customers may have different preferences for the type of relationship they have with companies, and that communications strategy should reflect this.

Given the authors’ backgrounds in strategy and operations, this book naturally excels when discussing these aspects of customer-centric business models. However, customer-centric and relationship-centric business models require holistic transformations – not only to operations and strategy, but also to culture and branding. After all, any attempt to build a customer-centric operations model can be held hostage by an enduring product-centric culture within the organization. Readers who are interested in how organizational culture and brand transformations can be achieved are advised to consult the Senteo methodology on Culture and Brand & Communications. Furthermore, the authors could place a stronger emphasis on managing relations with the customer beyond gathering data to enhance sales. This involves establishing a meaningful dialogue with the customer outside the product offering – it is not clear that the authors have this dialogue in mind.

What if there were a way to turn occasional, sporadic transactions with customers into long-term, continuous relationships–while simultaneously driving dramatic improvements in operational efficiency? What if you could break your existing trade-offs between superior customer experience and low cost?

This is the promise of a connected strategy. New forms of connectivity–involving frequent, low-friction, customized interactions–mean that companies can now anticipate customer needs as they arise, or even before. Simultaneously, enabled by these technologies, companies can create new business models that deliver more value to customers. Connected strategies are win-win: Customers get a dramatically improved experience, while companies boost operational efficiency.

In this book, strategy and operations experts Nicolaj Siggelkow and Christian Terwiesch reveal the emergence of connected strategies as a new source of competitive advantage. With in-depth examples from companies operating in industries such as healthcare, financial services, mobility, retail, entertainment, nonprofit, and education, Connected Strategy identifies the four pathways–respond-to-desire, curated offering, coach behavior, and automatic execution–for turning episodic interactions into continuous relationships. The authors show how each pathway creates a competitive advantage, then guide you through the critical decisions for creating and implementing your own connected strategies.

Whether you’re trying to revitalize strategy in an established company or disrupt an industry as a startup, this book will help you:

  • Reshape your connections with your customers
  • Find new ways to connect with existing suppliers while also activating new sources of capacity
  • Create the right revenue model
  • Make the best technology choices to support your strategy

Integrating rich examples, how-to advice, and practical tools in the form of “workshop chapters” throughout, this book is the ultimate resource for creating competitive advantage through connected relationships with your customers and redefined connections in your industry.

This book offers a solid framework for understanding and applying operational changes aimed at and developing stronger relationships with customers and creating additional value. However, we would advise readers to consult the Senteo Methodology for similar changes to organizations’ culture, brand, and environment, all of which are no less important for implementing a truly customer-centric business model.

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