Adapting to extreme competition

MyCustomer.com

By Jeremy Cox, CMC Editor

In the coming weeks we are going on a journey of transformation.

This won't be like a touring bus, with someone pointing out places of interest. You are not expected to sit mutely in your seat, occasionally raising an eyebrow of interest.

Where is the destination? Well, I can't really tell you yet, as I only have fragments of a rather bizarre map. But it will be a journey to a more customer oriented and adaptable world. And while the destination is uncertain, we will recognise its shadow.

Everyone who comes on this journey will have a fragment or two of this strange map. As we piece them together we will find answers to some of the most pressing issues we face.

To get us started, let me share some of my fragments with you.

Common issues:

Fragment No 1: Leading change
All organisations have a common challenge, assuming they have a sense of direction. How do we create momentum for change and make it a positive experience for everyone? This subject will be wrestled with on this forum and one way or another, the secrets of successful change will be revealed.

Fragment No 2: Developing our customer portfolio
Perhaps it is more common for banks to think like this, but most commercial organisations tend to look at their customer base from a revenue perspective. Understanding the potential lifetime value allied to profitability at the customer level, can reveal tremendous opportunities for profitable growth. It can also reveal major weaknesses in our operational capabilities. I'm lining up experts in this field, to share their methods and viewpoints with us, including a cross industry benchmarking survey carried out by Professor John Murphy of Manchester Business School. We will also explore the link between shareholder value and the customer portfolio. Don Peppers and Martha Rogers new book offers firms a new metric as a guide to the fundamental health of a firm: Return On Customer, the book’s title.

Fragment no 3: Creating and Delivering Value
Professor Francis Buttle’s definition of CRM, in our book Mid-Market CRM 2004, places value at the heart of strategy:
"CRM is the core business strategy to increase the size and profitability of your customer base by creating and delivering superior value to targeted customers at a profit."

Creating and delivering superior value is the cutting edge of competition. The only perception of value that counts is the customer's. Increasingly as products become commodities, firms are paying more attention to the total customer experience, as a means of creating and delivering more value to customers.

To date most implementations of CRM technologies have focused on standardising processes to raise the bar on performance consistency. This vanilla flavoured CRM is little more than a compromise and fails to take into account the individual needs, buying behaviours and preferences of customers. It might make management feel in more control, but don’t expect customers to beat a path to your door if you follow this route. In the course of the coming weeks and months I aim to look into this whole area deeply. Member contributions are most welcome!

Fragment No. 4: Customer Insight
None of the value creation and delivery is worth a jot without this. As one CEO said, according to the IBM CRM Global Study in 2004, "We need to improve our knowledge of our customers – by really hearing what they are telling us, and then having the ability to respond rapidly." We will take a closer look at how firms are doing this effectively. This CEO is already leaning towards a more adaptive and customer centred capability. (see Evolution of CRM – a commercial perspective)

Organisations able to generate real insights into individual customer needs, behaviours and preferences, are in a great position to maintain and increase their relevance to customers or clients. Of course, they have to be able to act on those insights.

Fragment No 5: Global Competition
This is impossible for most of us to get away from. CRM doesn't happen in a vacuum and pressure on margins in most industries is fierce. What strategies are people adopting to offset commoditisation?

As well as an obvious threat, global competition also creates new opportunities. India and China have a rising middle class with aspirations to buy established brands. Research by KPMG (M&A Appetite and Strategy in the Global Insurance Industry May 2006) revealed that while 58% of Insurers see Asia as a high growth opportunity, 20% are looking to Russia/CIS and a further 20% see Latin America as a promising market. How do firms evaluate these opportunities and what must they do to ensure a successful outcome?

Global competition also creates huge uncertainties for the workforce. The same report by KPMG cited 71% predicting further consolidation in the industry. On top of this 'offshoring' is moving up the value chain, from supplanting contact centre agents to more complex and demanding work. This raises several the questions.

Where next for the UK’s workforce? How do business leaders balance the interests of key stakeholders? What impact does staff morale have on the customer? How can firms adapt and find new opportunities to feed their people with work? Why should they care? How do leaders make these choices?

Fragment No 6 – new roles & skills & culture for a customer centric era
Following hot on the heels of the 5th fragment (I can feel a Hollywood movie title coming on), are the demands a customer centred organisation makes on its people, and network of suppliers and alliances. What change in culture is needed? What new roles need to be performed? What new skills are required? Is there a bright side to all this change for the individual? My own view on this is that in a Pavlovian sense change = pain. However, maybe for the first time ever, the vast bulk of employees will need to collaborate internally and externally, and make decisions. This could be incredibly emancipating and bring a sense of doing something far more worthwhile.

Fragment No. 7 – becoming adaptive
Is this the end of the journey? Probably not, but it represents a quite different view of an organisation compared with the living dinosaurs we've all experienced from the industrial age. Creating and leading a sense and respond organisation will take a whole lot more than simply throwing new IT or software at the challenge. That’s the least of it.

I aim to engage some of the leading business thinkers to help shape and map out the journey. I also intend capturing the wisdom of pioneering people making great strides in this direction, and look forward to presenting interviews and case studies to our members. (If any member has practical experience in this field and would like to share this with other members, please let me know – [email protected])

I hope you will share this journey with me and find it thought provoking and helpful in your job.

Please feel free to email me with your view or post a comment below.

By Jeremy Cox Editor CMC
[email protected]

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