Customer complicity: The route to the future

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.

Customer Complicity

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.

Trust.

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]