Customer Strategy Infographic


It goes without saying that if your organisation pledges to become more customer-centric, you need to innovate your business model through a customer-centric lens. Customer-Centricity is all about the organisations ‘way of work’ or the ‘business system’ that enables the business to design and to deliver a unique, distinctive and consistent customer experience in order to Acquire, Retain and Develop targeted customer Efficiently. An organisation seeking to develop customer-centric capabilities must be willing and able to change its organisation structure, its measures and its employee and distribution incentives to focus on long term business success.

The design of a customer-centric strategy requires an organisation to deeply understand its current customer-centric capability (its departure point on the transformational journey), the nature of customer-centricity to which it aspires, the action and implementation priorities to bridge the gap between the current and the ‘to be’ state as well as the business benefit (financial uplift) derived from this improved level of customer centric capability.

This infographic helps explain the core components of the transformational journey and the customer-strategy, and is based upon the SCHEMA Customer Management Framework which is the methodology we use to drive customer-centric transformation

Exampleco customer management strategy - REAP

Customer-Centric Transformation a no-brainer: Check out why!


I’m guilty! I admit that I’m a customer-centric evangelist because quite frankly, how else can you build meaningful competitive advantage? Customer-centricity is all about differentiation and it’s almost impossible to sustain differentiation around product, price and distribution footprint. But you can sustain differentiation around your customer knowledge, insights and understanding.

Here are 3 questions designed to get you thinking a little differently about the criticality of developing customer-centric capability within your organisation. These ideas are attributed to Don Peppers & Martha Rogers of Peppers & Rogers Group, whom I worked with very briefly around 11 years ago.

1)      Who is the one stakeholder, whom if you maximised the return thereof, would benefit ALL stakeholders?  So think about this – there are generally 5 major stakeholders in businesses today – society, partners, investors, customers and employees. Maximising the return for the investor is not necessarily good for the customer! Maximising the return for the employees doesn’t mean ALL other stakeholders will benefit. Maximising the return for the Customer, on the other hand, certainly does benefit all other stakeholders. This is why the principles of customer-centricity are so important. If an organisation is unable to propagate a supply-demand chain then they are unable to supports investors and all other stakeholders.

2)      Would you agree that customers create 100% of business value in almost all cases? Customers create value for businesses every quarter by purchasing products and services. They also create value in another way which is referred to as lifetime value (LTV). LTV is based upon their intention to continue doing business with, and paying money to the organisation. That LTV goes up and down in value, as does a stock/share portfolio. Any reduction, or potential reduction, in that value (brought about possibly through a poor engagement or experience) is bad news for the organisation. This level of understanding and insight of that value change is generally not available within organisations so this reduction in value is not reported to shareholders , albeit that it is akin to the company reporting lower earnings which in almost all cases results in company stock/shares losing value. My friends at Peppers & Rogers have a metric for this which they refer to as ‘Return on Customer’ and this metric is designed to capture both types of value created (actual and LTV) to balance the short term/long term impact of customer value. ROC = (Profit made on customer today + change in LTV)/Initial/beginning LTV.

3)      What do shareholders & investors really want? Most shareholders and investors want confidence that leadership is able to grow a company organically. That means that the organisation will have developed capabilities to Acquire customers, to Retain them and keep them buying from the business, to grow them and to get them to buy more from the business. They’d also want confidence that leadership is able to guide investment and understand the cost-to-serve different customer cohorts/segments to best manage financial return. If the business can demonstrate these capabilities then they are providing REAL value to customers which means they’re providing real value to shareholders/investors at the same time

Customers are a scarce asset. They are valuable and unique. They are measurable. They are the biggest limitation to growth and to understand this will impact the decisions we make.

So…………within your organisations, if customers are the most important asset in your business, who is managing them as such. What operational framework/ architecture/ business model are you using to optimise that asset? Who is tracking the value of the customer today and the value of the customer tomorrow? What does your customer dashboard look like?

Comments?

A blended set of measures are critical for customer-centric operationalization


What company doesn’t want to be customer-centric? It’s highly unlikely that any executive wakes up in the morning and makes a statement along the lines of – “Customer-Centricity is not important to us and we shouldn’t consider it!”

That said, to move beyond the lip-service that is so evident around this topic/set of capabilities requires both courage and a commitment to a transformational journey.  Surely everybody with some understanding of change management principles recognises that transformation requires an amended set of measures and/or the addition of some added measures to ensure focus and accountability? Financial metrics and the achievement of profitability targets are, of course, non negotiables.  Today, however, organisations have to balance profitability with social conscience and need to focus much more on stakeholder relationships. The most important stakeholder in almost all cases is the customer.

I’m regularly asked what metric should be used to measure customer-centric capability. The reality is ‘a measure’ is not sufficient. Trying to craft a customer strategy, develop customer-centric capabilities and operationalise those capabilities isn’t going to be supported by ‘a measure.’

The purpose of this article/discussion isn’t to wax lyrical about the strengths and weaknesses of individual metrics. It is to share a suggested ‘blend’ of measures that are needed if an organisation is serious about a customer-centric transformational journey.

These are illustrated below. Most will be familiar with Customer Satisfaction, Employee Satisfaction, Voice of the Customer and Net Promoter Score. The 2 measures that have less of an understanding are SCHEMA® and Customer Effort Score.

Customer Measures Matrix

 

 

 

 

 

 

Very briefly, SCHEMA® is a leading indicator and measures the customer-centric capability of an organisation. It measures how well a business is optimising customer profitability and compares against global benchmarks. It’s a leading metric because, from this level of understanding, an organisation is able to quantify and identify where it needs to build capability to enable it to be customer-centric – in other words what capability is needed to design and deliver a unique and distinctive customer experience in order to acquire, retain and develop targeted customers efficiently.

The Customer Effort Score is another metric that I am hugely supportive of as ‘effort to engage’ is becoming an increasingly important indicator of ‘willingness to do business with’ as well as loyalty. Quite frankly, it’s astounding how difficult it is to do business with many organisations (after all – why should we care about or be expected to adhere to processes that make absolutely no sense to us – why should we have to put up with broken, inefficient engagement capability that wastes out time and requires effort from us?)  Who has any loyalty and wants to support a business that is difficult to do business with.

I chair a senior learning forum called The Customer Council (TCC) and at the end of 2012 we invited Dr Nicola Millard from BT to address TCC. BT have become somewhat of a ‘poster child’ when it comes to Customer Effort Score in action. Have a look at this video, by Dr Nicola Millard, on the topic of Customer Effort: Help or Hype?

http://www.youtube.com/watch?v=U5iBs_Kac3U