A moment of truth is that one magic moment where a company is evaluated – fairly or unfairly for the way its products perform, the way it interacts with the customer, the way it delivers its service or any instant that consumers come across a product/service.

I will always remember a speech given by Tom Peters (Passion for Excellence) where he was emphasizing a moment of truth by using a quote from an airline executive. The executive said ‘Tom, when passengers see a coffee stain on the tray table in front of them, they automatically assume that we have engine troubles.’
A bit extreme but if you follow the logic from the passenger’s point of view, the passenger is thinking ’ Well if they can’t at least take the time to clean the coffee stain, I hope that they are taking the time to service the engines…?’

Another example of moment of truth is when a fellow Romanian steps out his car to help you push your car out of the snow during our last snow storms. You certainly did not expect it but it gave you a renewed reminder on how hospitable Romanians can be when things are not going well.

Here’s my example. Someone very dear to me received this sms for an outstanding balance on her bank card:

Cod IDclient XX8644YY: La 06/02/2012 suma datorata este 67.41 RON. Restantele se raporteaza Biroului de Credit.

In English the translation is: Client code: XX8644YY, as of 06/02/2012 you have an outstanding amount on your bank card (owed to the bank). Unpaid sums will be reported to the credit bureau.

Context: Yearly fees were accumulating on the card which had not been used for quite some time principally because my friend has other cards and her main banking was done with other banks.
I assume that banks know that clients have multiple cards and accounts.

Assessment: First of all, total lack of politeness. No ‘Dear Mrs’…or ‘we would like to raise to you attention’…
Second no explanation – we go straight to the credit bureau.
Third: No warnings; this came ‘out of the blue’. No emails, no attempt to call and perhaps enquire as to why this was left unpaid or inactive. Perhaps there was some confusion; who knows what can happen when we call customers to get information or feedback!

I sound cynical (my Canadian heritage) but I am mostly disappointed as a marketer!
This bank which will remain nameless spends a tremendous amount of money on Above the line (ATL) advertising in TV, Print and outdoor with 3 Romanian sport figures.

I mean the visuals are nice, creative, welcoming, and frequent and judging by how long these 3 celebrities have agreed to promote the bank, I assume that the campaigns are working. In fact my friend held on to the card (albeit inactive) for that very reason…it had a celebrity on the card. Now that is powerful Marketing.

Result: My friend was upset with the message and she was not aware that the card had become inactive (I mean the last time I checked, we were all too busy to check to see how ‘active‘ we have been with some of our bank cards right!?). This whole matter was unbeknownst to her. She proceeded to call the bank and cancel the cards, rather…all cards, if this is how they treat customers. Ouch!

The solution:
All touch points and customer facing departments have to be in unison, like a classical music symphony. They need to follow the same music, the same beat and the same song book. Product Managers and Marketing communications folks busy trying to get new customers need to be attentive what the customer care staff or retention/loyalty or collections teams are sending to the customer via SMS. This is inexcusable.

Don’t spend money by swaying customers with nice ads with powerful icons unless you as marketer have complete control of all touch point messages. We don’t expect Marketing to actually make collection calls however any message, let me repeat ANY message to customers has to be consistent with the brand and what you are conveying to the market.

All customers bring value even if their revenue seemed insignificant. The value they bring is how well they will refer you or speak about how they were treated by your company even if the relationship between your company and the customer had to end. Do it gently.

Your homework
As the marketing leader emphasize upon your peers that interact in some way or another with customers such as Sales, customer care, retention/loyalty, collection, PR and operations that all messages to customers, have to be consistent. Get your team to collect all messages (‘canned’ or pre preprogrammed) that were sent to customers in the past and insist that all need to be reviewed by Marketing.

This may be a long laborious task but well worthwhile the time – you may uncover other ‘shockers’.

As the lead Marketer, make it a point to continuously communicate to all your peers that Marketing owns the messages to customers. By rallying your organization with this precious yet effective direction you will be on your way to ensuring that those moments of truth are fair ones.

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Def: Identify and selectively target prime groups of customers and potential customers, to understand their preferences and to respond with different marketing strategies that are appropriate for each chosen segment.

Case: Market sizing and segmentation

You are the new CEO of Kool Concept, a new residential real estate developer, a greenfield project in the heart of Cluj, Romania. You can basically build whatever you want however you must address potential demand and meet revenue and KPIs (Key Performance Indicators). To be successful your residential concept also needs to incorporate other elements to attract residential owners: Offices, large employers, schools, retail, professionals, fitness centres, public transport etc.

The research company you hired came up with an extensive research and analysis on the addressable market in Cluj:

–     You know that there is an annual demand in the city of Cluj to build approximately 14.000 housing units annually.

–     Very few people live in houses currently, but there is high demand for single-family residences. Nearly 35% of those who intend to purchase a residential property would like to purchase a house.

Residential market segmentation

Income is the most critical predictor of ability to pay for say, high-end housing. You assumed the target market for housing in the Kool Concept development is concentrated in the segment >1.100 EUR/ month net income. In Cluj county, there are currently 7.800 households meeting this definition. Ten years from now this is expected to rise to over 20.000.

The research company combined income and social class with other factors to create a more complex, needs-based segmentation to help illustrate demand. This analysis delivered the following five segments:

• “Young Rich Kids”: Both young and successful entrepreneurs or children of wealthy parents who are studying in Cluj.
• “High potential students”: Students or recent graduates who have an above average level of interest in real estate and improving their living conditions
• “First Time Home Buyers”: Young adults in their mid-20s or early 30s, they have generally started their first home with a partner. Many have young children,  socially and physically active, have cars, are online and sophisticated consumers:
• “Happy families”: Middle-aged families in their 40s, married with older children at home or who have begun to move out of the house. Significant household equity, 80% of those want to buy a house, but only half intend to get a mortgage. Less active than younger segments, fewer tendencies to go out.
• “Empty nesters”: Older couples in their 50s/60s whose children have moved out, accumulated wealth and want to buy a place to enjoy their twilight years. Currently own a place, typically larger, with 3 – 5 rooms. They do not go out to bars and restaurants but enjoy culture, sports matches, having friends over, etc: 
• “Foreign expatriates”: Upper managers of current and future investors in Cluj will be present in the city for 2 – 4 years and will demand the highest quality housing.
• “Repatriate Romanians”: Roughly 2.5m Romanians have left the country since 1990. You estimated this could total 3.000 – 5.000 individuals over the next decade.

So what?

Now that your research generated what is called “Primary” data – data that has been researched and paid for (whereas “secondary” data is what you find in reports or the web, usually free), you now know that there are different categories or “segments” of customers to address and target.

Then what?

Once you have done the research and identified the clusters, the next task is to target the right product/message with the best media – this is called  „hunting with a telescopic sight “  vs. using the shot gun approach.

At my last employer ( Romtelecom) once we knew our segments, we targeted them with laser precision by offering them a product which we instinctively knew they would buy.

Results:

My direct mail (DM) campaign gave me a 12% success rate ( unheard of in the business) versus the usual  2-3% success rate.

Why were we succesful?

1)   We shocked  the segment since they had never received an offer from Romtelecom.

2)   They were targeted –almost a perfect fit  with the new product (hint:  I could see their consumption behavior based on their current usage).

3)   Our media or advertising campaign was incredibly cheap. Instead of using TV, radio or print, we used envelopes, stamps/courier service and a few follow up calls from the call centre.

All this because we did a bit of research, grouped customers with cool descriptors called segments, made a few assumptions and tested a different approach.

Ta Dah!! There lie the benefits of Segmentation!

Now I also need to admit that our product was indeed what they wanted.  How did we know that?

Well because all that research that we had commissioned in the first phase indicated to me what they were interested in buying. All we had to do was to “action” the research with a real campaign.

Q. Cost of Segmentation research.

A. Approx. 60K Euros. Regardless of company size (big or small) the process is the same and so are the results.

If your business is small then you need to use www research (web). The people in your team are critical. Any good Research Analyst will understand Segmentation even if they have never really prepared one. This was the case with my team – we learned from each other.

 This segmentation discussion was more in line with the classical approach which stands the test of time.  I would need another article to explain newer approaches to getting primary data through “permission based” or “inbound” marketing”   techniques in order to gather info about segments.

On a closing note, when Jim Hubley our CEO first told me “Paul…Set up segmentation for us” I said  “of course Jim “  walking away and not having a clue how to do this.

After a few months building the team, setting the direction, getting buy-in as well as convincing top management the merits of Segmentation we were able to deliver a 12% sales rate on our Direct mail campaign!

So as you can see it took time but it was an investment in people, processes and getting a better understanding of customer segments which enabled us to become more strategic in our approach.

It paid off…Happy hunting!

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