We can confidently predict that the future will look
different from the world we inhabit today. How quickly or how slowly that
landscape changes remains highly uncertain. The future includes:-

• New technologies that will better enable
  organisations to both ‘sense and deliver’ what consumers want
• Interactive dialogue and 2-way conversations
  that provide free flowing information exchanges in both directions
• Younger generations who have developed different
  buying patterns from older generations
• Multichannel options for buying, interacting,
  problem solving and communicating
• Evolving organisational design that is more
  dynamic and more team based than the traditional hierarchical structures

If businesses do not build customer centric capability they
simply will be unable to offer superior customer value propositions. They will
remain ‘mired’ in mediocrity and frustrated with their efforts that lead to
small, insignificant improvements that customers barely notice and lead to
nothing other than ’better sameness.’ Their ability to deliver sustained,
superior business performance will be more ‘uncertain’ than their ‘customer
centred’ competitors.

Many CEO’s believe that to grow requires the seeking out of
new markets, new territories and/or acquiring new businesses. Many don’t
realise that they can grow (with much less risk) by tapping into and exploiting
their customer base. There is significant competitive advantage locked within existing
customer information.  If businesses get
to understand their customers better they are able to provide more relevant and
meaningful engagement that becomes increasingly difficult for other suppliers
to provide or imitate.

If a customer purchases from more ‘categories,’ their future
profitability increases. If customers utilise and spend more across more
channels, they have a greater lifetime value. If the duration of the
relationship is increased, lifetime value increases, especially with higher
value customers.

Organisations need:-

• Clarity of vision
• A deep understanding of what that vision means
  to the way they manage customers
• The foresight to ‘bring the customer into the
  boardroom ‘ – by that I mean the appointment of a Chief Customer Officer responsible
  for customer governance
• A culture of continually asking ‘what would the
  customer think, say and do’ if he/she was a participant in the boardroom
• Channel integration enabling a ‘single view’ of
  customer , irrespective of which channel is selected to engage
• A deep understanding of customer journey’s such
  that the impact of various processes can be measured, rather than measuring the
  efficiency of the process
• Business Intelligence capability to deepen
  understanding of current and future customers.

Let’s face it! Organisations that focus on building short-term and long term customer value significantly improve the sustainability of their business performance.

Many organisations ‘wax lyrical’ about their undying customer focus and their customer centric organisational structure and culture designed to deliver a unique and differentiated customer experience. In some, albeit few, organisations this is true. In others, partly true and in the majority, this is little more than an erotic dream in ‘cloud cuckoo’ land. Research has shown that up to 5 times as many executives believe they and their companies are customer centric relative to the number of customers who agree. Talk about different perspectives!

Desired Capabilities:

We’d be hard pressed to find an organisation that publicly states that it has no desire to be customer centric. Whilst I’m sufficiently open-minded to recognise that certain organisations in certain industries may derive no benefit from building customer centric capability I admit that I cannot share an example there-of – I honestly don’t know of one. Clearly, there is a business argument that will support the fact that certain organisations in certain industries across differing geographies require differing levels of customer centric capability. The challenge is in defining what level of customer centric capability is required and building the plan that’ll get us there, within the defined time horizon.

The role:

So what is the role of the Chief Customer Officer? Primarily, this is the individual who is ultimately responsible for customer governance. It is this individual who is accountable for maintaining and enhancing the value of the customer base through an understanding of the current market place and future trends, such that strategy informs organisational change and actions necessary for servicing customers profitably. It is the individual responsible for the design and delivery of customer experience across all customer touchpoints. It is the individual responsible for aligning and integrating customer input, marketing, sales and service.

The Outputs:

This position is, first and foremost, about improving business performance.

It’s about building enterprise wide customer capability improvement and execution abilities in all the identified practices across a leading Customer Management Capability Indicator such as the CMAT™ model of Customer Management.

The CMAT™ Model of Customer Management

It’s about gathering customer insight and integrating it across channels and product development. It’s about business process re-engineering such that the organisation becomes easier to do business with. It’s about building a unified customer driven culture. It’s about injecting a customer balance into executive decision making such that traditional focus on revenue growth and cost containment don’t result in damaged customer relationships and diminished long term results. It’s about creating a 360˚ view of the customer through needs based dialogue, new customer acquisition, cross-selling and up-selling existing ones, improving customer satisfaction and loyalty indicators and, of course, retention.

Measurements:

The challenge is in agreeing to a set of well balanced and meaningful measures representative of both business performance and customer centric capability.

CMAT™ is a leading indicator (indicative of current and there-after on-going improvement in cross functional customer centric capability.) The CMAT™ measure should be supported by a Customer Satisfaction index (CSI,) a loyalty index (NPS,) an Employee Engagement Index (measuring the level of understanding of a customer centric philosophy and strategy & the level of engagement/agreement with the philosophy) and an Employee Satisfaction Index.

Business Performance measures should be crafted around a set of Customer Value drivers such as REAP (Retention, Efficiency (Cost-to-serve understanding,) Acquisition and Penetration (cross-sell and up-sell)

In Closing:

According to analysis from the Chief Customer Officer Council the Chief Customer Officer position has enjoyed an overall average growth rate of 41% since 2000. It is absolutely essential that the CCO role has the unequivocal support of the CEO. It is a strategic position with the responsibility to improve upon any process that impacts the customer. To do that requires ‘organisational permission’ and support to perform the integration function.

Sources: Chief Customer Officer – Jeanne Bliss; 1to1 Media; REAP Consulting (Pty) Ltd; Chief Customer Officer Council.

The Customer Centric Organisational Blueprint™ visually represents the logic, thinking and business system that enables the execution of a Customer Centric business strategy. It is the blueprint for the design of both meaningful and sustainable competitive differentials and the delivery of superior business performance, short term and long term.

Central to the architecture of a Customer Centric business model is a clearly articulated set of strategic outcomes. These will typically be a blend of financial targets, well defined competitive differentiators, the delivery of customer excellence and quite possibly aspirational or iconic brand status.

Any business looking to work, and to win, in the 21^st century is exposed to a convolution of  political, economic, social and technological issues. Aside from the complexity that these events bring, unrivalled business opportunities exist for those organisations innovative enough to look for them. These opportunities result from access to global sources of brainpower and skills, extraordinary advances in communications and an almost limitless access to information. 

A deep 360˚ business assessment will assist in creating context and highlighting  organisational challenges around how to best deal with complexity,  legacy issues, decision criteria, organisational structure, performance measurement and short-termism.

Business performance today is grounded upon an ‘existing’ set of organisational assets. These need to be clearly identified, understood and documented as they underpin the organisations’ value propositions. They define the current competitive advantage and must be the ‘point of departure’ in the journey towards customer centricity.

An integrated company vision that seeks out real differentiation, innovation and ‘game changing initiatives’ should be in place and well understood across the business. The route to delivering the ‘vision’ is via a focus on a number of ‘strategic themes’ (e.g. Leadership, People, Customer Experience, Execution, Design Thinking and Innovation.) These strategic themes are fully aligned and supportive of the strategic outcomes identified earlier.

The pursuit to develop a Customer Centric based business strategy is reliant upon the identification and understanding of the organisations current capability across a number of  cross-functional practices that enable the organisation to treat different customers differently. This is a fundamental step as a Customer Centric business model requires cross functional collaboration that allows the organisation to design and deliver a distinctive customer experience. The customer experience itself is a blend of the physical product, communication or service and very importantly, the emotions evoked, before, during and after engaging with the organisation across any chosen touchpoint.

What lacks in most organisations is a clear, well defined, well aligned and agreed ‘future state’ of the Desired Customer Management capability. This is a critical step and is needed in order to clearly define the ‘scale of change’ required to move the organisation from its current to its desired capability. This clarity of thinking informs the design of the structures and supporting systems that will enable the organisation to embed the changes required.

Without this the business is unable to determine the capability required to make this change (e.g. skills, internal resource requirements, external resource requirements, non-manpower costs), the costs of the change programme itself (measured against the incremental uplift in profit as a result of the improved organisational capability), the improvement in the quality of decision making (improved effectiveness and efficiency)and the delivery of the defined Customer Experience (and therefore profitability) and the time horizon over which the change will be delivered.

Clarity of the current organisational capability as well as the desired capability enables the design of the transformational journey towards a truly customer centric operational model.

The ultimate objective of the transformation is to develop a way of engaging with client/customer such that the association becomes one of ‘indispensability.’ This is about defining  ‘what we will be’ and executing accordingly.

To become ‘indispensable’ to client requires a proactive design of the intended customer experience across a defined number of customer journeys. The design of the Customer Journey Maps (the steps that customers  go through in order to experience the ‘proactively defined experience’) is reliant upon a deep understanding of the distribution of value and needs across the customer base. Different customer journeys and therefore different experiences may be offered to clients of different value.

Optimising customer value requires proactive initiatives that impact key metrics that address the Retention, Efficiency, Acquisition and Penetration (REAP) drivers. REAP planning is a mechanism/way of proactively managing the profit stream e.g. for a particular decile/segment is value being optimised through improved retention (R), through more effective cost-to-serve management (E), through acquisition of more of that type of customer (A), through improved take up of additional products/services(P) or a combination there-of? For optimum value the organisation should consider how to balance resource allocations and actions across the REAP drivers by decile/segment. This will mean that a consistent set of scorecard measures exist (REAP) albeit that targets will vary by decile/segment.

Recognising the systemic nature of this approach enables the articulation of what we refer to as the ‘Refined conditions of Business.’ These will be aligned with the strategic themes however they address the outcome of the strategic theme in the ‘desired future.’ e.g. the outcome of the Leadership theme will be a more effective team, the outcome of the People theme may be greater levels of staff engagement, the outcome of the Customer Experience theme may be improved levels of customer preference, the outcome of the Execution theme may be improved economic profit (EP) and so forth.

The result of the adoption of this blueprint is a well understood, measureable and sustainable improvement in competitive advantage and business performance.

Roger Martin shares statistics that prove that shareholders weren’t necessarily any better off during era 1 when professional managers came in to look after their interests. Similarly, during the last quarter of the 20^th century and through till the end of 2008, when the maximisation of shareholder value was the ‘calling cry’ – shareholders aren’t shown to have benefitted any more as a result of their interests being put first and foremost. In fact, during this period, the focus of many organisations and stock markets became increasingly short-term. This focus on quarterly results led many executives to ‘dilute’ their focus on longer term sustainable earnings, to the detriment of those shareholders who were longer term focussed. We’ve all seen the results and possibly felt some pain resulting from Worldcom, Enron, Madoff and the 2008 financial meltdown. This is largely due to leadership focussed on serving themselves and short-term shareholders rather than leaders who are focussed on building both short and long term sustainability and earnings.

Bill George, in his HBR article entitled ‘The New 21^st Century Leaders’ highlights the fact that a new generation of leaders is re-shaping the best led global companies. Authentic, customer focussed leaders are replacing hierarchical leaders who have focussed on serving short term customers.

The late Peter Drucker probably said it best when he stated that the purpose of a business is not to create a product – it is to create a customer.

So what needs to be done to focus new age leadership on delivering sustainable superior business performance and where does leadership focus to deliver against the mandate?

Sadly, measures and bonuses are often structured in such a way that management is incentivised to do the wrong things. Silo mentalities remain embedded, functional areas operate in their own isolated universes oblivious to the customer experience, often a business focuses on optimising a functional area unaware that ‘fixing the part’ often breaks the whole –  (e.g. Optimising operational efficiencies of the call centre by measuring AHT (Average Handling Time), Time to Answer etc without realising that the Call Centre is very often the only channel that a customer will proactively use to make contact with the business and instead of encouraging  customer interaction the focus remains on getting customer off the line as quickly as possible so that operational metrics can be achieved.)  This is often at the expense of brand reputation and customer experience – real drivers of organisational value.

Bonus payouts are very often based upon Revenue, EPS, Market Share and such like. These metrics seldom correlate with building sustained value.

Furthermore, the analyst community very often ‘rate’ companies according to aggregated and generic measures that do not necessarily correlate with building organisational value. For example, ‘Net New Customers’ is often viewed as being representative of an organisations growth capability. The higher the number the better! Well, reality is sometimes different if viewed from a value perspective e.g. Net New Customers may equal 1 Million, made up of 1.27M newly acquired customers and 270K lost customers. What if the bulk of the newly acquired customers were low value customers and the bulk of the lost customers were high value? This may well represent value erosion rather than be reason for celebration.

So…..in the Age of Customer Capitalism leaders need to create organisations that have the capability to Influence Customer Behaviour – they need to demonstrate an ability to Acquire customers more effectively than their competitors through high quality, relevant product and service. Their Value Propositions need to be targeted and appropriate. They also need to create an organisation that has developed capability to Retain customers through the delivery of a service promise that aligns with the value proposition and brand. Corporate social responsibility, socio economic commitments, sponsorships, environmental awareness are all important as part of Retention capability. The organisation also needs to develop the capability to cross-sell and up-sell their customers – to develop trusting customer relationships that encourage customers to be open to additional, relevant products and services.

The ability to Influence Customer Behaviour is reliant on having a solid base of Committed Customers, not merely satisfied customers. It is this group of customers who, through consistency in terms of product quality, relevance and service, become company ambassadors.

The only way to build real commitment is through the Design and Delivery of a Unique and Distinctive Customer Experience. This is a blend of the rational and the emotional – it is a mix of the traditional product, service, communication offering and the emotions evoked when engaging with the business across various touch-points and/or channels. New age leadership needs to proactively design this experience at each and every moment-of-truth and ensure that employees are empowered to deliver according to the agreed upon standards

Lastly – to deliver the defined experience requires Engaged Employees – employees who are fully aligned around the organisations values and its purpose. These employees need to be committed to deliver upon the promises they will have made to ensure that the intended experience is brought alive

Organisations developed around these principles will indicate that the ‘Age of Customer Capitalism’ has come of Age.

So……….when we read those lofty mission statements that paint the picture of a ‘customer 1^st’ business, gawk with wonder at those ‘organisational values’ that promise the world, stare with amazement at press articles and web-entries that freely use self proclaimed descriptors such as ‘customer centric’ and ‘world class service’ we have the right to be cynical. Not many organisations get it right.

Our global customer management capability benchmark (CMAT™) indicates that customer management capability, in general, remains fairly static year on year. This indicates that although many organisations have recognised the need to become customer centric (and in fact have done something about it by having their capabilities professionally assessed through a methodology such as CMAT™) they are failing to execute in a meaningful and  sustainable way. They are failing to re-orient the organisation around a true customer centric mindset. In so many cases there is confusion about what customer centricity means and a distinct lack of enlightened leadership that recognises that economic and market changes are calling for a different way of doing things. Increasing competition, more insightful and educated customers, evolving customer needs, diminishing levels of loyalty and trust are all ‘alarm bells’ that are being ignored.

Not only are the ‘organisation’ systems broken but so too are the ‘market’ systems. The obsession with shareholder value has boosted market capitalisation but has led to financial meltdown.  Increasing pressures from investors require short term results. Corporate boards are challenged by the analyst community to report against aggregated metrics that are deemed to be indicators of business success and sustainability. These are often so aggregated and short term driven that they have little bearing on sustained longer term results. These realities force executives to focus on raising expectations about future performance and then to drive hard to meet those expectations in whatever way possible. In too many cases the decisions made are not in long term interest and are more focussed on ‘puffing up’ short term income statements than building sustainability.

With this as a backdrop it’s no wonder that organisations are failing to live up to their customer centric aspirations. We can confidently predict that the future will look different from the world we inhabit today. How quickly or how slowly that landscape changes remains highly uncertain but we all know how quickly change happens. Amongst other realities the future promises:

• New technologies that will better enable organisations to both ‘sense and deliver’ what consumers want
• Interactive dialogue and 2-way conversations that provide free flowing information exchanges in both directions
• Younger generations who have different buying patterns from those of older generations
• Multichannel options for buying, interacting, problem solving and communicating
• Evolving organisational design that is more dynamic and more team based than the traditional hierarchical structures

When we add these few realities  to the mix we recognise that the future is going to consist of increasing  levels of complexity, particularly for those organisations chasing the ‘customer centric’ differentiator. In this rapidly evolving world there is increasingly less tolerance from the consumer for mediocrity and false promises.  We already have significant lower levels of belief and trust in organisations and brands that have, in the past, stood for stability and consistency.

Quite simply, if businesses that believe their own rhetoric about customer centricity being their competitive advantage don’t really start to ‘practice what they preach,’ they need to move away from their perceived point of differentiation and channel their energies elsewhere. They need to find some point of differentiation that is meaningful and relevant to their customer base. At least then they may be perceived as more authentic, even if less customer centric

Central to the content of the article is the reality that reward systems exist which encourage behavior contrary to what is wanted/desired. The behaviours that are desired are frequently not rewarded at all. Steve’s article provided examples of these ‘fouled up systems’ within politics, in war, in medicine, in universities, in consulting, in sports, in government and in business.

I’ve been promoting the fact for many years that one of the only ways of creating sustainable competitive advantage is through the design and delivery of a unique and distinctive customer experience. Achieving this outcome is a consequence of enlightened leadership and organizational design based upon systemic thinking such that all business resources and capabilities are aligned, embedded and mobilized in order to achieve the business purpose. The only way to achieve this is by creating and managing ratios and metrics that drive the appropriate behaviours to achieve the ultimate objective.

In today’s world (and more importantly in tomorrow’s world) this becomes even more important if businesses are going to differentiate themselves and become more accountable for their actions. I think it was Lou Gerstner, IBM turnaround fame, who said that ‘you get what you inspect, not what you expect.’

So, until businesses establish some ‘balance’ in their ‘un-balanced’ scorecards, until businesses truly start collaborating and co-creating with a real commitment and understanding of the ‘meaning’ behind their stated vision, mission and strategic intent, until businesses start seeing and understanding the critically important links across systems, resources, processes, policies AND their strategic  objectives and until organizations establish metrics that underpin EXACTLY those behaviours that they desire, we will continue to see ‘more of the same!’ When the rate of change inside the organization is less than the rate of change outside the organization, that organization is living on borrowed time. Sadly, the consequence is that you and I, as consumers, will continue to suffer mediocre and random experiences at best. AND, that sucks!

To compete in an Ironman requires one to be fit. Fit is not necessarily defined by being thin or lean. Fit is not defined by ‘how fit we say we are!’ – fit is defined by being capable and ready. To be capable and ready to compete in the disciplines of triathlon requires a blend of different sporting capabilities, stamina and good cardiovascular capability. Importantly, the capability and readiness is developed through a sustained and consistent adherence to a structured programme that builds capacity to successfully complete the swimming, cycling and running legs of the race.

One could exercise in an unstructured way for many hours per week and fail to achieve the state of readiness needed on the day. One could exercise and continue to eat too many calories and not achieve the optimum weight and body fat percentage. On the day one could pay too little attention to nutritional planning and suffer both dehydration and depleted energy stores.

Think of these principles in the context of an organization looking for a competitive advantage through the principles of customer management.  In the same way that the goal of an Ironman training programme is to enable the athlete to perform well in all disciplines on the day – the goal of a customer management programme is to deliver a consistent customer experience across all customer touchpoints. This requires an organization that views the delivery of a proactively designed customer experience as the outcome of adherence to a customer programme that places the customer at the very core of the business, with all functional areas working to support one another in delivering against the stated objective. It requires an organization not only to ‘think’ differently but to ‘do’ differently – an organization that knows and understands what they need to do, when they will do it by and what will be achieved by doing what they need to do.

There are but a handful of triathletes who naturally excel across the 3 disciplines. Equally so, there are only a handful of organizations that display top decile capability in strategy and leadership, in understanding customers, in people and organizational structure and capability, in channel mix, in customer information, in delivering a consistent experience, in enhancing customer value, in customer propositions, in competitive understanding, in recognizing leaders in key differentiating capability areas, in regulatory compliance, governance and risk.  Capabilities in these areas enable a business to be highly capable in customer Retention, E fficiency, Acquisition and Penetration, i.e. the 4 key drivers of customer value management.

Very often in triathlon the first swimmers out of the water enjoy their brief moment of glory at the front of the race and then get swallowed up by the field. It is those athletes with a fairly balanced mix of swim, bike and run skills that normally turn in the best performance.  An extraordinary strength/capability in any one of the disciplines is very seldom able to make up for weaknesses in the other disciplines.

This is equally applicable to the business world. To become customer centric requires a holistic and broad base of capability that spans all functional areas.

Overcoming a weakness in a sporting discipline is sometimes as simple as strengthening the muscles in that weakest discipline – in swimming it may be lats, traps and triceps, in cycling it may be quads, in running it may be hamstrings, quads and calves. The one area used in all three disciplines is the ‘core’ – all of the bodies most powerful movements originate from the core. Likewise in business – it’s the leadership and the clarity of strategy that is the core – it’s the existence, or the creation, of a burning platform to drive change, it’s clarity of vision, clarity of where we’re going, it’s making sure that the capacity to achieve exists, making sure that the right skills are in place and focused on the right activities and it’s the achievement of identified milestones that indicate that progress is being made.

Whether a business is developing capacity in the area of customer centricity or the individual is working towards participating in the Ironman, a tried and tested approach is required for success. For the business, a customer management framework enables an understanding of current capability, a benchmark score against a selected industry or geographical area and a blueprint that prioritises activities in order to build the end-to-end capability.  For the individual it’s understanding the level of fitness and capability at the start of the journey, it’s setting the personal time objectives for completion of each of the disciplines and it’s the training programme that needs to be adhered to down to the minutest of detail in order to be ready on the day. But above all this, it’s the personal commitment of the leadership in the case of a business and in the case of the individual that brings this to reality. It’s all about executing the plan that’s been created within the frame that provides the confidence to live the future.

Whether it’s the announcement – ‘you are an Ironman’ made when the athlete crosses the finishing line or it’s the sustained business performance and recognition of the unique and differentiated experience being offered by the business – it’s music to our ears.

It’s scary because in spite of all the talk about organizations building their ‘sustainable and competitive advantage’ through the design and delivery of a unique and distinctive customer experience the majority still screw it up.

I’m not sure about you but I’m really sick and tired of being on the receiving side of RANDOM experiences. In our many client engagements I almost always hear of the intention to ‘delight’ the customer. Why I ask? Can’t you simply deliver a consistent experience everytime ? I’d be happy with that!

The reality is that the 21^st Century organization requires interoperation and integration. It needs to be ‘joined-up’ with a clear understanding of the intentional customer experience it’s trying to deliver as well as the capabilities of executing against that intention. It needs to have clear definitions and a common vocabulary so that EVERYONE is talking the same language with consistent meaning.

Customer Experience has got to be ‘connected’ with the overarching business strategy. It cannot exist as a ‘bolt-on.’ It’s way too important for that. It must be fully embedded into the very core of what the business stands for. People today expect a customer experience. No organization can differentiate merely by having an experience – the differentiation comes through the ‘kind’ of experience delivered.

Experience has shown that by applying a Customer Management (CM) strategy, improvements in business performance are achievable where it counts most – the bottom line. But CM strategies can’t remain purely theoretical and strategic – they need to be translated into practical tactical interventions which deliver real results.

There are four basic principles involved when applying CM – Retention, Efficiency, Acquisition and Penetration. These four concepts (a REAP strategy) are levers which create improved business performance and are intended to support rather than replace current business planning activities.

Applying CM encourages companies to build an understanding of where your business comes from in terms of contribution from new customers, contribution from existing customers and contribution from increased sales and/or service to existing customers. Once a company understands this, you are then able to model and develop different REAP strategies for different groups or segments of customers.

Excellence in CM begins with a deep understanding of the nature and value (actual and potential) of existing customers and potential prospects. This needs to be supported by a robust strategy for managing them and clear plans of the type of management activity to be implemented for different types of customers.

One of the most cost-efficient ways to drive operating profit in any organisation is to examine the means of retaining good customers. However this can’t be done in isolation because simply retaining customers at any cost can represent reduced value to the company. Both extremes must be examined in order to see where the greatest value can be created.

Without the planning and management of Acquisition activity, ‘acquisition at any cost’ may result. Attention must be paid to the targeting of good quality new or previous customers and the managing of the relationship with them from their first expression of interest right through to their conversion to a customer.

Equally critical to an organisation’s return on its customer investment is penetration i.e. the ability to develop more value from existing customers through cross-sell and up-sell activities. An investment in extending the value of existing customers can deliver much more value than the same investment in winning new customers.

Implementing a CM strategy and utilising the REAP concept begins with extensive planning. This is not a trivial or instant process. Before any company embarks on this approach, clear commitment from the senior management team is imperative. Since the tools necessary to implement CM may need to scale to millions of customers, full support is needed from the IT and information management teams. This commitment must be matched to a thorough activity plan, further supported by access to the necessary skills and competencies. The whole exercise will be redundant unless it results in potential changes to business development activities.
CM is an extensive and even onerous undertaking for any business. However, an improved understanding of the customer, the creation of strategies and tactics that enable your organisation to generate value for the customer, carry with it the promise of great rewards, improved business performance and the creation of true value.

Defining your strategy – start with the positives

Many organisations use CM principles to manage their customers better; others are well on the way. But all experience problems, as customer expectations are still well ahead of what most companies can deliver upon, and the expectations keep rising. It is important to learn from the successes and challenges of those which make good progress, and whose business performance improves as a result, and to follow some basic rules:

• Know your customers and how you manage them. Why do they buy from you versus the competition? How much are they worth, by different groups? How committed are your best customers to you? What do they value about the relationship? What do they dislike? How many leave – in particular, how many valuable ones leave, and why? What is the quality of those you acquire, or are you acquiring poor quality customers and developing a problem for the future? What are the main elements of cost in servicing your customers? How could you be more effective or efficient in serving them?
• Make sure you really need to change how you manage customers. Are you comfortable with  your existing business and marketing model? Is the rest of the marketing mix – particularly brand, advertising, general direct marketing, PR, customer service, channels, pricing – doing the job perfectly well? Some companies which don’t focus on CM make lots of money and gain many customers, because they focus on factors such as product range, location and in-store proposition that meet customers’ needs, and a smart supply chain. In other sectors, such as mobile telephony and banking, managing individual customers better is proving the key to more competitive customer recruitment, retention and development.
• Sort out your definitions, your logic and your measures. Marketers can be lax in the use of terms, and in the logic associated with them. When you use the term “customer value”, do you have a common understanding within the business of what this means to your company? Do you know whether a customer who buys more products is more or less profitable than one who buys a lot of one product? If you use the term “customer experience”, do you know what experience you deliver now, in different circumstances or contexts, through different channels, for different customers, and how this relates to the value you give and receive? If you use “multi-channel marketing”, and try to offer the same experience in each channel, what evidence do you have that customers expect consistent experience across all channels, rather than each channel being used for a different purpose?
• If you do need to change, make sure that you don’t just add to costs. Use research to identify whether customers are likely to respond positively, rather than just enjoy the supposed benefits of being managed better without giving you more value.
• Ensure that senior managers and staff experience what competitors offer – the good and the bad. Make sure they understand what your research and measures are saying. Otherwise they will be making decisions in a vacuum.

Planning

• Know where you are starting from and plan to move forward steadily, taking regular health checks. Be clear and unemotional about how well you manage your customers now. This will affect your programme structure, timing, risk and payback.
• Develop a clear picture of your “desired state”, what works for your customers, your people and your shareholders or other stakeholders.
• In your desired state, balance all aspects of how you manage customers – how you analyse, strategise and plan, your systems, data and measures, your people and organisation and how you understand what you are doing and how your customers experience it.
• Develop a business case that gives increasing benefits to your customers and to your company over time. Don’t expect major benefits immediately, as you may need to invest in your marketing and sales infrastructure first, particularly systems and data (though don’t expect systems and data to do the job for you by themselves), but focus some of your plan on a few easy actions that lead to increased profitability quickly.
• Use change management disciplines, not just marketing disciplines. Too often consultants and clients trying to make CM work forget the people disciplines of change management. Indeed, one of the most important elements of effective CM planning is to manage stakeholders. Keep the change management focus as you implement. Just observing technical disciplines won’t work.

Implementation

• Manage the programme by outputs as well as inputs, to ensure that what you expect to happen with customers does actually happen.
• Convince leaders in the business, engage their support, and use them to make your CM programme visible. Make sure they support you during the tough times in the project, and that there is some sort of succession plan for seniors in the team. There is little that frustrates people in large companies more than the stop-start nature of change projects.
• Have a proper implementation programme. It ensures that all parties work towards a common sequence of changes. This may include customers.
• Appoint an experienced, knowledgeable, senior programme manager to oversee the whole programme.
• Make sure the executive sponsor really supports the programme manager within no-blame rules and with a tolerance of some failures.
• Set up a team to develop and manage the programme, and draw it from the main business functions affected – not just marketing, sales and service but also customer administration, finance, and logistics.
• Keep people informed of progress, and keep seeking their input.
• Ensure the training, motivation, coaching, and measures you implement don’t cause conflict between customers’ interests and staff interest. For example, aggressive cross-selling targets may be bad, steadily increasing targets for customer profitability or customer commitment are probably better.

Keeping going and making progress

• Focus on a few indicators which tell you how well you are managing your customers, how you and they are getting increased value from how you manage them, and how well you are managing the things you need to do in your company to make sure that you deliver customer management outside your company.
• Ensure that these indicators are closely connected with what you stand for as a business. For example, if you are a private sector company which needs to make profit, and if your profit comes mainly from customers you have had for some time but who grow in value to you the longer they stay with you, your indicators should measure how many of your customers grow in value with you each year, why they do, how they felt about it.
• Make sure your customer management approach stays an essential part of all the other marketing, sales and service approaches that your organisation uses.
• Maintain your focus on the quality of your customer information, the insights that you derive from it, and how they can be used to improve what your customers get from you, and the value you obtain from them.