"We do not love customers" admit the majority of executives

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Global study indicates customer strategies are executed ineffectively by companies due to their misunderstanding of the basic economics of relationships.

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Majority of companies fail to grasp financial aspects of their customer relationships and therefore fail to execute customer strategies effectively, indicates a new global study released by Strativity Group. The annual global Customer Experience Management 2005 study indicates a decline in commitment to customers and a continuing poor understanding of the value of customers, and therefore the reasons to invest in customer relationships. "These results indicate companies’ ignorance to the potential financial value in delivering delightful customer experiences and nurturing customer relationships," stated Lior Arussy, company founder and author of Passionate & Profitable (Wiley, 2005).

Results Highlights

  • 54% of senior executives claim they do not deserve their customers’ loyalty
  • 87% do not know the average annual customer value
  • 67% agree that their executives do not meet frequently with customers
  • 33% affirm that they have the tools and authority to serve their customers

Strategy to Execution Gap Continues

According to the study, 73% of the companies indicated that customer strategies are more important than 3 years ago. Yet, basic execution parameters such as frequent visit to customers (only 33% of respondents agreed that their executives visit customers frequently) and providing tools and authority to employees to deliver great customer experiences (only 33.3% of respondents agreed that they have the tools and authority to service customers) receive little attention by executives.

Failing to Capture the Financial Potential

Overall, the study indicates a growth in ignorance regarding the economics of relationships. Over 90% of the respondents did not know the cost of a new customer or the cost of a customer complaint. 73% of the respondents did not know the annual retention rate. In the absence of the financial drivers, companies fail to see both the downside of poorly designed and executed customer strategies as well as the missed opportunities associated with delivering amazing customer experiences. "I find it odd that companies which manage their operation using scientific measurements methods fail to measure and operate by the economics of their customer relationship." said Arussy. "It is this ignorance of the potential financial impact that leads executives to under invest in customer strategies."

A Trend of Diminishing Commitment to Customers and Employees

The majority of the respondents (55%) agreed that their companies are not truly committed to customers, but rather treat customers as a mean to a goal. Only 42% of the respondents agreed that their company conducts a true dialogue with customers. And only 22.4% of the respondents indicated that their compensation plan emphasizes quality of service and not just productivity. Overall, trends revealed by the results during the three years that the study has been conducted remain the same despite improvement in the economy. It appears that this economic upturn did not make companies more amenable to treating customers better, but rather made them take customers even more for granted. Companies continue to develop and implement superficial customer programs which are geared towards increasing short term financial results at the expense of long term customer loyalty and greater financial rewards. As indicated by the last three annual studies, the approach companies take toward customer strategies remain self centered, transaction based and product focused. Customers are simply a means to a quarterly results end.

Survey & Research Methodology

The research was conducted via a structured, anonymous, on-line survey which was used for assessment and qualitative insight. The survey was hosted by CustomerSat Inc. using their advanced ECEMTM (Enterprise Customer Experience Management) solution. All data analysis was performed using ECEM. 233 surveys were submitted by executives from the US, Europe, Asia, and Africa. Participating companies represent a wide range of sizes and cross business types.

For more details, please visit: www.StrativityGroup.com.

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