It is not easy to become a customer-focused company - if it were, everyone would do it, which would diminish (if not eliminate) its value as a competitive differentiator. There are, however, success strategies that savvy executives use to foster customer centricity within their organization. A review of 1to1 Media's 2010 1to1 Customer Champion awards provides insight into doing so successfully.
There were five clear themes that were most prevalent among the winners:
Trend #1: Executive buy-in is key
The most successful customer loyalty programs are those that are led in a top-down fashion; the same is true with many of the 1to1 Customer Champions. Without a champion at the most senior level in the organization, neither loyalty nor customer centricity is likely to take root and yield cultural change at a grassroots level.
Executive support is critical for a number of reasons, including:
1) The executives are ultimately in control of whether the company will invest - and by how
much - in the program.
2) Internally, it creates credibility - if the executive team is leading the initiative, then it is less likely to be seen as the most recent "the flavor of the day" management fad.
3) Externally, the executive sponsor puts a face on the program with customers. This person effectively sets the expectation that customers will have regarding the level of customer focus exhibited by the organization at all levels.
4) Being the chief customer advocate in an organization immediately provides a context by which the CEO can connect with customers.
How to engage executives? The easiest answer is to show them that it works - in other words, show them the money!
Trend #2: Links to business outcomes are required
The days of investing heavily on customer-centric strategies because it intuitively "feels right" are long gone. The best programs are those that move beyond scorekeeping and get to tangible business outcomes. From a financial perspective, this can range from tying customer satisfaction scores to revenue retention/growth metrics to creating new revenue opportunities.
These outcomes, incidentally, do not always have to be financial in nature - tying customer perception to operational efficiencies that come as a result of increased customer centricity are not only often easier to accomplish (from a data availability perspective), but they can also be restated in financial terms.
Ultimately, the key to having a sustainable customer-centric model is directly linked to the ability to demonstrate tangible business impact.
Trend #3: Acting on customer feedback is imperative
I would suggest that there are four general outcomes that can occur when considering customer feedback programs and action taken: Lip Service Companies actively solicit feedback, but - from the customer's perspective - do not take any action on the feedback. Gut-Feel Companies are good at taking action, but they don't actively solicit feedback from their customers. Internally-Focused Companies do not respond to customer feedback in either a systematic nor unprompted fashion. Customer-Focused Companies actively solicit feedback from their customers and have a system in place to act on the feedback, both at a systemic level as well as at an account-level. These companies will, over time, have a greater share of loyal customers that are engaged, and they will enjoy strong financial performance, because the action they are taking is customer-driven.
Most of the 1to1 Champions are employed by Customer-Focused Companies - they have formal feedback programs, a framework to take action (and incentive structures that support action), and a means to communicate their progress.
Regardless of the intent of the firm or the sophistication of its systems, the key constraining factor that any company will have in its efforts to act of customer feedback will be the orientation of employees. The 1to1 Customer Champions have a keen understanding of this, and it brings us to the fourth trend we have observed among this prestigious group:
Trend #4: Employees at all levels are critical
Engaging and leveraging associates in the customer action process yields a more sustainable process, which in turn will reinforce the customer-focused nature of the firm's culture. From a business perspective, this is the gold standard - building and maintaining a customer-focused culture will create a long-term sustainable competitive advantage that your competitors will not be able to easily replicate.
There are four best practices that contribute to building a customer action framework that has
a) You cannot communicate enough - Communicate the firm's customer program, its anticipated impact on both the company and its employees, and what is expected from employees. The best programs have an ongoing plan for employee communication, including not only status updates, but also opportunities to publicly recognize and celebrate short-term wins and role model behavior.
b) Do not assume that customer centricity comes naturally - The best companies are the ones that understand that most people have good intentions but may need help in converting intention to behavior. Many of the 1to1 Customer Champions talked about how they trained their employees to use the information to make customer relationships better. This includes providing tools and frameworks for taking action on the data.
c) Make customer focus a part of everyone's job - If we try to pile a customer-focus initiative on top of an employee's existing work, the probability of failure is high. Here's why: Most employees are extraordinarily busy; adding to an already heavy workload means that something will fall through the cracks. A better approach is to audit workflows in each employee group and determine how the customer feedback can assist in the workflow. For example, leveraging customer feedback in the account planning process helps salespeople achieve their key goal: to sell more.
d) Link customer feedback to compensation - This is not a step that should be entered into lightly. Before implementing an incentive compensation plan, ask yourself:
- Are the metrics we have selected valid? In other words, it should have a clear connection between the metric and the firm's financial success.
- Are the metrics we have select reliable and stable? Meaning, results are consistent, do not vary based on statistical whims, and are not prone to wide fluctuations.
- Are the results achievable? Any incentive that is driven by an unrealistic or unreachable goal will lose impact and will be considered worthless by employees.
- Is our approach to gathering the customer feedback free of bias? This generally relates to the methods employed in sampling and gathering the feedback. The fear is, of course, artificially high scores that have no relationship to true customer sentiment. This not only will result in the payout of undeserved incentives, but it severely compromises our ability to use the customer feedback to predict future business performance.
Trend #5: New (or enhanced) tools are available
The 1to1 Customer Champions remind us of the tools that are available for us to leverage in our customer-focus efforts; some of these are new, while others represent the latest version/evolution of tried-and-true tools:
a) CRM integration - The investments that firms have made over the past decade or so in the area of CRM are starting to show payoff - from a customer knowledge perspective, being able to link customer demographics/profiling information and actual behavior data to survey metrics creates the opportunity for more robust customer intelligence.
b) More powerful predictive modeling - The ability to integrate other data streams into customer survey data would be for naught without the ability to build sophisticated models.
c) Social media and text analytics - The newest tools that are emerging include data from social media sources coupled with the rapidly-advancing discipline of text analytics. The ability to harness these non-structured data sources is beginning to add incremental value to our customer analysis efforts; there is clearly more to come on this front.
What are the common threads of these tools? First, they leverage the latest technology. Second, they recognize that data from disparate sources can and should be leveraged in a variety of ways. Finally, they offer to streamline processes that historically have been challenging. Streamlining these processes creates capacity for practitioners -- for example, by eliminating time spent entering customer records and managing multiple customer data sources, we can work on more strategic initiatives, such as making customer information relevant, easy to understand, and integrated into the everyday workflow process of all employees.
Customer centricity is a must
Why is being customer-focused so important? Customer-focused companies tend to have a greater share of loyal customers; these customers tend to spend more, purchase more widely across an organization's product/service portfolio, and are more resistant to competitive alternatives. Customer-focused companies use the feedback to determine a plan of attack that yields optimal results - that is, it minimizes the cost of implementation while maximizing the financial impact it will have on the organization.
If you keep in mind the five themes we see among the 1to1 Customer Champions, your firm will greatly increase its odds of being a successful, customer-focused, and financially rewarded company.
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About the Author: Mark Ratekin is senior vice president, consulting services, for Walker Information Inc. He blogs at Walker Blogs. This guest column is excerpted from a five-part series on the 2010 1to1 Customer Champions.