Five blind spots that get in the way of customer understanding and growth - Interview with Toni Keskinen of 180ops

0:01Welcome. This is the PunkCX podcast. My name is Adrian Swinscoe and I'm an advisor, bestselling author, Forbes contributor and general explorer of the service and experience space. On the podcast, I seek out and interview entrepreneurs, leading business people, authors, tech leaders, academics and generally cool people doing interesting stuff in the service and experience space. Check out the archive at adrienswinsco.com. That's enough from me. Let's get into the interview.

0:34So welcome to the next edition of the Punk CX podcast. With me today, I have Tony Kaskinen, who is the CPO and co-founder of 180 Ops. Hey, Tony, how are you doing? I'm doing very well. Thank you for inviting me. You're very welcome. Now, we actually met in the flash in, I think it was Atlanta in January. I think it was January. Yeah. It was such an age ago. But we've been talking and we had a chat after that. And that's what was the background of setting up this kind of podcast. And so before we get into some of the things that we talked about, I wonder, Tony, if you could give me a bit of a thumbnail sketch on you and the work that you do across at 180 ops happy to i first started in sales and then moved on to marketing and advertising i worked eight years at the at ocuva networks agency in finland and as a planner and account director concentrating on well customer loyalty customer communications in in direct mail and in in digital services And back then I started working on customer journey analytics.

1:51It was something that we started in 2004 and there was mass customization professor from MIT, Jarmo Suominen, guiding us forward. And that led to the kind of discoveries and insights that I published five books about and four best practice articles in AdMap and work. and then moved on to media agency side as a i was running the intelligence and insights team working as a strategist and later on also run the cx business which was about really automating customer service experiences and and optimizing on channels and and so on all this work and um writing books and creating theories uh it was something that led me to more concentrate on transformational work for the biggest telcos and retailers and uh i would say that that journey from from learning from from bottom up like like the customer journeys and practical insights that were there, then transformed into something that allowed me to communicate about the priorities in a corporate management, the resource allegations and priorities and allowed me to do different type of work.

3:19And as an outcome, that journey and all that learning is now turning into an engine. my my dream was that uh at some point i would come up with something that would my billing and my salary would not be dependent on the hours that i spend with customer and and finally i think i i'm there now awesome i mean so to dig into that a little bit i mean And we were chatting recently and you were riffing on a number of blind spots related to those insights and data analysis and resource allocation and things that you think organizations suffer from. Particularly when it comes to understanding their customers, their growth, and where they should be focusing their resources.

4:14and I thought actually blind spots, we'd love a bit of a blind spot really, because it speaks to kind of opportunity. And so I thought it'd be good to, a good idea to have you on the podcast so we could shine a light on some of these, these blind spots and then get people to think about them. And so I thought it'd be just good just to go through some of these blind spots and you can, you can tell me about what they kind of mean. And so there's five of them. So let's go through each one and so the first one you talked about supply spot number one you said that you said that offering penetration as a cx measure is completely is something that's completely missed and it should be systemically measured and managed and and i was like going okay i have no idea what that means but so i thought but i know a man who does that's tony and i thought tony help me understand what is what it means but what happens and what yeah particularly what happens when you start measuring and managing this sort of metric yes so this is something that i learned in my consulting days and and uh when you start looking into offering penetration so how many offerings are customers actually using you come up with a figure that shows that majority like 80 percent of customers are only using one or two offerings the average revenue per account on on these customers is low and when you take a look on the on the deeper penetration customers that means that they are using way more offerings their average revenue per account is way higher and they represent 80 % of the company's total revenues.

6:00And if we think about offerings, they are on the customer perspective, they represent jobs to be done. So offering penetration is really about how deeply are you integrated with the customer, how committed the customers actually are in collaborating with you. And as a blind spot, how this then translates is that when companies are doing their resource allocation, they use this pyramid model. On top, you have eight type of customers. There are a few of them, and they represent majority of the company's revenues. Right. This is where all the sales resources are actually allocated. Now, then comes the C &D customers.

6:47C &D are that represent the 80 % of the customer base and they have low current average revenue per account. And the total revenue from these customers is little, but it doesn't tell anything about their future potential. It only tells about the historical billing. And that's where the blind spot comes in that these customers that have strong growth potential. and they could be highly valuable for the company, but no one is actually responsible for growing them systematically. It's a lost opportunity that is sitting there in your customer database and companies simply don't realize that. Right.

7:34That reminds me of... So I remember hearing a story where somebody was... I think it was an Australian bank, actually, did a piece of work around particularly this they didn't call it offer penetration but they they talked about it's almost like alignment of different customer groups and their maturity across a life cycle and what they found out was that there was a a set of customers that they were at the full maturity end of the scale and they and they've gone through this journey that was go we start with product one and then we graduate to product two and then over time that they've taken on products three so they're like a three products kind of portfolio set of customers but what they also can then realize is that there's another subset or another set of customers that didn't have the same level of maturity because they'd only gone product one to product kind of two and therefore they you know but they had the similar sort of markers of these other customers um and so they had similarities but they hadn't kind of opted for product sort of three and i guess that's all what they're talking about because then the interesting thing that they did is that they said well why don't we they look deeper into those customers into their behavior and they realized actually that many of these customers frequented the retail network retail branches of the bank and so rather than doing what many organizations might do go like oh look here's an opportunity these people might not necessarily uh but may be open to this they would maybe send them an email saying oh you've got product one product two kind of why don't you think about product three but they thought well actually that's what everybody else does right and most of the times email campaigns don't really have the greatest result they conversion rate but they thought well because they they they looked at behavioral data because they frequented these branches they thought why don't we work with the retail network so when they next come into um to branch whenever that might be once they're finished conducting their business they'd be like a pop-up screen yes the teller would say hey we've been doing some work and they're using sort of behavioral science techniques like there are people like you that have that are customers of our bank that have gone product one product two like you but then have also then graduated onto product sort of three is that something you'd be interested in and they were able able to achieve a i think it was something in the region like a 32 33 percent conversion rates of that you know that offer which is unheard of in those type of outreach kind of campaigns but did it so because it was properly aligned around offer penetration behavioral characteristics behavioral type size techniques not really hard selling just like soft selling and i thought that is that that's what you're talking about right yes it is exactly what I'm talking about.

10:47For example, Ansof Matrix was designed to kind of measure the effort levels of how difficult it is to sell to different types of customers, selling familiar and non-familiar offerings to existing customers or new customers. And it clearly showed that cross-selling new familiar offerings to existing customer is the least effort. So the effort reward level in sales productivity is much higher when you are cross-selling to existing accounts. Right. But when companies don't, what we do is we create a potential model at offering level, which means that we actually have a view of the customer's total potential at offering level.

11:37So what is the wallet size in total and at different offerings. And that allows us to kind of change the way how companies see priorities. Right. The thing is that this is something that unless you actually model it and bring it to people's attention, it's not clear that are you doing the right things or not. Right. Right. And is that related to the sort of, and connected to the second blind spot that you mentioned, which was about strategic segmentation and portfolio goals? Yes, it definitely is. Tell me about that sort of connection and that sort of particular blind spot. um when i've been doing um strategic segmentations what i'm talking about now is is larger b2b companies which means like telcos and and uh bigger players that have dozens and they might have tens of thousands of skus they they have a lot of different types of services the nature of these services can be widely different you can have a you know in an individual company you can have SaaS offering and then people services, professional services, you can have hardware in sales, investment goods and so on.

12:56So the variety can be stunning. Now, when I've been doing this consultatively, I've been doing value chain analysis of because on the value chain, different types of companies have different jobs to be done. If you look from procurement to daily operations and to customer facing functions, different types of companies have widely different needs in and how they connect with your offering. Now, when you have mapped this out, it gives you a way of looking into that what is the maximum value your company can produce for a bank, for a manufacturing company, a retailer, or different types of companies.

13:48These segments also represent wildly different levels of commercial value. And this allows you to prioritize that. How do I actually prioritize these segments? And what is the monetary value currently and what is the upside of concentrating on certain segments. And so portfolio goal is an individual companies. When we do this modeling, we do it at offering level and combined with standard industry classification three and five level, which means that we model the way how current customers are buying different types of services and what kind of combinations can we find there? And where do we have evidence that shows that these types of companies are prone to use this type of offering?

14:45When you have the data that we produce and you have the value chain analysis, you have both the monetary value and the story. Why should the customer actually be using your your full product offering line instead of just one or two offerings and when we have this type of portfolio goal for every single customer it means that key account managers now have a view that how do I maximize my named customer's value how do I prioritize different accounts that I'm responsible for? Where's the money that I should go after? And naturally, this has a major impact on, if we think about sales performance, quantity, direction, and quality have been recognized for decades as the holy trinity of sales performance.

15:44But getting answers to those questions that how do I increase my volume of meeting customers, meet the right customers at the right time with the right message, the direction side, and then looking at the impact in hit rates and conversions is something that has been really difficult to manually kind of crack. And that's where 180 Ops comes into play. And is that, so that, because when we were talking, you were showing me how this works. Because actually what it does do, when you think about it that way, it sometimes offers, from a sales perspective and then broadly our own experience perspective, it offers slightly counterintuitive insights.

16:31Because most people, if it's key account management, they might go, ah, we need to spend more time on the big accounts and make sure they're happy and try and sell them, upsell them and cross sell them and all these different sort of things. that actually what you're kind of saying when you take this segmentation and portfolio goal sort of thing, I think about, you know, their potential around kind of the offer and kind of the similarities that the different companies and customers kind of like can have, actually can tell you maybe to focus on a different, what you might be seeing as a lower value set because there might be bigger kind of opportunities there.

17:10Is that right? Well, that is right. And if we think about in a wider scale that how do we maximize the storytelling and marketing that we do? Right. Are we talking about individual offerings or are we talking about the wider value that what does it mean for a customer type of A to be our customer? How can we help? If we have a more holistic way of telling the story and telling the full value of how we can help them, it's a completely different discussion. Right. Okay. And how does that connect to the third blind spot, which is one related to segmentation and future growth possibilities? and tell me a bit about that and what actually currently happens and what companies should be kind of focusing on instead yeah i kind of crossed the two and three so the that's fine i thought i thought that might be the case the portfolio goal is is is about individual customers and key account management and and then the strategic segmentation really goes into let's say for example if we think about standard industry classification, I think there's all in all 3 ,600 lines that represent different types of industries.

18:42And it's an impossible combination to kind of manage 3 ,600 segments. But when you combine those with the value chain thinking, you recognize that they have similarities they have same needs they have same use cases and jobs to be done that needs to be answered and when you when you kind of get there you can kind of put together like six to eight large segments that have the same needs the same purposes and that's really something that should be the corporate management foundation. How do we actually run our operations? Where are the priorities? How do we maximize the value of the assets that we have called products and services?

19:39Right. So many companies, for example, I've worked with companies who had six to eight segmentation tools in their disposal and they were using them, but no kind of overlapping strategic segmentation that would bring the group together and see the market as a whole. If we think about telcos, for example, they have subsidiaries and every single subsidiary is looking at their market from their individual business perspective. what they are completely missing is the synergies between different offerings right i see as a group of companies we actually can serve customers in many more many more ways okay no that's fine i thought i i did think that there was because these these um blind spots they they um it's almost a bit like it's a bit like spotlights you know yes on a dark room and they're not necessarily distinct there's a there's the bits of overlap kind of be you know between the you know between the two but you can look at them individually but you also need to look at them holistically as that they all kind of like sit and but it and actually kind of overlap but then because the next one that you can talk about is almost like a behavioral sort of thing and um you talk about there's blind spot around up sales and renewal and cross-selling and new customer acquisition i mean can tell me about Tell me about that one, because that's, there's almost a bit like the segmentation portfolio goal feels a bit like it's a company enterprise level.

21:14And then there's a segmentation of the future growth possibilities one, which is a bit more like an individual kind of level, but more kind of like customer kind of like led sort of like blind spot. But then there's a behavioral one. This blind spot number four is a behavioral sales level about up sales and renewal, cost selling and customer acquisition. What's the kind of thing that's going on here that you think is the dysfunction? If you think about business management, CEO, CFO, product line manager, or somebody on top of the company, these people have access to CRM. They can see what's happening in the pipeline.

21:52But what the pipeline tells you, it's bluntly showing the pipeline. So activity opportunity offers hit rate, close rates. But it doesn't really tell you that what is the content of those, what are the salespeople actually driving for. And management should pay attention to whether the sales is creating new value and deeper customer relationships or creating new ones or whether they are just maintaining the existing customer relationships. Because upselling and renewal are a lot of that is about maintaining the relationship. when salespeople are actually cross-selling, they are creating new value.

22:38They are expanding the customer relationship, tying the customer deeper into collaboration to work with you, improving retention, creating market share and new revenues that were not there before. And this is something that also is about sales performance. So how do you run performance of your operations? It should be actually managed as an incentive model too. Right. Because when we are incentivizing sales for sales work, we should be sure that we are actually incentivizing them to create this new value and new customer relationships and expanding market share and creating new value instead of the repetitive renewal and upselling.

23:33And so am I right in saying that when we talk about upsells and renewal and cross-selling and things, that actually some of that activity all gets lumped together. And it's almost like it's a big signal, but you're saying that there's actually a stratified level. There's distinct signals within that big signal that we should be splitting out because they're different. And by not splitting them out, we're missing an opportunity and more insight. Oh, absolutely. We definitely do. And in terms of insights, when you sell certain offering, you have very different average deal styles, time to money, effort, reward levels.

24:17When you are doing renewal, upselling, cross-selling and new customer acquisition. These figures are also way different in different segments, as well as in different offerings. So in order to really manage your performance, you need to know how these differentiate. Some offerings are completely impossible to sell to new customers as a first proposal. And it should be banned because it means that what you are doing is counterproductive. you are actually steering customers away and you're not winning. And it's just wasted time. And that's very much related to the fifth and final blind spot, which is around you need to be more strategic around how different offerings influence the customer relationship at different times to understand if you do something, sell something to one customer, that might be actually that's your one and done and that's you're never going to go anywhere.

25:19You need to, sometimes you need to, rather than just taking the money as well and taking the sale, filling out the order form, you'd be like, hang on, we need to be a bit more strategic about that. Yes. Is that right? Totally. How do different offerings influence the customer? I mean, how should we be splitting those things out, do you think? That's the blind spot five. Yeah. so um when we analyze offerings we recognize that some offerings are great door openers so so creating a new customer relationship some offerings are performing really well as a first initial offering then you have offerings that have a halo effect and an acceleration effect which means that when you sell this type of offering to a customer it feels quite natural for them to also start buying b c and d so if we recognize that we have these offerings that have a halo effect those should be introduced to custom relationships early because that creates the adaptation curve average revenue per account and loyalty impact like like naturally without any push or or anything like that on the other hand we also have offerings that play an anchor role.

26:40So they tie the customer to you. And when the markets are turbulent, and we need to find ways to improve retention and loyalty, these types of offerings are the ones that kind of create that the customers become weatherproof. Yeah, right. Okay. And when we understand the role that these offerings are playing in the customer relationship, we can actually create the kind of approach that you were talking about, that let's first start with offering one and then move on to two and three. Well, we can actually segment the markets in a way that how do we grow these segments systematically? And how do we maximize the lifetime value and average revenue per account development on those accounts?

27:29Because that creates a sustainable business model where you also recognize competitive advantages that are difficult to replicate because they are, for example, an outcome of M &A purchases and synergies between offerings. And, well, there's a world to be discovered that most companies don't even recognize as a challenge. Right. So you're the expert in this kind of field and tell me when I was talking to you about it, I was like, you know, I was like, my word. And I was sort of like, there was times when you were sharing it to me and explaining it to me, I was a bit like, I was twisting my brain trying to kind of keep up sort of thing.

28:16And I was a bit like, oh my word, this is proper data mining at a fundamental level. You're looking for gold in all of this kind of data. And it might feel slightly esoteric, particularly some of the stuff I talk about, but it's really kind of like valuable. What I wanted to do is to try and ask you then, it's like going, well, there's all these blind spots and there's all these things that kind of companies do. And there's all the ways that they approach it. But actually, they're trying to bring it to life about kind of going, oh, right. Tell me what this means in practice. Tell me how this has sort of transformed somebody's approach or something.

29:02So, I mean, do you have a couple of examples, let's say, where you've been able to apply what you're doing at 180Ops with the data analysis and the classification and the value chain modeling and all these different things to go, oh, this is kind of what they were doing. This is what we've allowed them to see. This is now what they are doing. this is what's kind of happened as a result to bring to show us the show us the value as it were yes we've got a couple of examples that you can share that would be that'd be awesome well um when we start working with companies often they have a new strategy or they have a strategic program like like commercial excellence sales excellence sales transformation rev ops uh or they are starting to use OKR.

29:50So they have recognized that they need a new perspective. They need new insights to do the changes in a data-driven way. And that's where our role is really to feed those programs with situational awareness and new insights that we dig from the data. What they learn about this is about Pareto principle, the 80-20 rule. Yes. and uh for example i i like to to kind of twist the dagger and and show the customers that well let's look at the customers you have lost recently and uh now you have lost this many customers and among those customers 10 of them are customers that have had millions in potential right maybe it would have been a good idea to recognize those customers in advance where the value is so that you're not just looking at this customer that we lost had this amount of money in billing, but look at also the potential and growth trajectory that was available to be built.

31:02And that's always kind of really like making it really hurt because that's what you need. you need pain you need you need to recognize that well bloody hell this this thing is something that that we don't want to ever happen again and and then things start start changing you shed the light and uh show the light into these blind spots and difficulties and and that starts changing and naturally it has a major impact on key account management and and how do we actually operate it How do we incentivize salespeople? And is that, when you talk about the customers that you've lost, is that you end up going, look at the customers you've lost, you've done your analysis, this is the potential that they could have offered.

31:53But then you contrast that with how they've managed the account and what they've been offering them. And then you show that actually that was possibly the wrong move. This is a better move. Even if you had done this, they might have been able to retain that and create kind of more value for both them and also for you. The thing is that most of the companies change when they recognize that they have no other choice. They need to change. Okay. So you need to, in a way, to kind of drive transformation, you need to create pain so that it becomes an urgency. It becomes a priority and we want to start doing something on this and change the way we are operating.

32:43And yeah, that's something that what we are offering for companies is a kind of new perspective and seeing their customer base and the markets in a new light because that's the foundation for innovation. you need to change your perspective you need to break the status quo you need to recognize what are the things where we can improve and where the priorities are okay and do you have any kind of like um specific kind of like possibly named examples that you could as like a case study that you can say like here we worked with this company and this is the this is the chance there's the pain i feel like they were and then we kind of worked with them and then we showed them this and they were able to achieve that?

33:32Well, yes. One of the cases really was when they were able to recognize the strategic segments, they really concentrated on those. They have been able to increase their market share and the loyalty of customers by really looking at them in a more holistic way. So improving the offering penetration and serving the customers with a wider portfolio of offerings. And that's simply like business-wise, it's a major impact on both revenue and profitability side. And some of the companies also, we've had difficult times. we have difficult times behind us which means that a lot of companies have been laying off of sales people and reducing resources in in sales now getting higher results with existing sales force that you now have means that you need to show direction for the sales people that where should they concentrate on and how can they perform to the maximum.

34:51And that means that from meeting to opportunity, opportunity to deal or offer and offer to deal, percentages are increasing. And that's where it's an incremental change mostly. But when it starts kind of accumulating and it's really something that has an impact on the profitability of the companies. Yeah. I mean, I actually think about it in a way that, you know, it's the way that I think about some of these things is just a really kind of like high level. I say that, and on a very simple level is that I say that, you know, most companies are built on the same sort of chassis, right? It's like they're, you know, the chassis goes, you're there, you have a company's ability to attract interest from a customer base.

35:46Then you have a company's ability to convert that interest into custom, and that drives a number of customers that you have. Yeah. Then you have your average sale value, and then the number of times they buy from you in any given period, that will drive your revenue on a particular period. And then you have your overall cost to serve, and that will drive your profitability. Now, at a high level, that's the sole of the chassis, right? The problem is that most companies focus on the number of customers they have, the revenue that they have, and the profitability, but without realizing that actually those things are outcomes of the other things.

36:32And what you're talking about is going, actually, what is a more appropriate thing that we do to attract better interest from our customer base? How can we improve our conversion rate of that? And therefore, how does that enrich our number of customers? What's a better insight in terms of how do we improve our transaction value? How do we improve the frequency of transactions that will drive our revenue base? And that's all about appropriateness and things, understanding your customers. And then also being more efficient in how you operate your business because you're adding new insights and therefore it's less wasted effort because you're doing the right things at the right times for your customers will drive your profitability.

37:17Yes. Does that all make sense? Oh, absolutely. And one of the things is that it's about bridging silos. Yeah. When I wrote the book Path to Growth and Profitability, which is available in Amazon, the president and CEO of the biggest bank in Finland who has made his doctorate on agile strategy or living strategy. He said that the thing he really appreciates in our approach is that we are creating strategic view of the market, bottom up and outside in. And because it's evidence and facts based and directly tight and founded on the individual customer relationships, it gives you a chersisic view that has a bridge to operational management.

38:09So there's no kind of blocks in between and there's no kind of wrong understanding of the situation. The management team is acutely aware of what's happening with the customers. On the other hand, the customer management people now have a better view of understanding how can they manage their own performance and meet their expectations and exceed their goals. And that comes to, for example, the employee retention, sales retention. If we think about what's happening in the sales, previously it was a kind of recognized fact that one third of your sales forces is performing really well. One third is average and one third is below average.

39:01Now, the sales performance is kind of melting from the top down. So you have brain makers, few people who are artists and performing incredibly well. and then companies become dependent on those rainmakers. But the average performance is constantly declining, which means that the kind of markets are in a huge turbulent situation where everything's constantly moving and the salespeople need some tool to guide them through these difficulties to tell where the buck is moving next, where should you be next, What should you concentrate on? And that allows the companies to improve the average sales performance and kind of help the weaker and average salespeople to perform better, which then also improves the employee retention.

39:58Yeah. And it sort of makes sense. So you end up having these, as you say, rainmakers or superstar salespeople. Yes. That are, you know, in many cases, everybody's chasing them. and and they're but they're outliers right they're they're not average no yeah you've got the um the average sales people and it's about giving the the ability because here's the thing is that i think we get caught in this cycle they're always looking up to the superstars yes and trying to replicate what the superstar is doing you're like good and you're saying actually there's another way yes and there's another way is that that you don't actually have to go be chasing the big deals that are going to make your quarter or make your month or whatever but actually you're saying if you're going to do this and this and this and this and you do those things consistently well then you're going to go be there and and you're going to deliver you're going to deliver value for yourself for the business but also most importantly for the customers because there's no point trying to sell the kind of the big mammoth deal and keep banging away at that door because all you're going to do is end up kind of you know potentially wasting your time or destroying that relationship but actually why you do the right things for the right reasons to the right kind of customer because if you do that consistently well and we do that across the board then everything lifts up well what we show is actually that that you have one salesperson hunting for 10 million euro or dollar deal now which is more likely this guy makes the deal or the colleague who's hunting for 100 ,000K deals, which also comes to 10 million, does better.