A recent IBM dinner of CMOs shone a light on some of the major challenges chief marketing officers are facing when it comes to customer-centricity.
Customer-centricity might seem a safe topic for conversation, but having recently attended an IBM dinner for CMOs where it was the main discussion point, it’s clear that in reality it is an issue that is proving difficult to swallow.
IBM recently released a new marketing study titled "From Stretched to Strengthened" based on interviews with more than 1,700 chief marketing officers (CMOs) from around the world.
The study findings conclude that CMOs must respond to three new realities:
- The empowered customer is now in control of the business relationship.
- Delivering customer value is paramount and an organisation’s behaviour is as important as the products and services it provides – the modern organisation must be customer-centric.
- The pressure to be accountable to the business is not just a symptom of hard times, but a permanent shift that requires new approaches, tools and skills.
As such, CMOs need to help their organisations:
- Deliver value to empowered customers.
- Foster lasting connections.
- Capture value and measure results.
While the 15 guests in attendance at the dinner all agreed that ‘customer-centricity’ has taken on enormous importance in light of the emerge of the ‘empowered’ customer, and that being a customer-centric organisation enables firms to have the best possible opportunity to nurture lasting connections, they all conceded that the issue started to unravel when it comes to measurement.
One attendee summarised the difficulties within his organisation: “We’re number one in the market, and my CEO wants to be number one for customer satisfaction. But when I ask why he is silent. Does it drive financials? He doesn’t know. If I’m customer-centric, what is that doing to my underlying financials? He gets credit scoring, and segmentation, and single customer views, but do we really understand the connection of customer-centricity to financial performance?”
Another added: “I worked with a major telco and we established that our industry as a whole doesn’t look after customers. We decided we could differentiate by being customer-centric – giving existing customers the same deals as new customers, etc. But there was no solid ROI case, it was just decided by people who sat around a table. Because you can’t prove it.”
It was agreed that ROI tended to be the “over-riding” metric, but this isn’t without its problems.
“It would be nice to have a metric around customer engagement and understand what it does to the bottom line. ROI stops them doing customer-centric communication. The unmoving focus on ROI is what stops me doing things that would create dialogue with customers,” commented one CMO.
Another added: “ROI assumes there is a finite time between an action and response. Whereas in B2B it can take six months. When you look back and see the different touchpoints, you can see up to six before a response.”
The friction between the bottom line and the desire to become more customer-friendly was perfectly demonstrated by the challenges that two CMOs in particular had experienced during their tenure:
- “The customer lens in these times is tough. You have my CEO’s boss saying he wants zero complaints, but then I also have demands for 13% return on assets. Some of those things aren’t reconcilable. So we have debates about whether half a million is worth 100 complaints?”
- “A lot of us are running marketing campaigns that aren’t necessarily the soft customer-centric campaigns because you can close more deals. But there is also a push towards dropping frequency of emails because the volume is annoying customers.”
The very nature of ‘customer-centricity’ also further muddies the waters, according to the attendees – “it means different things to different people” resonated with them all.
Despite this, there was also the widely held belief that while it is not tangible enough, while there is fuzziness surrounding it, ‘customer-centricity’ is intrinsically positive, and by ensuring that there is a greater focus on the customer, the “results will come”.
As one CMO suggested: “I think you can get away with a degree of gut feel by the board agreeing that being customer-centric has got to be good for the business.”
The increasing empowerment of the consumer, as highlighted in IBM’s research, only serves to emphasise this point – “The days of spending loads of above-the-line and them then liking you is gone… if service levels etc aren’t right then they will just defect to a rival.”
What there was agreement on, however, was that in order to become ‘customer-centric’, organisations would have to achieve greater understanding of their customer, and have a single view of the customer across the business. Data, it would seem, holds the key for customer-centricity.
And the good news is that there is now an abundance of that.
“There is an explosion of data,” one attendee noted. “The data that exists within the organisation, in our databases, but also outside in the web and blogosphere and social media, sharing opinions on our products. Getting value from that is paramount.”