Article
Boreholes in the outback
This article has been taken from The Gen newsletter - Spring 2009.
Click here to download the pdf.
I recently read the account of a visitor to an Australian cattle station. Impressed by the scale of the 300,000-hectare farm, stretching beyond the horizon in all directions, he asked the head stockman, ‘How on earth do you maintain your fences?’. Back came
the unexpected reply, ‘We don’t build fences. We sink boreholes.’ The business parallel struck me immediately.
None of us want customers defecting, especially in the current economic circumstances. We can try ‘fencing them in’ with promotions and price cuts. It’s relatively easy to do, but expensive. And of course there will always be competitors ready to ‘tear down’ our fences with better promotions or deeper price cuts. Rather than thinking of ways to prevent our customers ‘straying’, how can we make ourselves more attractive to them? How can we deliver more of what they want and need?
We have found that a marriage of service and product can often reveal new ways to unlock opportunities and deliver value that lies beyond the scope of current offerings.
In the pharmaceutical industry, for example, the ‘razor, razor blade’ model is well established, whereby a manufacturer supplies both the injector and the drug itself. Eventually, ‘generics’ companies will be in a position to compete for that ongoing
drug supply. The introduction of artificial barriers, such as lock outs and RFID tagging, is rarely well received by customers: they know they are being held to ransom. However, with appropriate design of the injector and drug packaging, the manufacturer can provide hospitals with a service giving full visibility of drug inventory and actual usage, ensuring optimal reordering and the elimination of waste. The hospital can still buy from alternative suppliers, but those suppliers can’t help to optimise procurement in this way. Such a scheme delivers true cost reductions to the hospital, while reducing the competitive threat to the original manufacturer.
The market opportunities arising from the novel combination of service and product are limitless. Monitoring the state of endangered buildings and structures for insurance companies is another example. This typically involves multiple site visits by surveyors to perform manual measurements. Now, using remote sensors connected to a control centre via the cellular network, data collection can be automated. This delivers operational efficiencies to the surveying firm, but delivers even greater customer value: the insurance companies get more timely status data which significantly improves their own business process efficiency; and the insured gets the claim settled more quickly.
Closer to home, the M-PESA mobile money transfer service, developed by Vodafone and Sagentia, brings together mobile phones and micropayment services for people
in Kenya and beyond. Not only does it deliver a much needed service for phone users – literally changing how people live in the developing world – it has also reduced customer churn for Safaricom, Vodafone’s partner network in Kenya, and created heightened regard for Vodafone and its pioneering work.
We can communicate with our customers more freely, precisely and individually than ever before, but we still need the mindset that asks, ‘What is the ‘borehole’ for my customer? What needs am I in a position to fulfil?’. Sagentia has proven tools and techniques for eliciting unmet customer needs and experience in delivering award-winning service innovation. This might be the ideal time to reach for your divining rod and work out where to sink your next borehole!