Combining focus of customer value with sound strategic development

Good evening and thanks for rusty me today. I'm very excited to talk about how I see that you can combine this focus on class the business development values with this more customer centers that the topic of today and what I brought today is 10 examples of companies marrates I think my friends doing a good job So combining these two perspectives, and hopefully there'll be some inspiration among the 10 examples that I'll go through. Before actually showing some examples, I'd just like to say a few words about this age of the customer that's been the focus of today. Because I think there's an important point into why we should focus on creating customer value just as much as creating business value. And hopefully it's evident for everybody in this room that this is a really exciting time to be alive and to be part of marketing and digital and whatever. Because we're really living in a golden age of new technologies. And there's lots of interesting technologies. You can go out and document, then you can see 3D printers and virtual reality and internet of things and whatever. And all of these technologies are developing really, really fast these years. And I think this is so really amazing to be part of. When we're talking about the age of the customer, I think it's important to stress though that these technologies should never be isolated. And what's really interesting about these technologies is of course not the technology in itself, it's what it does for customers. And it's been said a few times already, but these technologies are of course the fuel that empowers customers and really changes customer expectations. And now we've heard from FNCG brands, we've heard from global manufacturers. And the point here is of course that customers, regardless of what kind of industry you're in, customer expectations will be changing and are changing extremely fast these years. Just to give you an example of this, I think everybody knows Uber. Uber I think in many ways pretty cool. They have a very data driven approach to business development. And they're also very transparent about some of their findings. And one of the things that they can see is that when they enter a new city, when they start up in a new city, they register that people are typically willing to wait eight minutes for an Uber to arrive. And eight minutes, that's probably the average time to wait for a taxi as well. But what Uber does is actually that it changes customer expectations really, really fast. Because after a year being present in the city, the willingness to wait for an Uber drops from eight minutes to five minutes. So Uber sets a new standard for the level of efficiency in transportation and that really changes customer expectations in general. And this is of course transportation, but the point here is that customers, they get accustomed to this kind of efficiency and they take those expectations with them to all their other doings in the world. And it's not just Uber, it's expectations that travel across industries. And that's of course where this point about whether it's B2B or B2C, it doesn't matter. Because Apple has set a standard for interfaces that everybody needs to live up to. Amazon has set a standard for selection when we're shopping online that everybody needs to live up to. H&M for pricing quality, Singapore Airlines for service, and then then like mobile pay might have set a standard for efficiency when it comes to transactions or the financial sector in general. And the point here is of course that all of these companies, all of these technologies, all of these startups are really changing our expectations as customers, as human beings. And I think that's really, really interesting. And that's why the title of my presentation today is of course that we should focus just as much creating customer value, meeting customer expectations or perhaps even exceeding them if we want to anticipate their future needs. And that should be just as important as focusing on the more classical business values. And that's of course not to say that revenue isn't important or branding isn't important, but customer value is just the keystone for finding out how to generate more business. This isn't taken completely out of context. Howard Business Review have actually tracked and analyzed 6,000 mergers and acquisitions in the US over the past 10 years. And what this graph really simplifies says is that over the course of the past 10 years, customer value as a percentage of the total business values of companies being sold or acquired in the US have gone from 8% to 18%. And at the same time, brand value has gone from 18% to 7%. So these two have really changed. So customer value meaning customer satisfaction, customer loyalty, data about customers, all of these things that are related to creating and understanding customers is really becoming a keystone for understanding what creates value in a business in a more generic context. And it's of course easy to talk about focusing on customers and creating customer value when we're doing new business development. But I think what's important is to think about this customer value focus in every aspect of business development. So I'd like to present a couple of cases ranging from talking about pricing strategy, price optimization, and harnessing and building these new platforms using some of these new technologies. And I think that pretty much goes back to the three types of innovations that Matisse was talking about. And my point here is of course that you can have this customer centric focus and this focus on customer value in all of these areas. So basically I'd like to show a few examples of how you can do more intelligent and dynamic pricing using data. I'd like to show how you can do something as dull as business process optimization with a customer focus. And then lastly a few examples of how you can actually create new services with this customer focus in mind and harness data to create new platforms. First off, to the US, Progressive is an American insurance company. And they use behavioral data to make a more dynamic pricing. Today if I'm to buy an auto insurance policy, it's typically based on three factors. It's based on my age and where I live and what car I'm driving, what make and model of my car. And based on that I get a fixed price. Progressive does it a little bit differently. Basically they have a product called Snapshot which is a box they install in the car that monitors your entire behavior. It monitors where you drive, how often you drive and how well you drive. So the number of accelerations or hard breaks will actually inflict on your price. So dynamically Progressive monitors your behavior and changes the price accordingly. So there's no fixed price. It's really just based on how well you behave. And I think this is a great example of Progressive actually doing business development that differentiates them. But at the same time I think it's also a matter of creating value for customers because most insurance customers will actually experience that they will get a cheaper price on their insurance because most customers, most drivers actually behave quite well. So customer value and business value can really go hand in hand. Location data, another untapped resource in my opinion. Back to Uber, this is a map of New York and the red dots here are the places in New York where the demand for Ubers is the highest. It's typically in Manhattan, typically in Wall Street, typically in the afternoon. And Uber knows all of this because everything is digital in their world. And what they do is of course that they then increase the price because that sends more drivers to the streets and that creates sort of a market equilibrium where supply and demand are very close to being aligned. And you can say a lot about the ethics behind Uber. I won't do that today. But I think as a way of using data to do more intelligent pricing in a way that hopefully accommodates both the business needs and the customer size, I think Uber's pricing strategy and pricing model is really, really interesting. In a more lightweight area, context data and contextual data in general is of course also something that I think should be used in order to do more intelligent pricing. Especially if you're a FMCG brand like Arla or a retailer because that's where the impulse shopping really happens. Budweiser wanted to go into the Irish market a few years ago with this campaign that basically was an app, I don't know how many used it, that said when it's sunny outside, then we'll get you a discount on the beer. Sounds like a good idea, except for the fact that they probably didn't know the Irish mentality or the Irish weather for that matter because it failed pretty miserably. And the British beer brand Murphy's was pretty fast to react with similar tactics but with the opposite equation, saying that when it rains it pours because they knew the Irish mentality, they knew when it was really bad weather, which is this most of the time, people head for the pubs and then they can get a discount on the beer. I know this is sort of a marketing gimmicky thing but as a way of using contextual data and all of this data is available for most of you, weather data is a resource that you can just tap into and use in your business development, in your marketing and I think this is really, really interesting as a way of thinking about pricing in a more intelligent way that will hopefully also benefit customers. Business process optimization. That's not very fun. But my point here is that customer experience can really be part of doing better business processes and I brought a few examples. One of them is actually what Matisse was just talking about, Grundfos-Banglond, it's here, which is, as Kenita mentioned, real-time monitoring of bacteria levels in water pipes. It's a great piece of innovation out of Matisse's department that we at Greenland have had a small part in by designing the interface and the customer experience for the iPad application where you can actually monitor your bacteria results. And the reason why I think this is a really cool example of doing business process optimization is that it actually serves a purpose. It helps Grundfos' customers' water supply facilities by doing their job easier. They can now remotely access the bacteria levels of the water pipes. And I think this is great, and this is of course also a great business for Grundfos because it differentiates. It's the first in the world that actually can do this. And again, business process optimization can easily combine customer focus with business focus and I think this is a pretty neat example of it. Artificial intelligence, we've talked about it a bit. Arne said to talk about chatbots and that's of course one of the really, really height workings of artificial intelligence. I think in terms of talking about business processes, artificial intelligence in general has a really, really big potential. We're seeing it in a number of industries. We're seeing it in the financial sector where the first completely automated, machine-driven stock portfolio has just been launched by Charles Schwab, meaning that computers will actually do the stock trading for you as an individual. We're seeing it in agriculture where video monitoring and predictive analytics will make sure that the livestock gets all the food they need. Hello? All right, we're back. And we're seeing it in healthcare where IBM is working together with some of the biggest cancer hospitals in the US, trying to create better cancer treatment plans based on artificial intelligence, based on historic data of treatment plans. And the point here is of course that in each of these industries, artificial intelligence will help make better, swifter decisions. That's a good business case, but it will also be a good business case for me as a customer because regardless of whether investor or a meat lover or cancer patient, this will hopefully result in that I get a better return on my investment, I get a better quality of my meat, or I get a higher chance of survival if I get a diagnosis. So again, process optimization can easily have a two-sided effect if you do it the right way. The retail environment, we of course need to talk about the retail environment. This is a video from the Ralph Lauren showroom in New York where they're experimenting with creating virtual showrooms. This is like a bit of a prototype of how the showroom of the future, or the fitting room of the future could look like. But what I think is interesting is that we are already now seeing especially American retailers trying to fit fitting rooms with iPads that will actually empower the customer, that will actually let the customer decide by herself or himself whether he wants a different size, a different color, whether he wants to try and make these rooms. So some of this logic that Anas also talked about in chat box is actually already now present in fitting rooms and the staggering thing is of course that customers will try and six times as much close because they feel empowered, because they're in control of the shopping situation themselves, and they'll actually also be much more inclined to do cross-buying because they can control the decision themselves. And I think the case for retailers is of course really, really good as well because it will reduce the number of staff needed in the stores and it will increase their revenue from sales and for customers they'll get a better experience. So again, business process optimization doesn't have to be dull if it's just done the right way. All right, so lastly, reaching out to new customers using technology to create new platforms and the first case here is a bit quirky. It's from the main area in the US where they produce some of the best lobster in the world and until a few years ago, American lobster wasn't available in China. So these American lobster fishermen, they decided let's try and go to the Chinese market. Now traditionally, in order to do this, you would have to set up a sales office in China, you would probably have to set up a logistics apparatus in China, a distribution center, and all of this that was pretty complicated stuff. What they did was a little bit different and was very much in tune with the digital economy. They started selling directly to the Chinese market on the platform called Alibaba, which is this global trading platform that simply connects buyers and sellers. And the interesting thing is of course that American lobster export to China has gone from virtually nothing to 675 million over the past five years and I think this is of course like a fun story of reaching new markets, but I think everybody who's in the manufacturing industry or has a product that they want to reach out globally like the baby meat product, that's probably also available on Alibaba, everybody who wants to reach out to new markets and new customers and create value for customers in different markets, there are so many possibilities for doing that much more swiftly today than previously. This easy access to markets and customers that this represents is of course also one of the greatest pitfalls and dangers of digitization and disruption because there are coming up more and more companies who only focus on the customer experience, who have this completely customer-centric mindset and disregard classical infrastructure and classical economic thinking. One of them is Instacart. Instacart is a grocery store online that has a great user interface, a great digital experience, and they even promise to deliver your groceries within one hour in select cities around the world. They don't have any physical stores, they only tap into Whole Foods and Costco and Target and all the other physical stores, they don't have all the inventory, but they simply own the customer experience from online ordering to delivery. And I think this is so interesting because this is really something to be afraid of if you're an established player. And we're seeing this in a number of other industries as well. Here at Homes, we're seeing Luna away who are trying to disrupt the banking sector with their mobile-only bank. They don't have any banking infrastructure, they don't have any physical banks or any cell. All they have is a mobile app that has a user interface where you can actually sign up as a customer. And I think this is also an example of how to do business development with a customer focus. And the point here is, of course, that if you don't take this seriously, disruptors like this will come into your market and try to dominate you. Last up, some of the stuff that we're very proud to have been part of in the corona is some of the work we've done together with Vestas over the past couple of years. And a modern turbine has a number of sensors, a thousand sensors, and it generates a lot of data. And historically, Vestas has used this data for each of the purposes, for research and development, for maintenance and service and support and stuff like that. A few years ago, they wanted to try to commercialize this data to the world. And we've helped them create a number of digital services that are now actually a revenue stream for Vestas. So if you're a Vestas customer, then you can log into this platform, this app store called Vestas Online, where you can actually buy access to a weather forecast app, a power forecast app, you can get advice on how to position your wind turbines if you're building your next wind park. Some of you might be doing that. And all of these digital services are pretty interesting ways of creating a business model and interesting ways of creating new revenue. And all of this is based on historic data that Vestas already had. And I think this is a really, really cool way of creating value for customers, because obviously it's valuable, otherwise customers wouldn't be paying for it, but it's also a good business for Vestas. And the point to prove that is, of course, that the break even on this platform from initial idea to launch was actually happening after eight months. So even though it was a pretty big investment, even in Vestas terms, the break even was really, really quick. All right, this was a really, really quick two to four, through 10 examples that I think are really, really interesting ways of companies trying to create business focus with customer focus. I have a few finishing remarks or comments that I think perhaps sums up how I see business development in the age of the customer. The first one is that it's a complicated game. Business development, customer experience, product development, if you really want to succeed, if you want to create some of these outstanding experiences that I've shown so far, you need to coordinate the disciplines across, because they are so closely interrelated and interlinked today that it's impossible to create great customer experiences if you don't have product development, if you don't have business development, and all of them working together. Then I also think that it's time to reconsider how you measure success when doing business development. Again, revenue is of course always king, but I think it's really fair to say that customer KPIs, lifetime value, net promoter score, the share wallet, those are perhaps just as relevant to consider and perhaps even more important in the short run than it is to focus on revenue. And lastly, I've shown a couple of cases using data, data to do more dynamic pricing, intelligent pricing, data to do new business development with investors, and my point here is that data for most companies will be heavily under the estimated, and whether you use the data you have today or not, I think for the finance people out there, they should start considering putting data on the balance sheet together with all the other intangible assets because that's really where it belongs, because it's so valuable, there's so much untapped potential in the data you have if you just use it in the right way, and of course you use it to create both business value and customer value. Those were the words from me. Thanks. Thank you. Thank you. Thank you.