Customer behaviour has fundamentally changed in the past decade and many old business models are no longer applicable to today’s context.
Forces Driving Change
Customers are more informed, aware, empowered, enlightened and concerned about the products and services they buy.
Faced with a deluge of choices, they have the capability to purchase through an ever-growing number of channels, driving marketplace changes that are having a significant impact on all businesses.
To assess the current state of and to document how top performers achieve customer-focused market leadership, the IBM Institute for Business Value surveyed nearly 500 customer relationship management executives, across roles, industries and responsibilities in 66 countries.
Surprisingly, three forces related to satisfying the needs and wants of customers were not high on the survey respondents’ list of concerns:
a) new business models (14%), b) increased customer demands (20%) and c) the digital information explosion (16%)
Customer focused leaders therefore need to consider some key questions including:
- Are the business models that created our success in the past still valid?
- Do these models reflect how consumers want to engage with our business?
- Do we have accurate data when we need it so that we can continuously update the strategic insights that drive real growth?
To achieve customer-focused market leadership, companies need to acknowledge these forces in their business strategies.
New Categories of Market Leadership
As business leaders seek to develop new ways of doing business, they must quickly focus on developing fresh customer insight and establishing channels that will allow them to transform the customer experience, open new markets and reduce organisational complexity.
Analysis of the survey responses indicates that there are three categories of market leadership:
- Customer insight leaders – companies that optimize data analysis, transform it into something useful and create measurable value
- Digital channel leaders – companies that harness new methods of creating value through customer interactions and new products, services and digital business models
- New era leaders – companies that incorporate the best practices of each category
The study found that companies that lead in these categories are able to choose among three distinct strategies to increase their potential for differentiation and create a unique customer experience based on the business conditions they face and the market positions they want to occupy including:
- Radical cost and complexity reduction – taking costs out of business to make operations leaner, more flexible and more accessible to customers
- Innovative market making – Focusing on social business design to engage customers, partners and suppliers in creating value
- Strategic service delivery – using all available channels to improve the customer experience. It optimizes every channel to be responsive and engaging wherever and however the customer chooses. It also allows the customer to move seamlessly from channel to channel
The Roadmap
In examining the best practices of market channel, customer insight and new era leaders, the survey found that market making and strategic service require four specific areas of managerial attention. Companies desiring to attain customer focused market leadership must:
- Listen – gain actionable insights by extracting and analysing customer data for actionable information
- Learn – target content delivery in a way that is customer preferred and relevant across all channels and opportunities for well-crafted customer experiences
- Engage – enable the organisation to continuously engage the customer in sharing and creating value
- Harvest – deliver information that improves the way customer management functions plan and execute their work, including enabling better performance across functions to deliver value
Six Steps for Driving Success
While the key activities are listen, learn, engage and harvest, the approach relies on defining what insight is needed, when and how it can be applied using the following 6 steps:
- Determine which of the three strategies best match your organisation based on your specific needs
- Examine your existing business model and revenue generation approaches and compare them against the experiences that customers want to have
- Define how you currently manage the areas that enable you to focus on the customer experience: listening, learning, engaging and harvesting. Do you have any gaps? Identify the current and new metrics that could improve how you deliver better customer experiences across channels
- Assess the capabilities of your core organisation for development of customer insight and channel delivery. Determine the effectiveness of existing multi-channel strategies. Are they tightly integrated across functions? Are they delivering results?
- Realign metrics and measures across the organisation around the desired customer experiences, revenue that can be generated by delivering them, the insight needed to develop and maintain them and the channels that will deliver them. Create cross-functional road maps that enable the desired business model, products, services and markets to be effectively developed, deployed and measured.
- Create specific organisational change plans for the people who will deliver the strategy and develop the organisation’s leadership potential to tie to the plans.