In business, the words “planning” and “customer-centric” seldom appear in the same paragraph, let alone in the same sentence.
It’s almost as if being customer-centric is something that happens by osmosis. However, any organization that leaves the customer experience to chance is taking a massive risk that its competitors will take away its high-value customers.
The problem is that most organizations don’t understand how customer-centric they are, because they simply don’t have it as a dimension in their business for customers. We tend to manage businesses in one dimension, usually reflected in performance metrics. But the metrics reflect internal tasks, not customer activities. How otherwise would a global company—where control by metrics was truly world class and admired by everyone; where any manager would sell their grandmother to shave a quarter percent of their controllable operational expenditures—have more than 23 percent of OPEX as self-inflicted cost that no-one controlled? Because the company didn’t report costs that way, so no one saw it.
Worse still, efforts to reduce departmental OPEX are actually increasing the self-inflicted cost by moving tasks to less able departments. The same company decided to close its warehousing and ship multiple components direct to the customer from different factories on different days. Executives were surprised to see calls to customer service and returns rocket within weeks, knocking out both operations for months.
But it’s not just the P&L that suffers. This lack of a customer dimension is, in my experience, the root cause of poor customer experiences and employee frustration.
Jan Carlzon, former CEO of Scandinavian Airlines was asked, “What was the one thing that made the difference in being able to turn around SAS?” He answered, “There was no one thing; it was all the little things that came together to make it happen.”
Historically, operational planning has been a functional activity developing or enhancing operational capabilities to support products, with a heavy emphasis on utilization, productivity, cost and efficiency driven by top-down metrics. But without any method of aligning operational changes to see if they make sense for customers, the resultant customer experience is fractured and inconsistent, creating hidden or self-inflicted costs.
All the customer-affecting capabilities—and at Round, we believe there are more than 75 groups of them—must be aligned at the chosen level of customer-centricity by effective operational and capital planning that delivers capabilities. Only then will the organization be consistent and bring customers with it on the journey to customer-centricity.
Decide how customer-centric you want to be!
But what is the customer dimension? What is between the extremes of product centricity and giving the customer the keys to the store? To most executives, being customer-centric means having the customer in control, which might be acceptable for B2B organizations but not for B2C. Based on research with CRMGuru and our experience working with clients, we believe there are two critically important interim positions: Customer Experience Focus and Customer Value Focus. These help transition and transform the organization in a managed and controlled way, gradually optimizing the business around the needs of each customer or customer group and enabling the customer to ultimately take full control of the process—should your business or your customers require it. Here’s how it works:
- Customer Experience Focus. The first step from product centricity focuses the organization on the customer, turning the business perspective from inside-out to outside-in. Constantly improving the customer experience is the key to achieving this. The company becomes a learning organization, engaging the customer in the process of driving improvements through empowered customer operations that operate within clearly defined change governance to prevent chaos. This process helps eradicate errors and inconsistencies, driving down operating costs while enthusing customers and customer-facing employees. Customer satisfaction and retention are the key metrics that drive this change.Customer processes are based on customer events and defined independently of organizational boundaries. Ideally these processes have owners who report outside the functional fiefdoms. The key process metric is the end-to-end cycle time for each process, not the productivity or cost of each component.Customer Experience Focus also requires some level of customer segmentation, based on value or some other financial insight, because customers are not equal and you simply cannot afford to be all things to all customers. But segmentation should be applied across the organization, with all customer-facing teams aligned with the customer segments. The teams should have clearly defined service levels and decision-making authority.
- Customer Value Focus. Once customers understand that you are serious about learning and improving, they will begin to trust you, providing more and more insight to further define and optimize products, services and offerings. This requires you to develop a deeper understanding of customer needs and create more tailored products and services to meet them, further reducing costs. This is the world of permission marketing, best offer and marcom optimization.It also requires dynamic treatments to engage customers in individual ways, to maximum value—a term that is deliberately ambiguous. If loyalty starts at Customer Experience Focus, then achieving mutual Customer Value Focus creates raving fans. Now the customers are ready to become an extension of the organization, and the organization has prepared the way by optimizing the business around their needs. This is an end-to-end supply chain model where partnership is the key word.
Unfortunately, the historical optimization of the business around products and functions means few companies possess the ability to optimize and align their organizations. The customer dimension is simply missing from their organizations. Executives cannot see this misalignment, but all customer-facing people know it is there—as do the customers.
But all it takes is asking for help from the customers and your customer-facing employees for you to begin to change that.