Every few days there seems to be yet another customer service disaster that fills the newspapers and swamps our online social media feeds. The mistakes companies are making in serving their customers are becoming ever more frequent, at least it appears that way to me. You too?
I find this strange, since almost every organisation, big or small, recognises the importance of satisfying their customers. They all talk about customer centricity but very few actually go beyond voicing their opinions. Why do you think that so many organisations continue to struggle?
After all, a customer first strategy is not that difficult, at least in theory. Just think customer first in everything you do. So how come most businesses get it spectacularly wrong? I think the reason is because they don’t see the immediate return and it costs – a lot of – money to implement.A customer first strategy is not that difficult, at least in theory. Just think customer first in everything you do. So how come most businesses get it spectacularly wrong? Click To Tweet
Reasons for adopting a customer-first strategy
There has been enough research done to prove that the return on a customer first strategy is significant. Here are just a few of the numbers I found.
- 86% of buyers will pay more for a better customer experience. But only 1% of customers feel that vendors consistently meet their expectations. CEI Survey
- The price premium for great customer experience is real—and it’s big, up to 16% PWC
- 89% of consumers have stopped doing business with a company after experiencing poor customer service. RightNow Customer Experience Impact Report
- By 2020, customer experience was expected to overtake price and product as the key brand differentiator. I haven’t heard if it did! Customers 2020 Report
- A 10% increase in customer retention levels results in a 30% increase in the value of the company. Bain & Co
Those numbers would make any CEO sit up and take notice! But will it make them act? What’s holding them back from investing in their customers rather than (just) in the products and services they offer?
I believe that those numbers can no longer be ignored. It’s time every CEO started initiating a move to a more customer centric organisation. NO more excuses; this has to be (OK, one of) your top priorities!
If you’re ready to put your customers first, then why not sign up for the C3Centricity Academy and follow the course on the topic? FIND OUT MORE.
Marketers are too busy building brands
With so much information available today, marketing is being challenged to demonstrate its ROI. This might explain why they are still putting their efforts into brand building, sometimes to the detriment of their customers, consumers and clients.
However, an analysis run by IBM on research carried out in the UK last year by the Callcredit Information Group gives a different reason. They found that the majority of marketers is feeling overwhelmed by all the data that is available to them these days. Their explanation for this is that:
“Only 29% of marketers believe they have the necessary skills to analyse data, with 44% planning on investing in further training over the next two years to boost confidence within their organisations around the handling of information.”
Only 29% of marketers believe they have the necessary skills to analyse data, with 44% planning on investing in further training over the next two years. (IBM/CIG) Click To Tweet
According to a Forrester report, 44% of B2C marketers are using big data and analytics to improve responsiveness to customer interactions. But of equal importance in terms of top two mentions, is the desire to generate insights. ( Source)
According to Forrester, 44% of B2C marketers are using big data and analytics to improve responsiveness to customer interactions. But of equal importance, is the desire to generate insights. Click To Tweet
It disappoints me that despite the constant flow of data into companies most companies still lack insights into their customers. As I’m often quoted as saying:
“We’re drowning in data but thirsting for insights.”
Marketing is clearly so busy using data to manage pricing, distribution and communication channels, that they are not using the information to also get to know their customers better.
This conclusion is confirmed by a Forbes article which mentions that marketing is using big data to provide answers to
“which content is the most effective, how to increase conversion rates and customer lifetime value.”
It would be good if they used it to increase satisfaction and loyalty too, no?
Big data has actually done customer understanding a disfavour since organisations are hardly increasing their spend on market research according to ESOMAR’s latest industry figures. The industry grew 6% in 2021 and is expected to grow around 8% this year. As the graph below shows, these are the first increases after several years of stagnation.
Now compare this to the more than 22% increase recorded for ad spend in 2021!
But there is some hope. A recent report on the KPIs used by marketing showed that Marketers are using a variety of metrics to measure the impact of their brand marketing activities. In surveying more than 560 global brand managers and CMOs, the analysis concludes that new customer acquisition (75%) and social media engagement (72%) are the two primary ways they use to determine the success of their brand marketing efforts.
However, there is still a lot of room for improvement. A 2016 Spencer Stuart survey shows data analysis and insights are one of the three main areas where CMOs need the most development as a leader. Unfortunately, they are also the skills which more than a half of them say are most difficult to find when building a team!
So if CMOs can’t develop insight about their customers, shouldn’t market research be more not less important to them? After all, it’s the one profession which spends its whole time trying to understand the market and its customers. So what’s going wrong?
Market research is seen as a cost, not an investment
Companies still need market research to understand their customers. Yes, there is a wealth of information flooding into organisations with the IoT, but those numbers don’t tell you their “why.” That’s where market research comes into its own. It needs to provide more answers and not just the mere statistics researchers seem comfortable dropping on the laps of executives and marketers alike.
I believe that (a large?) part of the issue is also the researchers themselves. They’re often not very sociable, speak a language others don’t always understand and yet they also seem afraid to voice their own opinion let alone make recommendations.
This was confirmed in The Vermeer Millward Brown Insights 2020 research. It clearly showed the advantages of a senior market research position at board level. But to get there, most researchers need new skills. The critical capabilities which were said to highlight the biggest differences between leaders and laggards were in business acumen, creative solution thinking, storytelling and direction setting.
It seems a real pity to me that the very people who should benefit from the explosion in data availability are not profiting from it. As if their needed skills are not enough, there is also a real opportunity for them to lead the customer first strategy in many organisations.
Customer services are seen as complaint handlers
When I was first hired to head up the global consumer excellence division for Nestle, I found a group of siloed departments which rarely shared information. Even worse, the customer care centre was seen as mere complaint handlers. Their image was of a group of women who spent their days on the telephone talking to other women!
I don’t think Nestle are the only ones who had this image at that time, now more than a decade ago. Have things changed since? Not much in my opinion. I still find similar perceptions in many organisations today, which thankfully become my clients through a desire to make those much needed improvements.
You only have to look at companies which excel at customer care to realise the business benefits of putting the customer first, Amazon, Southwest, Zappos to name but a few. And recent Temkins research concluded that SaaS companies can expect to double their revenue within 36 months of adopting a CEX strategy.
An excellent article by Shep Hyken called “Ten Customer Service Tips for Customer Loyalty Month” details the essentials of a forward-thinking customer-first strategy and what it means today. In it, he mentions that
“According to Forrester, 72% of businesses say that improving the customer experience is their top priority. A study from NewVoiceMedia indicates that companies lose more than $62 billion due to poor customer service. No company can afford to be a customer service laggard.”
The Forrester report from which Shep quotes was from an ongoing analysis that has been run each year since 2010. The key findings from the 2016 report showed:
- In all five sectors they covered, companies with higher customer experience (CX) scores outperformed their rivals in revenue growth
- CX leaders showed an annual growth rate of 17% compared to just 3% for the others.
- The cable and retail industries beat the field in CX by 24% and 26%, which is a huge boost to the bottom line.
- Even in the sector with the smallest range (airlines), there was a 5% difference between companies.
- This also translated into subscriber growth – in the cable industry leaders grew internet subscribers by 23.9% more than others and video subscribers by 13.9%
Along with the previously mentioned statistics, I can see no reason for a company not to invest in a customer-first strategy. If you can think of any yourself, then I’d love to hear them in the comments below.