This month, in my exclusive column for CustomerThink, I continue to explore in detail my perspective on seven ‘tips’ that will enable any organisation to become genuinely customer centric. I must remind readers that the ‘tips’ are in no particular order – tip number five is no less important than tip number one – although all the tips are connected to each other in some way. Last month I shared 6 key questions related to the importance of engaging your people in improvement activity. Engaging your people in playing a key role in improving the customer experience is one thing, but what if customer experience is not actually a key element of the business strategy in the first place?
“Strategy needs to be a balance between what the business wants and what the customer wants. Creating that balance would mean that the strategy does not just focus on business driven metrics (revenue, profit, cost etc..), but also customer driven ones (loyalty, satisfaction, effort etc.…). The better able a business is to create that balance, the more likely it is that it will not just deliver a better customer experience – it will also deliver a better employee experience.”
We live in a world that has become increasingly and almost entirely focused on ‘commercialisation’ (the process of managing or running something principally for financial gain). Whether it be conscious or not, too many organisations have spent far too long believing that their ‘reason for being’ is making money. I have always fundamentally disagreed with this – anyone who has had the fortune (or misfortune) to hear me speak, will know that the mantra I preach is as follows:
“Organisations exist to fulfil a purpose – the better able they are at fulfilling their purpose, the more money they will make”
The consequences of failing to abide by this principle are significant. In researching for this article, I discovered a list of accounting scandals on Wikipedia — it is quite an astonishing read! The list goes back to 1976 and includes names such as Xerox, Bristol-Myers Squibb, Kmart, Nortel, AIG and Toshiba among others. The list does not even mention Tesco and Volkswagen – two more remarkably high profile and recent examples of businesses losing sight of the real reason why they exist. Although I have never been privy to the business strategies that led to these less than savoury outcomes, I would be quite comfortable in presuming that customer experience was NOT incorporated into them in any way.
The purpose and ambition of any company ‘should’ be made clear in the creation and documentation of its strategy – strategy being defined as ‘a plan of action designed to achieve a long-term or overall aim’. Many strategists would have you believe that the creation of strategy is akin to a dark art – something that only a few have the skill to do and something that needs very expensive consultants to conjure.
If an organisation has an aspiration to be customer centric, the business strategy is a critical starting point to assess if it has defined its plan to be for the benefit of the company, the customer or both. Strategy is/should NOT be complicated – yet if it fails to contain a focus on both what the business wants AND what the customer wants, then it will fail to achieve the latter.
Defining business strategy is relatively simple (in theory) and consistent across companies – usually, growth, through customer acquisition and retention is at the heart of it. Business metrics such as revenue, profit, return on capital employed, working capital among others are pored over in great detail on a daily, weekly and monthly basis. Yet if an organisation ONLY focuses on these business focused aims; and measures performance by these business focused metrics, then all it will focus on day to day is what the business wants.
To be a customer centric business, it is AS important to ALSO focus on what the customer wants; and to measure performance through customer focused metrics (such as customer lifetime value; customer loyalty; customer engagement; customer satisfaction etc.). A customer strategy can be defined as follows:
- One that puts the customer at the forefront of thinking, when creating procedures, conducting daily operations and training new employees.
- It is a guide, a roadmap, a set of boundaries by which the business will function
- It describes the intended customer experience – and must be shared so everyone knows what to do.
- When companies implement a customer strategy, customer experience automatically comes to the forefront of that company’s daily operations.
It is not complicated, yet so often, the customer element of strategy is missing. I am not saying that it is wrong to have a clear understanding of what the business wants in its strategic definition – quite the contrary. What I am saying is that if the business ONLY focuses on what the business wants, it will not be able to put the customer at the heart of the way it works.
A simple test of whether your organisation has put customer experience as a key element of its business strategy or not, is to ask the following questions:
- What is your corporate mission/vision/purpose?
- Do you know/can you describe your core customer types/segments?
- Can you describe the needs, wants and expectations of these core customer types?
- Do you know what your key strategic business metrics (critical business success factors) are?
- Do you know what your desired customer experience is; what your organisation has committed to doing for its customers; and how you will measure success?
- If you answered ‘yes’ to 4 and 5, are you able to align business goals with the successful delivery of the desired customer experience?
In practice, most organisations I have worked with around the world struggle to answer all 6 of these questions. The overwhelming majority are most comfortable answering question number 4. Here is an illustrative example of how the questions could be answered and a customer focused business strategy constructed:
Ensuring customer experience is a key element of the business strategy sounds so obvious – it is – yet to do so relies on leadership having the mindset that allows them to understand the correlation between meeting/exceeding customer expectation and financial performance.
The final point I would like to make on this subject is this – creation of the strategy is only part of the challenge. Ensuring that everyone in your business knows what it is, is the other part. Too many organisations keep the business strategy as a closely guarded secret for the most senior executives – the minions are rarely confided in. If you want to be a customer centric organisation, it is not just essential to ensure that customer experience is a key element of the strategy – you have to ensure that your own people know what the strategy is as well!
If you are reading this and you do not know what your business strategy is….. I urge you to ask your leaders as soon as possible!