Kaihan Krippendorff takes a look at the history of the music industry to demonstrate how Spotify excels at delivering customers what they want when they want it.
In 2006, a pair of Swedish entrepreneurs banded together to fight an ongoing problem: Piracy in the music industry was costing artists, retailers, and record companies billions of dollars in lost sales. Customers who had previously gone to CD or record stores to purchase music were now evading legislation to download songs for free, instantly into their music libraries from services such as Napster.
When Napster unexpectedly shut down in 2002, Kazaa, another controversial service, sprung up in its place. Swedish entrepreneur Daniel Ek saw an opportunity to combat illegal online activity through another means: delighting customers.
“I realized that you can never legislate away from piracy,” he said in a 2010 interview. “Laws can definitely help, but it doesn’t take away the problem. The only way to solve the problem was to create a service that was better than piracy and at the same time compensates the music industry. That gave us Spotify.”
He joined forces with fellow entrepreneur Martin Lorentzon to create what is now the most popular music streaming platform in the world. How did they do it? By delivering what the listener wants to hear, when and where they want it—and sometimes before they even realize exactly what it is they want.
THE EVOLUTION OF MUSIC THROUGH A PROXIMITY LENS
An industry-wide trend is underway. Company strategies and customer desires are shortening the distance between when people decide they need something and how long it takes for them to get it. My friend and writing partner, Rob Wolcott, offers the following definition: “Technology is driving the production and provision of products and services ever closer to the moment of demand.”
Many of us have benefited from the somewhat creepy omniscience of Amazon’s anticipatory shipping—the retailer predicts products we might want and delivers them to a nearby warehouse before we’ve even placed an order. But the research Rob and I have done shows that this extends far beyond retail; proximity is the future across all industries, and it’s been in the works for years. In order to pinpoint where Spotify seized the opportunity to capitalize on proximity, let’s take a brief look at the history of music purchasing.
Key points include:
- The changing technology
- Napster and file-sharing
- Applying proximity to your business model
Read the full article, WHAT SPOTIFY CAN TEACH US ABOUT PROXIMITY, on Kaihan.net.
Kaihan Krippendorff identifies how the concept of a flywheel can be applied to business.
Most evenings, when I’m not traveling, I make time to get in at least half an hour on my Peloton bike. It helps to wind down at the end of the day. I’ll turn on a show (lately I’ve been slowly savoring this season’s episodes of The Handmaid’s Tale and waiting in anticipation for season 2 of Ted Lasso) and pedal to break a sweat. As my legs push the pedals around, the wheels spin faster and faster until I need to add resistance to slow myself down.
In the physical world, we who have studied physics are familiar with the coefficient of friction—the amount of force it takes for you to push one object against another. When the object is in motion, like the wheels on my bike, that coefficient goes down. Once I’ve gathered momentum, I don’t need to work as hard to go fast.
A flywheel takes this a step further, by accelerating a large rotor to very high speeds and maintaining the energy in the system as rotational kinetic energy. It takes a great amount of effort to start turning the flywheel, but once it’s in motion it builds momentum to keep picking up speed.
In the world of data, the concept of a flywheel is being used to increase customer centricity and satisfaction. My recent podcast guest, Ash Fontana, and the insurance company Lemonade Inc. show us how.
THE DATA FLYWHEEL
Any company that has at least dabbled in data analytics or artificial intelligence (AI) knows that it takes time to get started. In order for big data and AI to provide their desired benefits, a company must build a reservoir of customer information. This process can take years and can cause many companies to give up before realizing the effects.
Key points include:
- The AI flywheel
- Lemonade’s flywheel for customer centricity
- How to identify AI opportunities
Read the full article, THE CORE CONCEPT THAT IS DELIGHTING CUSTOMERS, on Kaihan.net.
Robbie Kellman Baxter shares a recent post from her series Subscription Stories. This week, why customer success growth closely aligns to the rise of subscription-based businesses, and how a customer success orientation can help dramatically increase your customer lifetime value.
Nick Mehta, CEO of Gainsight, which is often called the Customer Success Company. Nick is both an expert on the emerging discipline of customer success and the leader of a SaaS company that is dedicated to a forever promise of helping businesses develop deep and lasting relationships with their customers. We’re going to go deep on the discipline of customer success, what it is, why its growth closely aligns to the rise of subscription-based businesses and SaaS specifically, and how a customer success orientation can help dramatically increase your customer lifetime value. That is a key metric in the membership economy. Anyone who wants to build a forever transaction with customers can learn a lot from Nick.
The following interview is adapted from my podcast, Subscription Stories: True Tales from the Trenches.
Robbie Baxter: Let’s start with the basics. How do you define customer success?
Nick Mehta: We believe customer success was created out of this transition to the subscription business model. In more transactional business models, the way to make money, was to build something and then to go sell it. That is what created a lot of the economy out there. In a subscription business model is, as you know, if you build stuff, sell it and your customers leave, you don’t make any money because all that money comes over time and the lifetime value of the customer.
Key points include:
- Defining customer success
- The role of community in the growth of Gainsight
- Energizing virtual events
Read the full article, Why Customer Success Matters For Subscriptions With Gainsight CEO Nick Mehta, on LinkedIn.
Duygu Cibik shares an article that identifies the key factors that can help you find an efficient and effective customer success manager.
What is the right customer success manager (CSM) profile?
This is another question that CEOs and other executives raise often.
Clearly, desired CSM profile depends on your expectations from CSMs tied to CSM role definition. I’ve summarized my expectations in a previous post titled “What is Customer Success?” and I’ll cover the desired CSM skills and experience in line with those expectations.
- Consultative skills
To be able to provide advice to clients regarding the product, potential use cases that would benefit the clients and help clients optimize their business processes, CSM should act as a consultant partner to their clients. Because consultative skills is a broad term, I’ll try to divide it into specific components.
- Analytical skills and intellectual curiosity
For CSMs to be consultative, they need to possess strong analytical skills and be curious so they can quickly understand their client’s business model, the revenue and the industry dynamics. This would enable them to understand and position the most relevant use cases for those clients.
For example, consumer good clients use Sprinklr primarily for marketing, a retail bank may use it both for marketing and brand reputation management while an investment bank typically leverage Sprinklr to identify and manage potential risks to their brands.
Developing industry based playbooks help CSMs to gain this knowledge to a certain extend; that said if you have analytically skilled CSMs, you can put them in any client situation knowing that they’ll figure out how to deliver value to the client.
Additional points identified include:
- Emotional intelligence
- Client management skills
- Domain knowledge
- Project management skills
- Commercial acumen
Read the full article, What is the right Customer Success Manager (CSM) profile?, on LinkedIn.
Azim Nagree explores the necessary steps to take when the current crisis is over and shares a template you can use to build your business case.
Many of us are spending our time thinking about (and writing about) how to get through the current Coronavirus-driven situation. For those who have had to endure headcount reductions, your energy and focus is probably on just getting through the day-to-day workload.
But it’s important to think about what will happen when the current crisis is over, especially as it relates to hiring. So, when management is telling you to cut back on headcount, how do you make the case to start hiring again?
The answer is simple – data.
When you are asking for additional headcount, make sure that you have the data to back up your request. It is likely that every department will be requesting headcount, and the executive team will not approve everyone’s request. Those with a solid business case backed up with data will win, compared to those who have generic requests based upon intuition. More simply said: Bring a gun to the knife fight
Points covered in this article include:
- Sales targets and quota capacity
- Demand generation
- Customer support and customer success
Read the full article, What Happens When This Is All Over, on LinkedIn.
Robbie Kellman Baxter explains why the customer relationship is even more valuable and volatile during times of crisis and provides six practical steps you can take to maintain strong customer relations.
Subscription-based businesses seem to be the most resilient during this time of crisis. With predictable recurring revenue, they have greater flexibility to withstand the storm. But there’s more to it than just revenue. To hang onto customers during a crisis, you need to build a forever transaction with the people you serve.
Around the world, everyone is adjusting to their own personal “new normal.” They’re sheltering in place. They’re worrying about the elderly and immunocompromised in their community. Their kids are distance learning and not going to school or childcare. Most people, except those on the front lines and in essential businesses, are working from home. And many of those who own or run businesses are trying to hang onto their customers when seemingly all forces are working against them. Smart marketers know they can kill their brand if they screw this up.
The six steps include:
- The focus on the forever promise
- Determining your best members
- Expanding customer success
- Learning from frontline team members
- Placing the customer at meetings
- Identifying the customer challenges
Read the full article, How to Hold onto Your Customers in a Crisis – and for the Long Term, on LinkedIn.