How Well Do You Really Know Your Customers?
Good ole Joe has been calling on your biggest customer for almost 20 years. He knows all of the managers by their first names. He has been to their kids' baseball games. He even knows the brand of beer that they drink and their favorite restaurant in town. But, does he know that they are expanding their business in a market your products don't serve? Does he know that they are courting potential acquirers? Can he explain to you why their business is down in two key, profitable categories for you? You invested heavily in bringing on a new line late last year. You've overstocked in that line to make a point to the new supplier. Has Joe taken the product specialist to this customer and worked with their engineering team to find a fit for these new products? Does Joe know that they currently buy a comparable line of products from your competitor? So, how well does Joe really have his finger on the pulse of your largest customer?
This should sound familiar to many of us. We lull ourselves into a false sense of security because we have a "relationship" with the customer. We don't work the account the way we would one that we are trying to win. What a surprise when one day we find that we've been outhustled and outsmarted by a competitor. Where is good ole Joe then?
We all have good ole Joes in our sales forces, purchasing departments, accounting teams, production crews and management teams. They've been doing things the same way for years. For the most part they've been successful. But in today's world, our customers, partners and employees demand more.
Are we ready to give them what they want? Do we have the information necessary to know what to give? What do we get in return?
The Customer Is The BossA seismic shift in customer expectations occurred late in the 20th century as the Internet revolution began to take hold. Where previously our economy was supplier led, it has increasingly become customer led. The transparency of information afforded by the Internet has made today's customers more and more knowledgeable about the products we sell.
Learn to become more customer-centric by looking at your company through the eyes of your customers. How do you like it when during a service call you're asked for your phone number by an automated attendant and then have to provide the same number again when you're finally connected to a real person? That is just one example of not looking at our processes through our customer's eyes. Ask yourself the following questions:
- Do you have the trust of your customers? Are they willing to share with you the challenges they face in conquering their marketplaces? Do they trust that you have the expertise to help them succeed?
- Does your organization approach the customer from a holistic perspective? In other words, do the different teams within your company work together to identify and offer solutions to your customers?
- Does your company reward innovation? Do you have a methodology in place to institutionalize the retention of knowledge so that it can be reused?
- What is your company's risk profile? Are you willing to delay gratification while you retool your company to be customer-centric?
- Do you have the leadership necessary to achieve your goals? Can your people become consultative enough to understand your customer's needs and construct a value proposition unique to them?
The answers to these questions will help define whether you have the right stuff to succeed in your quest to become customer-centric. In their book The One to One Fieldbook, Don Pepper and Martha Rogers comment: "The ability to access customer information instantaneously from anywhere already has altered the competitive equation. If you don't have a system that can leverage the flow of information at your fingertips, you're going to be left behind - if it hasn't happened already."
What do successful customer-centric companies have in common?
- They understand their customers - their culture, strategy and values.
- They deliver "value-based" solutions instead of products and services.
- They tailor their operations to the customer's needs and ensure a "seamless" face to the customer.
- They attract, train and retain people with the best customer skills and experience.
- They institutionalize the customer culture, through the use of technology, to ensure a continuously enhanced customer experience and a constantly improving value proposition.
Customer IntelligenceSuccess will be predicated upon the availability and quality of information. Traditionally, firms have had silos of information about their customers - buying habits, financial results, demographic information, etc. But, that's not good enough today. Information must be integrated across multiple systems. It must be actionable and have context. We need "customer intelligence," not simply information. Notice in Figure 1 that a review and feedback loop must exist to continue to make the information more intelligent.
Companies are finding it increasingly difficult to differentiate themselves through traditional methods, such as product quality, operational excellence, logistics and best business practices. The Y2K effect, where nearly every company in America went through a modernization project, has leveled the playing field, forcing companies to look elsewhere for their unique value proposition. Many companies faced with this dilemma have turned to customer intelligence to drive the process of identifying and differentiating their customer offerings.
Before his death, Sam Walton, the founder of Wal-Mart, had these comments on customer intelligence: "I'm told that we have the largest civilian database in the world. What I like about it is the kind of information that we can pull out of it at a moment's notice. I can tell you exactly how many of any item we've sold - not only overall but in every region, district or store. It gives us the power of competitive advantage."
Every company strives for competitive advantage. For years we have treated our customers like our adversaries. Just look at the terminology - we "won" an order, we "beat" the competition, we "fought hard" for a deal. That doesn't sound like a customer-centric set of descriptions. We must change our culture, our processes and our terminology. We must begin thinking of our customers as our partners instead of our adversaries and start seeking wins for them. What we have to do is begin to foster "learning relationships" (as Peppers and Rogers calls them) with our customers, where we are able to fit our products and services a little closer to an individual customer's needs each time we interact with them.
The road is littered with the bodies of those companies that have tried and failed to reinvent themselves as customer-centric organizations. As compelling as the ideas are, they are deceptively difficult to implement. As you develop your vision, identify the people, processes and policies most likely to derail your mission. Build a plan to overcome the obstacles that you identify along the way. Remember that the journey can be made in pieces; you don't have to go "cold turkey" to succeed. And, make sure you tell your employees that mistakes are ok, resistance is not.
The results can be dramatic - Pitney Bowes doubled their market cap in less than two years. Farm Credit Services of America grew total assets from $3.8 billion to $6 billion and their customer base by 40% in four years. Only you can predict how your company will react to the change. As noted author and consultant Geoffrey Moore says, "Begin with the notion of putting the customer first. An inspiring ideal, to be sure, but it embodies a deep flaw: there is no such thing as "the" customer. In the real world there is "a" customer, and there's another, and another, and at least in their own minds, they do not add up. This is individualism at work, and the power of one-to-one marketing demands that you never forget it."
So, how much does good ole Joe really know about his customers? Arguably, very little. Through foresight on the part of management, a healthy dose of technology and some new, customer-focused practices, ole Joe can learn a lot. And so can you.
A recent Aberdeen Group research study showed:
- Only 48% of firms know about a problem before a customer does
- Only 43% of firms alter their service based upon a customer's profitability
- Only 42% would take the opportunity to sell something during a service call
- Only 37% know if they share a customer with another division
A recent Accenture research study showed that by the end of 2002:
- 83% of companies will implement a data warehouse
- 70% will revamp their customer processes
- 53% will use electronic commerce to transform their customer relationships
- 49% will organize by customer type