Profiting from Customer Dissatisfaction

The Apollo Space Program. Tesla. Disney. Salesforce. Apple. LEGO. Amazon. These are just a few of the many inspiring case studies in my book, Be the Go-To: How to Own Your Competitive Market, Charge More, and Have Customers Love You For It. And though nearly all of the fascinating stories deal with these organizations’ early days, when they were small unknowns trying to make a name for themselves, I still get this question: “You talk about all of these behemoths. Does the step-by-step approach in the book also apply to smaller companies?” And the answer is a resounding YES!

Case in point: The Verde Group, a global market research consultancy. Also mentioned in my book, this company is a perfect example of the Apollo Method for Market Dominance™ in action for a smaller, privately held but outrageously profitable company. If you aren’t a senior executive responsible for customer retention, you may not know about it. But rest assured, it is the Go-To in its space. So how did The Verde Group do it? What can you learn from its experience?

To answer those questions, let’s do a high-level walkthrough of how The Verde Group implemented each of the Apollo Method’s four phases.

LAUNCH

In the Launch phase, the goal is to develop a point of view on the common, critical and urgent market problem you are going to own and a unique solution that will deliver such powerful results that your customers will gladly pay you healthy prices, earning you higher margins. You then launch your point of view and approach into the market.

For The Verde Group, it all started with a railroad. Early in her career, the firm’s founder, Paula Courtney, was working in customer strategy at CP Rail in Canada, using her data science and psychology background to understand what made customers tick. “I began to notice something surprising,” she said. “Customers who had complained the loudest and been the most unhappy… once we fixed the issues, they became our most ardent, profitable supporters.” Intrigued, she left the railroad and teamed with a like-minded colleague to build a firm focused on this problem and point of view. I’ll frame it using the Why/What/How Message Framework from the Apollo Method:

Why there’s a problem:

At any given time, the typical North American company is at risk of losing anywhere from 10-20% of its revenue due to customer dissatisfaction.

What you should do about it:

By proactively addressing that dissatisfaction, you can actually make those customers more profitable.

How we’ve uniquely solved the problem:

The Verde Group has developed a unique solution called Revenue@Risk®  to help companies understand these sources of dissatisfaction, quantify the revenue at risk and determine how to turn unhappy customers about to leave into outrageously loyal and highly profitable customers.

Over time, the company went through several ownership changes but never veered from its original mission. Landing back in Paula’s hands, she rebranded the company as The Verde Group and launched with a new website announcing the company’s positioning in a four-word tagline: Profit from Customer Dissatisfaction. It met all four of the ABCD criteria I explain in my book: Actionable, Bold, Controversial, and Distinctive. The Verde Group also issued a manifesto (white paper) laying out the point of view and proving it with data from a study of over 90,000 customers at dozens of companies. The study showed that an increase of just 5% in customer retention can account for a 20% increase in productivity and a 50-100% increase in profit margins. The Verde Group then used that study as the basis for an incredibly successful public relations (PR) campaign in Canada. This garnered coverage on every major radio, TV news and daily talk show across the country.

IGNITE

The Ignite phase of the Apollo Method says that another key to becoming a Go-To is to lead a movement around your point of view and approach by rallying influencers and engaging powerbrokers who will evangelize the point of view and approach on your behalf.

To do this, Paula approached a “powerbroker” colleague who became a believer and introduced her to the Baker Retailing Center at the Wharton School of Business, University of Pennsylvania. The Baker Retailing Center quickly embraced the point of view and decided to collaborate with The Verde Group on a series of studies that they then jointly publicized and took to numerous other powerbrokers and influencers across North America. Those folks then jumped onto the profit-from-customer-dissatisfaction bandwagon and evangelized the message. Like ripples emanating from where a pebble is tossed into a still lake, word of The Verde Group’s point of view and unique methodology spread, changing hearts and minds along the way.

NAVIGATE

In the Navigate phase, you lead customers along a journey by providing a complete solution that leads to results. It’s one thing to proselytize a point of view and talk about a unique approach, but at some point, you must deliver on your promises.

The Verde Group’s Revenue@Risk service offering did exactly that. In Paula’s words:

Unlike market research firms, we decided early on that we would sell to the C-Suite, because there you are selling the outcome of the work and have a better chance of influencing what they do with the information. We have always packaged our pitch around outcomes. “Hire us because you need to solve a business problem – you have a customer retention issue, you want to know where to put your dollars, how to innovate…because competition is eating your lunch. Don’t hire us to merely take a pulse on what customers think of you. We’re the sledge hammer, not the thumb tack.”

Many of The Verde Group buyers across industries want to fundamentally change their businesses by becoming customer centric and pinpointing real and potential sources of dissatisfaction they can proactively address. Most importantly, they also want to quantify the financial value of each problem, so they can prioritize. For this reason, Verde’s projects tend to be larger and more lucrative than the average market research project, but the fees are dwarfed by the financial return that clients realize.

One part of the Revenue@Risk secret sauce is a massive database of customer survey responses collected across numerous industries and a taxonomy of survey questions that allows Verde to query the database for benchmarking purposes. Clients can find out how they compare to like companies with regard to customer satisfaction and dissatisfaction. Historical before-and-after data also helps Verde tell clients which operational and service improvements will have the greatest impact on customer loyalty and spending based on the company’s particular situation and goals. Verde also uses a high-touch account management approach to steer clients toward results. The ROI on Verde projects can be enormous and rapid.

ACCELERATE

The Accelerate phase of the Apollo Method is all about adapting to change, building on strengths to broaden your market reach, and picking up speed as me-too copycats come after you.

After nearly two decades in business, The Verde Group continues to revolve around customer dissatisfaction but has expanded its offerings to include Performance@Risk (how the behaviors of your customer-facing sales or service agents are affecting customer spending behaviors and loyalty) and Reputation@Risk (problem experiences that are most responsible for negative word-of-mouth about your brand). The company also now offers various dashboards and tracking programs that allow companies to proactively head off customer defection or spend decay. Initially focused mostly on the retail and communications sectors, Verde also now serves a range of industries, including financial services and insurance, agriculture, manufacturing and logistics, and pharmaceuticals. The key for Verde has been to remain multiple steps ahead, constantly refreshing its own company vision and strategy, constantly adapting to market changes and constantly innovating in ways that will help clients.

PARTING SHOTS

Reflecting on the journey toward market dominance within the Verde market space, Paula offers a few additional thoughts on keys to becoming a Go-To:

“Focus has been absolutely essential to our success. People have tried to get us to broaden past our core knitting, and I have always resisted that because of the power of focus. No one understands how to solve this business problem like we do. And that’s what makes us so valuable to clients.”

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“Early on, having a big anchor customer was key for gaining traction and momentum, even though we had to quickly expand beyond that, of course.”

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“I can’t overstate the importance of the Ignite phase and powerbrokers, and yet I watch so many companies skip right over it. Our point of view, thought leadership and Revenue@Risk offering set us apart, but our Ignite activities are what really propelled us. Cultivate those powerbroker and influencer relationships and get them on board.”

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I’ve been watching The Verde Group’s story unfold over the years as both a participant and a spectator. It’s been a marvel and an inspiration to see how this company has successfully established itself as the Go-To in a sea of me-too market research firms. Through economic booms and busts, it has remained highly profitable by providing remarkable value to clients and true market leadership to its industry.

Find out how to become the undisputed leader in your own market by reading the book –  Be the Go-To: How to Own Your Competitive Market, Charge More, and Have Customers Love You For It.