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For a number of years either side of the millennium, BMW excelled at discovering compelling insights about what really attracted customers. The service levels, design, and integrated marketing that marked its customer offerings were the result not only of the glamorous and visible superb engineering but also of the less visible and simple act of paying attention to customer needs and spotting trends.

A prime example was the integration of Apple’s iPod into car stereos. BMW was the first car manufacturer to understand the potential of the iPod, the hottest new music gadget in a generation, introducing it into its new cars in June 2004, a full six months before its nearest competitor. BMW drivers could simply place the iPod in a docking station and operate it through the standard steering wheel and dashboard stereo controls. Many other car manufacturers followed suit throughout 2005, including Volvo, Ferrari, and Honda. Significantly, however, it wasn’t until August 2006 that Ford and General Motors caught up and realized that their customers might like it, too. Two whole years! How is that possible?

Such lags occur because firms without momentum tend to rely excessively on analysis of market research. They never come up with ideas like this. Their forms probably lacked a box to tick asking, “On a scale of 1 to 5, how useful would you find an iPod docking station?” But executives in a firm open to discovery spend time with customers and notice people listening to iPods who ritually remove the earbuds when they get into their cars. That’s when the lightbulb flashes over their head with a message: If they like those little things so much outside, wouldn’t they like them even more in their cars? That is customer insight. [Back to top]

Nintendo is a company that has created enormous momentum by delighting customers. We’ve already mentioned the Wii. Before this breakthrough product, computer games were largely the preserve of students, sullen teenagers, or their noisy younger siblings—Mom and Dad were tacitly discouraged from picking up the other controller and joining in. Besides, the games, with their repetitive noises, flashing lights, and complex controls were unappealing or unfathomable to many parents and grandparents. To the moms and dads who usually end up buying them as gifts, they seemed antisocial, increasing the distance between them and their children. The Wii, on the other hand, with its emphasis on movement and togetherness—encapsulated in its slogan: “Wii would like to play”—has expanded the gaming market by creating a simple, fun, accessible product that the whole family enjoys. Many of the costs perceived by parents have been removed while a host of new benefits, ranging from family fun to moderate exercise, have been introduced. So much so that during 2007 the Wii was outselling its competitors by as much as six to one.

The delight the Wii induces was very evident when we used the product to illustrate a point during a seminar we ran shortly after its release. Within minutes, the middle-aged executives on this program were throwing themselves into virtual tennis and softball, vigorously competing against their colleagues while laughing and whooping. At the end of the demonstration, they were all resolving to buy one, “for the kids.” [Back to top]

There are three elements to power offer design: a compelling target, the compelling proposition that will attract them, and the process of power-crafting. This extract deals with how the third, power crafting, interacts with the other two elements.

To appreciate the scope of power crafting, it is important to remember that a power offer is much more than a product or a service—it is the entire set of elements that influence the value that the targeted customers perceive. A central principle of momentum strategy is that a firm delivers to customers not just a product, but value. As a result, power crafting includes technological and operational elements (that is, possible product specifications), economic considerations (that is, pricing and the business model), and image (that is, communication, media, distribution).

An example of how the process differs from traditional design can be seen in the Opel Astra GTC, launched by GM Europe in 2005. The traditional design view was that the three-door model of a car should sell for less than the five-door version—after all, it’s just a five-door car minus two doors and so should run about €500 cheaper. Not the new three-door Astra GTC. It was introduced with a sporty design, great communications, and at the same list price as the five-door version. In fact, the average transaction price ended up being close to €2,000 more than the five-door version.

Why? Because the crafting of the new design and associated communications created compelling value for a different customer target than had previously been attracted to three-door cars. Its buyers were no longer those people who couldn’t afford a five-door car but a younger, wealthier customer group who liked its sporty looks and image. As a result, they were much more likely to purchase the versions with more powerful engines and additional trim such as alloy wheels and expensive sound systems. All three pillars of power offer design propelled an exceptional growth for the Opel Astra GTC.

As power offers go, the Astra GCT is not yet in the same league as the iPod, but it’s doing well. In less than two years, the car had increased its market share by 10 percent. Sales of the new model in 2006 were 30 percent higher than those achieved by the previous model just two years earlier. [Back to top]

Customer delight should be the only outcome that makes management jump with glee and trumpet the news about their satisfied customers. It’s also what customers deserve when they pay for a product. One good way to make certain that a firm has become ambitious about customer satisfaction would be to report, at least internally, only scores for very high levels of satisfaction. Companies need higher expectations. Above average is not good enough—they have to focus on the “top box,” because this is essential to drive customer action.

The term top box was coined by Andy Taylor, chairman and CEO of Enterprise Rent-A-Car. In the mid-1990s, Taylor began getting an uneasy sense that Enterprise’s customer service was not as good as it should be. He decided to adopt a simple and meaningful measurement system that would give overall metrics of customer satisfaction and also indicate whether customers would rent from Enterprise again.

Enterprise’s new measurement system tracked only completely satisfied customers—the top box. Top box customer satisfaction scores were integrated into monthly operating reports, and no one was promoted without a customer score equal to the corporate average or higher.

“Top box” shows the importance of being ambitious about customer satisfaction. Determined to recapture its reputation for customer service, Enterprise realized that a robust benchmark was the only way to overhaul its corporate culture. The impact? Enterprise is now a $9.5 billion business and has enjoyed annual compound growth of 20% over the past 25 years. [Back to top]

‘Loyalty’ programs are misnamed – they certainly build retention, but few of them create any loyalty.

Consider frequent-flyer programmes, which often manage to create both higher customer retention and higher customer dissatisfaction. Of course, these programmes create retention but in the long term they are a liability if they lead airlines to mistake retention for commitment, and hence reduce the urgency for a more customer-focused approach that could create momentum.

Naturally, loyal customers should be rewarded, but that’s different from imprisoning them. Virgin Atlantic’s loyalty programme understands the importance of rewarding customers for their loyalty, rather than forcing them to act in a certain way. Virgin’s emphasis is on satisfying customers first and rewarding them second. …Virgin’s customers actively choose the airline. Their retention is not forced; they have chosen to stay. This is infinitely more powerful.

…When going on a vacation, most people first chose a destination and then an airline. Many customers of Virgin Atlantic do the opposite – they first look at where the airline is flying and then choose a destination. This is real loyal retention – it is vibrant retention, so much so that it turns the paradigm of vacation decisions upside down and, of course, contributes to the company’s momentum. [Back to top]

However, although customers are usually very willing to speak their mind, in many cases employees will not respond freely unless they trust the openness and genuineness of the process. We have sadly witnessed meetings between senior executives and employees that were conducted like elaborate royal visits. The great leader descending, surrounded by his entourage, and condescending to talk at the little people for a while, as nervous supervisors keep watch to ensure that no one creates any embarrassment by suggesting that things are not absolutely perfect, thank you very much. The process of discovering compelling employee insights must be carried out with the same level of humility and openness as is applied to discovering compelling customer insights. Humility and openness can be tough pills to swallow when it comes to one’s own employees, but the rewards are substantial.

IKEA swallows the pill effortlessly. Every year, management spends several weeks working in showrooms and warehouses to ensure that they keep in touch with their fellow workers. This is a chance to spend quality time with employees and to truly understand any issues they might have concerning their roles in the firm. IKEA calls them “anti-bureaucrat” weeks and believes they ensure that managers don’t forget the nitty-gritty. This annual exercise leads to key discoveries about employees, new insights, and perceived needs “back on the floor.” It is a key source of internal momentum. [Back to top]