Customer complicity: The route to the futureby
Terms like Customer Advocacy and the Voice of the Customer are prevalent, and some companies are making great strides in their quest to listen harder and adapt their operations and capabilities to serve customer better than competitors. As Dr Bradley Gale of Customer Value Management fame said: "Companies succeed by providing superior customer value in their products or services."
Perhaps this is stating the obvious, but how do you go about doing it?
Customer is the gatekeeper to a dynamic future
As large firms in particular struggle to free themselves from the bonds of the past, the lure of the Adaptive Enterprise becomes ever more seductive. Not everyone is sure what this means, but my sense of this, is that as market lifecycles become more compressed and customers exercise their freedom to choose with greater willingness and ease, we are forced to adapt. Most of us are on the back foot. A sense & respond, highly adaptive organisation, is always on the front foot. It can anticipate change based on good signals and has the intelligence to interpret and act upon them.
It sounds like a very technologically savvy organisation, but adaptability is more complex than that. This can mean changing our products or services, or selling them through different channels to keep pace with changes in buyer behaviour, or even changing our fundamental business model. The biggest change of all though is when it involves changing our values and embedding this in the firm’s culture.
If this magnitude of change is necessary, what chance is there of becoming an adaptive enterprise? Yet this is precisely what is needed if a firm is to transform itself from being a transaction chaser, to one able to put the interests of the customer first, and still make a profit.
But is this level of change really necessary, or can firms simply rely on pushing the decision point closer to the front line through further automation, data integration and new procedures?
I’m sure there are still further efficiencies that many firms can make to get more out of their resources, but behind this, there is an assumption that the old rules of competition still apply. Such an unspoken assumption can be lethal and is probably the biggest cause of death of large organisations – take the UK Textile and Motor industries as examples. If we peer into the future a little more and realise the central and powerful position of the customer, than the signals are pretty obvious – product centricity is yesterday’s story, not today’s.
So what is today’s story all about? In my first article back in June, I painted a picture of a ladder portraying the implications behind different evolutionary states. (Evolution of CRM a commercial perspective) In the course of the many newswires since, we've taken a look at a number of challenges and barriers to progress:
- The evolving landscape of CRM
- Customer portfolio management
- The emerging role of marketing
- Leadership of change
- Benchmarking and loyalty
- Delivering the brand promise
- Customer service
But at the heart of any of these topics is the creeping realisation that however hard we try, none of these changes will be successful without the complicity of the customer. The customer is the gatekeeper to this dynamic new world. We can throw all the technology we like at the problem, but unless the customer lets us in, it is worthless.
As this diagram shows, any progress beyond merely fixing holes and basic competitor differentiation (more bells and whistles) cannot be achieved without a deep understanding of the customer and his or her context. The more dynamic a firm wishes to be, the harder it gets. This demands far greater collaboration across the organisation, allied to a much deeper understanding of the customer’s context.
Against this backdrop, customers are being bombarded with surveys and questionnaires, but privacy protection, as well as their boredom, is making it harder and harder to tease out what they really need. There is a paradox here. This arms’ length approach to customer understanding is too superficial. It needs to be replaced with a far greater degree of intimacy and knowing of the customer. The problem is that in many cases, customers don’t want that kind of relationship. So what can you do?
Technology supports customer insight up to a point
There are some extraordinarily clever people about who have developed advanced and complex algorithms to provide predictive analysis based on past behaviour or similar contexts. Amazon is the obvious example of a company which has used such tools to enhance its ability to make relevant suggestions to customers, but even it is finding it remarkably tough to generate profits. Also, they are not slaves to an industrial past like most large and long established companies so they have a distinct advantage.
Data mining and campaign response analysis tools provide only a partial picture, and at best its historic. The holy grail of the 360 degree view seems to have lost some of its sheen, as the sheer magnitude of the task dawns on big firms. (See Data quality: The Herculean task at BT)
The default position is a customer satisfaction survey
Lagging firms rely on their annual customer satisfaction survey and hope for a lifeline from the results. I have always and remain to this day highly suspicious of the term 'satisfaction'.
How would you respond if you asked someone what their marriage was like and they told you they were satisfied? If you were particularly cynical you might want to pop down to the betting shop and place a bet that it would be over within 5 years. You’d get poor odds.
To get a decent enough sampling, salesmen are often tasked with the job of chasing up their customers and even advising them on how to complete the forms, should a bonus be resting on the outcome.
Capturing the voice of the customer
Some companies take the task of capturing the voice of the customer, very seriously. These firms pour over the individual results and wrestle with them until they have identified the real drivers behind the customer's choices. The old customer satisfaction survey seeking information to help a firm sell more to the customer doesn’t work.
Customers aren't that stupid or easily fooled. They can spot a self serving survey when they see one. Equally they can appreciate it when firms make a real effort to understand their underlying needs, and get quite excited when they anticipate them or introduce them to relevant things they hadn't even thought of. If they do complain or respond to a survey, they want to feel that it really matters and will make a difference. No one wants to be just a number.
How far do you need to go?
The extent to which a firm must bend over backwards to understand its customers will depend on the nature of the business and the degree of choice open to customers. Customisation of a product or service down to the level of each individual is more suited to some businesses than others. If we look at Professor Adrian Payne’s matrix opposite, the top right hand quadrant offers the best protection against being copied or commoditised. Intuitively this is where most people would like to be.
On the other hand the scope to create an individualised experience or service may be limited. Last week I travelled on Great North Eastern Railways (GNER) from Wakefield in Yorkshire 200 miles down to London. The only alternatives open to me were flying or driving – but neither would allow me much freedom to work at the same time. I don’t expect an individualised offer from GNER, nor am I willing to share more than my basic details with them. I’m just a number.
On the other hand my bank probably could develop individualised offerings that took into account my personal context, though I’m not sure I trust them. And that is the real issue.
Only the trustworthy have a future
The customer really is the gatekeeper. If the customer does not trust a firm, then it won’t invest its own time in revealing the detail behind its context. If it won’t reveal its context, than the firm is likely to have only a superficial understanding of the emerging reality. It cannot be truly adaptive with such wafer thin insight. The writing is on the wall.
Martin Hayward, Director of Consumer Strategy and Futures at dunnhumby in 'Customers are for life not just your next bonus' - looks at this issue of trust.
"A bank claims to listen to its customers yet closes branches. A fast food outlet claims to promote healthy eating yet sells salads laced with high fat dressing. And Consumers aren’t daft. They recognize hype and hot air and they don’t like it. They don’t want to be pawns in the marketing game it’s time for marketing departments to reconnect with customers."
If customers really are for life, then at the very least firms need to get to grips with injecting the authentic voice of the customer into their businesses. To do that they must show that they are trustworthy, in their behaviour, not just their promotions. For some firms with a history of being self serving, this is a tall order, but without this depth of understanding, which relies on the customer’s active complicity, the sense and respond or adaptive enterprise will remain a pipe-dream. This ethical dimension can only be a good thing.
By Jeremy Cox CMC Editor Business & Strategy
If you would like to contact me and share your own experience or opinion please contact me at [email protected]
Please login or register to join the discussion.
Your article assumes a big divide between the company and the customer. And that only the company is, nay, can be in change of satisfying, even delighting the customer. The company senses, the company responds and the customer, poor thing, should be grateful.
This may be the situation today. But it doesn't need to, probably won't be the situation tomorrow.
Tomorrow, the customer may be much more involved in co-creating their own future with the company. They will be driving innovation through lead user kits, they will be driving marketing & sales through their social networks and they will be managing their relationships with companies on their own terms.
Sounds like pie in the sky?
Well it isn't to the likes of P&G, Toyota, 3M, Ford, GM, Orange, Eli Lilly, McDonalds and so forth. They are experimenting with customer co-creation today.
The fuiture doesn't lie in keeping the customer outside the company door, but with bringing the customer inside the company.
Independent CRM Consultant
Graham I'm sorry I should have made that point clearer, but you make a great point, the customer will increasingly become a co-creationist where it has a vested interest in a successful outcome and where there is sufficient trust. Thr trust element is the key. This means that to succeed in this world where power is firmly shifting to the customer, (except in the case of commodities perhaps), firms will have to demonstrate their trustworthiness.
Those which take a purely transactional view, will be quite rightly distrusted.
This is nothing like the sterile environment where the customer is the passive victim of an all seeing company - quite the opposite.
(Apologies for mis-spelling your name in my last comment).
I am not sure whether we over-emphasise trust.
In today's business model, companies generally make profits when customers receve fewer expensive benefits. Business is a zero-sum game. So customers are right not to trust the companies they do business with. Trust is an alternative to not having sufficient control.
But a lot of tomorrow's customer-driven business will be done on the basis that the customer is more able to dictate more of the shots, whether through much better information, more combined resources or simply a wider range of cheaper alternatives. Business will be more of a plus-sum game where coopetition between companies and customers provides benefits for all. In these circumstances, trust as an alternative to control will be supplemented by a big dollop of control as an alternative to trust.
The lack of trust today is a sign of an unbalanced business model; business is still weighted unfairly in favour of companies. With the increase in customer power that the various forms of customer co-creation enable, trust, although always important between business partners, will no longer be such a big issue for customers.
Independent CRM Consultant
Interesting comments Graham. What I found during the days when IBM was evolving to a 'solutions' company from a 'box shifter', was that from the customer side the more complex and uncertain the solution e.g. some aspect of CRM, then the more store the customer placed on trust.
In other words, there is some correlation between the importance of trust and the complexity/uncertainty of the purchase and desried result..
This is one reason why box shifting salesmen fail miserably in the CRM arena unless its a simple contact management or SFA offering.
What do you think?
An interesting observation.
As things become more complex and difficult to control, people do look to other factors to assuage their inner fears of making a bad choice.
As Veronica Liljander's research has shown, trust is one of the last things to develop in a business to customer relationship. Most relationships just never make it this far. Sadly, short-termism or unjoined-up actions by companies are usually at fault.
The advantage of course is that once trust-based relationships are developed, they are pretty difficult to break. Things really do have to go catastrophically wrong over a long period of time for the trust to be destroyed and the relationship to fall apart. But when it does, it goes instantly and completely.
One of the drivers behind the rise of co-creation is a transfer of trust, from inherently untrustworthy companies to much easier to trust fellow-customers.
Independent CRM Consultant