The 'Must Have' Customer Strategy - Linking Vision to Executionby
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Customer process re-engineering is big business again, fuelled by 'fashionable' initiatives such as customer experience, six sigma and technology architecture. Crucially, however, there is a missing element in this 'hive of activity' – a customer strategy with teeth linking your value delivery system. Hopefully though, not for long. A new McKinsey study has revealed that amazingly only 11% of board directors completely understand their company strategy, but 70% of them want to be more actively involved in future. Top of their list is involvement in the customer strategy.
Between their 5 strategic imperatives and hands-on operations, most companies have a void - a disconnection between the head and body of their value delivery system.
This void should be occupied by a customer strategy and related operational business models; tools that hook process design into continuous market changes. But finding a company with a customer strategy is like finding a pearl in an oyster. Indeed, finding a business school that teaches it is just as hard. Yet process engineering carries on unabated, with a rash of newly appointed process owners spawning strategic 'heads' like a Hydra in an attempt to find context, whilst Boards produce visions with no teeth.
In IBM’s 2004 survey on what makes CRM initiates successful, a customer strategy came top of the list. Just having one improved success rates by 26%, whilst aligning processes with strategy added another 7% - so how do you fill that void? (CRM Works – IBM)
2. The value delivery system
A CRM strategy is a blueprint for systematically building customer assets - a measure increasingly used for financial valuations. It uses company capabilities to create and deliver a customer value proposition (CVP) for market and customer segments that offer potential. Note that capabilities are used to build value propositions. On their own a capability e.g. the ability to build alliances, predict churn or a contact centre, is not a value proposition.
The key point about modern strategy is that it's not an 'ivory tower' tome on a dusty shelf, but a crucial cog in the machinery of a company that dynamically adapts to the market changes around it. The oil that makes that machinery work is the information flows.
So the Board has now got a vision and they want to get involved, so what next?
Understand Value through an Information Hub:
- Find market and customer segments with the most opportunity and least risk. Build a market structure map – how does it work?
- Establish what customers really value and how committed they are to your organisation using research and feedback on the current experience
- Assess current capabilities against competitors – your strengths and weaknesses
- Set brand values as the core CVP. Based on target group requirements they should position the company in the market differently to competitors and create stakeholder expectations
- Set market and customer objectives e.g. market share, customer retention. Achieving corporate goals through customer objectives makes a company customer centric – growing revenue is a question of which customers, not which products
Choose the Value Proposition and Communicate:
- Set tactics for each segment around product, services, pricing, communication, dialogue, media, content, channels, and knowledge. This is a crucial, crucual, area that is frequently missing.
- Outline in story board format the intended emotional experience, based on brand values – a technique also useful for customer experience mapping
- Set an internal change strategy to create an understanding amongst all staff of brand values, positioning and strategy – internal brand alignment is another crucial area often missing
- Outline the capabilities needed to achieve the tactics. This is where management consulting usually starts.
- The Value Creating Process in CRM – Adrian Payne – Cranfield
- Developing a CRM Strategy – IDM
- Developing a CRM Strategy – Jennifer Kirkby
Design Value into Operations
- Build customer experience process (or journey) maps to start operationalising the strategy and integrating 'multi-channels'. These maps show interaction 'touchpoints' against customer lifecycle events. Each event will trigger a chain of steps that the customer goes through. On each chain mark moments of truth (MOT’s) - the service points you established as making a difference to customers. Ensure all staff and customer experience is considered at each stage and look for gaps between the two.
The techniques in this area are relatively new and highly iterative with the previous two stages. You should ensure suppliers helping in this area understand the value delivery system both up and downstream. You could start here with 'as is' customer experience maps and then evolve 'to be' experience maps from the strategy. The benefit is the ability to do immediate fixes to problem areas.
- Pull together a logical operating model starting with the customer experience maps and outline all the required organizational capabilities. This is where that capability assessment should come into it own. (see Bridging the Gap – Alison Zakers, Impetus Consulting). An Information Framework could also be used at this point to break down capabilities into component parts (i.e. process, data, people and IT - see the following four points) at conceptual, logical and physical levels and so aid deeper design.
- Design the supporting processes which sit behind each experience map. This is where many software suppliers will start. Processes work at two levels:
- workflow - data handoffs between functions, supported by IT architecture.
- individual tasks within a job role – maybe supported by application software
Workflow is the most important levl as its where most experience problems occur. Getting it right aids cross functional collaboration. Despite the name, customer processes are not one dimensional flows but flexible networks of options that allow for a human and personal response.
- Design the data strategy – what information, and thus what data, is needed to support the business. Another crucial but frequently missing element. Nice to have data is an expensive luxury. (Prioritising and improving data quality – Iain Henderson/Don Murray
- Design the organisation structure, required skills and rewards (see Marketing Produce the Product Brochures Don’t They – Jennifer Kirkby
- Design the IT architecture and application support.
Continuously Improve the Value Delivered
Now continuous improvements can be introduced with:
- Process quality systems like six sigma - the name of the game being to remove all blocks from perceived customer value. Note - six sigma has been found to be limited in this regard.
- Ensure with a continuous change programme/internal marketing that staff are motivated and really understand what they need to deliver and why.
- Collect customer and stakeholder feedback, information and measures and pass back into the information hub of the strategic planning process.
3. Talking different languages
The voids in the value delivery system are partly due to the culture gap between that rare species the marketing strategist - who doesn't 'do' process and management consultants whose bread and butter comes from ‘best practice’ process engineering for technology implementations. In the middle sit marketing services -excellent interaction skills but no knowledge of process. At the end come software suppliers who understand technology and process but not strategy and customers. All talk different languages to different business areas. So parts of the value delivery chain become fashionable whilst others, get neglected. The answer is for everyone involved, but particularly CRM Programme Leaders, to understand the links between vision and execution.
To finish, a quote from the history of IBM’s Palisades Management School who under threat of closure decided to reinvent themselves and started by throwing out strategy and planning -
"For a year IBM process leaders met interminably but came away with little other than a growing sense of frustration. They had no idea how resources were to be allocated, priorities set or conflicts resolved. They kept on doing what they had been doing, indicators remained high but morale was low. The institute was drifting a rudderless ship. Empowerment creates such problems when no context exists to support consistent decision making… Seeing this, the CEO resolved to determine a reason for being and developed governing principles and high level business design."
From Adaptive Enterprise, by Stephan H. Haeckel
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Strategy & Business Analyst, CMC
Director Mutual Marketing
- Operational alignment – bridging the gap between strategy and execution – Jonathan Becher