Are We Customer Driven?

Good Intentions Don’t Count – Your Customers Don’t Care

The evidence is in: Customer-driven companies are far more successful than those that neglect their customers. In fact, I’d go so far as to say that the R.O.I. of customer management is that your business will still be around in five to ten years to talk about it. But what is it that makes one company stronger than its rivals? Is there a checklist of factors that can be used to benchmark your firm?

You are probably familiar with the scenario for today’s world of business turmoil:

  • In an overcrowded industry, head-to-head rivalry leads to a no-win situation.
  • The quest for competitive and unique positioning seems hopeless.
  • The battle to gain and keep customers seems doomed, even as traditional marketing and promotional budgets are slashed.
  • “Loyalty Programs” don’t achieve any significant customer loyalty.
  • Even small increases in market share are incredibly hard to achieve.

Yet competing head-on results in nothing but a bloody battleground of competitors fighting for an ever-smaller but increasingly-cynical customer base, introducing irrelevant but expensive incremental improvements, and wasting resources to market to customers who just don’t care anymore. For example, in this connected world, 90% of customers say they trust “peer” recommendations, not company promises, and everywhere they report that it’s harder to do business with companies.

The days of “business as usual” are dead. About three-quarters of all products are perceived as “commodities” being more-or-less the same as competing products. I bet this sounds familiar to most of you.

But some companies seem to find it effortless to keep customers loyal, and deliver “perfect” experiences consistently. Bloggers and writers always trot out the same examples: Apple, Disney, Samsung, Uber, Air BnB, various high-end retailers, Ritz-Carlton Hotels, other hospitality businesses, and even an occasional airline like Singapore or Virgin Atlantic.

What are they doing that is so different from their rivals?

We often use platitudes like: “They harness the power of emotions and experiences to do something spectacular, and learn how to rewrite the rules on the very same playing fields that rivals compete on right now,” or, “They are consistent about delighting their customers in whatever ways they can,” or, “They are relentless about getting the basics incredibly right.”

When asked, the executives from these firms say similar things because they don’t want to give their secrets away.

At its simplest, effective customer management comes down to five broad strategic steps…

  • Find out what your customers want and do your best to give it to them better than your competitors can.
  • Identify and win over the customers that you desire based on their needs and characteristics, but being very careful to not invest in those that you don’t desire.
  • Retain the desirable customers making sure that they never leave, by having a meaningful retention and loyalty strategy that emphasises innovative value added and puts relationships first.
  • Grow the value of these customers to your business through cross-sales and up-sales, and by proactively using the power of referrals and recommendations.
  • Constantly work on reducing the cost to serve customers without compromising the business relationship.

But in my experience, it doesn’t happen without a decent and detailed customer management plan. It may well be that executives make nice speeches and hire good staff, and that R&D produces desirable products that marketers can easily sell at an affordable price. But there is always a great plan behind all this.

Doug Leather of REAP Consulting has written a great book on the topic, The Customer-Centric Blueprint, and highlights some of the key elements that are necessary for success. I have oversimplified his powerful SCHEMA Model for easier readability, (sorry Doug,) but you need to be able to focus your planning and come up with decent and detailed actions in a number of specific areas. Of course, these broad strategic goals need to be translated into meaningful steps that can be implemented by your business. I have listed these below, and you should be able to rate your company’s performance on these themes without too much trouble.

Here are some questions that may help you:

Authentic Management Commitment: Is our leadership team in agreement on key business goals and priorities in customer management? Do they understand the importance of a strong service culture to achieve these goals? Do they really “walk the talk” when it comes to customer management, or is it just lip service? Is there a “Chief Customer Officer” responsible for customers’ experiences?

Customer Value Proposition (CVP): Do we have a clear customer value proposition that describes what kind of “perfect experiences” we want our customers to have when they deal with our business, and that makes us unique and distinct from our rivals? Do all our employees and partners clearly understand our service vision and act to make it real every day? Is the CVP translated down to individual level for every employee?

Measurement: Are our current strategic measures aligned with our service vision as well as business priorities, or do we measure traditional financial metrics only?

Customer Feedback: Have we mapped out all of the key customer “moments of truth” or touch points for all of our customer groups, and do we have a visceral and deep understanding of what they like and don’t like about our business?

Customer Needs and Desires: Do we have an active and formal process that helps us to deeply understand all of our customers’ changing needs, wants, desires, expectations, and fears? Do we know how they feel about doing business with us? Do we also have similar information about perceptions and expectations of our non-customers – including our rivals’ customers – that don’t buy our products/services? Do we include “voice of the customer” comments in our communications? (How do we capture “the voice of our customer”? Do we share it widely throughout our organisation?)

Customer Retention and Loyalty: Do we have visible, irresistible and proactive programmes/processes in our organisation that ensure effective retention of our customers, and to penetrate more deeply through cross-sales and up-sales to increase our “share of wallet” and “share of market”? Do we recognise, reward and celebrate our best customers, and formally show them that we appreciate their business?

Valuable Customers versus the Long Tail: Can we determine the worth of individual customers or segments of customers? (Not just by sales revenue, but by gross profit having subtracted cost of sales, cost of servicing, and cost of communicating.) Are we targeting the right customers for our efforts, and guaranteeing that we don’t waste resources where the results are poor? And do we have a process to manage, discipline or even fire our non-profitable customers?

Knowledge of customers: Do we have a customer intelligence process or system that gives us powerful information about all the important aspects of our customers’ businesses, (or lives)? Do we use this information to add value for them and their businesses? Do we use it gain advantage over our rivals, and to create loyalty in our customer base?

Referrals and Recommendations: Do we have a formal programme in place to mobilise the power of referrals, recommendations and customer testimony? Do we have a policy of keeping in touch with our most important customers at least once every 60 days in a manner which is relevant, anticipated and personalised?

Consequences: Does every single employee in our organisation understand the benefits of customer loyalty, and the price we pay when we mess things up? And do they completely understand their role in creating delighted customers – no matter how far back in the value chain they operate?

People Behaviour and Attitude: Does this knowledge and insight translate into customer-focused behaviour where customers’ interests are put first, and where every employee takes full responsibility for all of our customers’ experiences? Do we recruit the right people in the first place? Are our employees trained, motivated and committed to given constant superior customer care? Does every person in our organisation know who are our top 20% of customers? Do our communications to employees – including training courses, coaching sessions, briefings, meetings, newsletters, and all other media – regularly feature service issues and achievements? And do we recognise, reward and celebrate employees who give superior external service to customers and internal service to colleagues?

Problems, Complaints and Unhappiness: When breakdowns occur in customer experiences, does our complaint management system respond immediately, with empathy, consistently and in a positive manner to ensure “customer bounce-back”? Is our complaint recovery worth talking about because it was legendary? And do we have a process to ensure complete prevention when things go wrong?

Continuous Value Innovation: Are we any good at coming up with lots of innovative ways to add value in order to create customer loyalty? Does our service improvement process seek new ideas from every employee and every customer? What percentage of ideas are about improvements or added value for customers, rather than saving money for the company? Are these given priority?

Looking Out the Window: Do we benchmark our customer management performance with companies both inside, and outside our industry, and even beyond our natural borders? Do we have a process to identify global best practices? And is this information translated into action through our idea-generation schemes?

Technology Support: Are we ahead of the game when it comes to using technology (hardware, software, and social media to ensure that our customers have flawless experiences?

Giving Back: Are we a responsible member of society that gives back to the communities in which we operate, and honours our commitment to the viability and sustainability of our planet for future generations?

While this is by no means a comprehensive list of the characteristics of a customer-driven company, using it to create a snapshot of where you currently stand can be very useful for determining your future direction.

(If you’d like to see a comprehensive questionnaire of approximately 150 items that can be used for diagnosing your current customer-drivenness, please contact us.)

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