Kevin Hilstrom's post raised a couple of important points:
- Marketing's credibility gap
- The need for executive sponsorship for customer-centric change
- "Ownership" of voice-of-the-customer
The credibility gap seems to be getting surfaced and discussed already, at least judging by the number of times conference presentations reference the old hack about knowing half our marketing is wasted but not which half. But the trend seems to be in the right direction, and not just because we've taken the first step of admitting we have a problem or because measurability and accountability are high on the buzzword meter these days (also easy to say, hard to do). Orgs are investing in capabilities, the media mix itself is becoming more measurable as it shifts to direct and online channels, etc.
Regarding the necessity of executive sponsorship for a company to become customer centric, please allow me to defer to a later post that will discuss this and the many other things that, from our observations, are the necessary preconditions for a successful customer-centric strategy. Suffice to say, it's high on the list. BTW, at some level customer-centricity is a business strategy, not one of the Ten Commandments (oops, I was told to stay away from religion in posts), and will not be right for all business. So never will all CFOs and CEOs be interested. Check out what Elana Anderson wrote in an earlier Marketing Consortium post about different degrees with which companies pursue this business strategy
Third, Kevin is right that the database marketing organization is bound to be instigating or at least mixed up with customer-centric strategies. Since C.C. relies on understanding individual customers, they hold the keys to the kingdom to some degree. But it rarely goes anywhere if exec sponsorship and several other preconditions aren't in place.
In the mean time, I wouldn't hold my breath waiting for the end of vendor hype or consulting punditry, which have joined death and taxes as fixtures in our firmament.
Executive sponsorship is the key to creating a customer-centric strategy. Actions, not words, dictate how people will react. When company leaders say that the customer is number one but act in a contradictory way, their directive loses credibility. How many times are we faced in our work environments with the dilemma of deciding between two different goals? Are we supposed to produce more, spend less, or make sure that the customer is happy? How does our performance get measured? I know my performance goals have nothing about customer satisfaction in them. What should I do when a choice between hitting a production target and ensuring that a customer is happy needs to be made? Also, I see organizations that do not respond to customer needs until a complaint is made. What about finding out what the customer thinks about your product or service before things get to that point?
Posted by: Eric DePaul | May 05, 2007 at 01:11 PM
This week and next, I'll dive in-depth in to customer-centric marketing. I'll probably start by sharing the seven or so "prerequisites" for success, at least according to the companies we at Unica have worked with. You've nailed two of the seven, "Executive-level decision to adopt a customer-centric business strategy" and "Create scorecards and metrics; compensate accordingly." Since customer-centric marketing (CCM? technology marketers love three-letter acronyms, aka TLAs) requires plowing across traditional product and channel silos, it takes enduring executive sponsorship. Last night, at the cocktail reception for Unica's Marketing Innovation Summit (MIS, or "customer conference" for everyone else), one of large financial service customers explained how they think it will take TWO YEARS to really change the organization. And compensation, the primary management lever, is one of the things that separates the walk from the talk. Until people get paid based on customer metric instead of product metrics, it's unlikely CCM will be meaningfully adopted. Of course, Eric points out that there are limits to CCM based on the needs of companies to grow and be profitable. These may conflict at times, but I believe that for most companies, becoming more customer-centric will benefit both customers AND profitability, because today many organizations are optimized too narrowly, around product and channel metrics.
Posted by: Andrew Hally | May 07, 2007 at 12:25 PM
This is a great area of discussion, and it highlights some of the areas in which marketing still needs to evolve. There was a study just a couple of years ago that convincingly showed that among a sample of very large companies, a 1% increase in customer satisfaction led to a $55M increase in cash flow. Great. But how do you create a 1% increase in customer satisfaction? More money on branding? More money on product development? More money on sales training? Cut prices? And how much will these initiatives cost?
Many of the areas that have a strong impact on customer experience are not in the management domain of marketing at many companies today (sales, customer support, R&D), and until marketing can articulate an argument to organize cohesive strategies that extend beyond the siloed domain of marketing communications, we're not going to be in a position to really effect corporate strategies like a move toward customer-centricity.
Posted by: Chris Kenton | May 07, 2007 at 02:51 PM
The ability to impact customer contact points outside the direct control of marketing differs from industry to industry. Usually, consumer marketing-driven industries like retail seem to have an easier time of it than sales-driven industries like B2B and financial services. Marketing will probably never "own" the operational aspect of call center and other channels, but should have a role in the defining the best customer treatment stragies that get carried out across channels. Some call this "analytical CRM" as opposed to operational CRM. Certainly it takes a shift in management perspective. Kim Collins of Gartner spoke to this in her session today at the Unica Marketing Innovation Summit titled "EMM: Making Marketing a Profit Center."
Chris' comment could spawn another interesting thread about the link between customer satisfaction and financial results. Increasingly marketers are looking beyond customer satisfaction and customer loyalty metrics to "net promoter" score (see www.netpromoter.com), which many feel has a more direct link to improving business results. Others focus on customer engagement more than customer loyalty, assuming that loyalty is going the way of the dinosaur in today's customer-empowered economy.
Posted by: Andrew Hally | May 08, 2007 at 05:20 PM