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Blog Posted in avatar   Michael Hinshaw's Blog

The Heart Of Competitive Advantage In The Era Of Smart Customers

blog:17059:1::0
By Michael Hinshaw
Posted Jun 19, 2012 in Business
"Customer centricity" is a phrase (like brand, vision, or strategy) imbued with multiple potential meanings and open to wide interpretation.Those interpretations are often driven by the roles and responsibilities of the definer. Call-center management thinks differently about customer centricity than marketing, finance, or sales. Operations has a different definition entirely.
No matter your definition, the importance of being customer-centric is well-recognized; it’s the process of getting there that leaves many firms stumped.
As customers, it seems many of the companies we deal with are designed to frustrate and annoy. And when smart customers--always connected, technologically enabled, and able to access whatever they want from wherever they are--become frustrated and annoyed, they simply take their business somewhere else. Your competition is a click away.
The challenge? How to get customer-centric. The Holy Grail is an enterprise-wide understanding of customer-experience strategy, your customers, and their needs shared across groups, divisions, and functions with access to the data and systems that allows consistent delivery of defined experiences across silos.
Of course, becoming customer centric isn’t simple, though the firms that get it right make it look easy. Looking at leaders in this area, including USAA, Kohl’s, Amazon.com, and Costco Wholesale, they share some common strategic traits.
Though the list is longer and more detailed than this, here are three key things each of these organizations does particularly well. If you’re serious about getting customer-centric, then here’s where to start:
1. Segment your customers by value, wants, and needs into the smallest possible groups.
Understanding your customers at a granular level is key to serving them--and to making a profit while doing so. One of the most common barriers to being customer-centric is lack of customer knowledge or understanding. When we talk about segments based on this, we’re talking about looking through two primary lenses:
Needs: What they actually want, need, and expect from you.
Value: What your customers are or may be worth to your firm.
Without a shared understanding of your customers at the segment level, everyone in your company is essentially flying blind when it comes to being customer-centric, much less delivering great customer experiences.
2. Anticipate the needs of your customers by understanding the data that increasingly surrounds them.
Whether you have 1,000, 10,000, or 10 million customers, every interaction they have with you leaves behind a trail of potentially valuable data. Today, the ability to leverage massive amounts of complex customer data is well within the reach of any firm. Even so, most companies don’t even make an effort to anticipate what the customer will do--or need--next. If you do, then you can become dramatically more responsive in the customer’s eyes.The ability to use customer data to anticipate customer needs and intelligently respond to them is what will separate the firms that thrive from those that have no future at all.
3. Reward your employees for being customer-centric, and give them the ability to do so.
The fact is, it’s simply not possible for a company to be customer-centric unless its employees are motivated and enabled to do so. In most companies, employees lack the shared values and clarity of strategic vision that drive customer centricity across groups, divisions, and functions. They aren't clear on which customers drive value, what touchpoints and experiences are most important to them, or what their roles and responsibilities are when it comes to delivering better customer experiences. Fixing this means rewarding your employees for being customer-centric--and giving them the direction, data, and tools that allow them to do so.
Most companies don’t truly understand these things--and they won’t until it’s too late.
Think about it: The same disruptive forces that are empowering your customers have empowered your competition, which can duplicate your product quality, your prices, and even your service levels. They can leverage your supply chain and match your IT and distribution strategies.
Soon it will be too late for companies that haven’t leveraged technology or shifted organizational structures and business processes in ways that drive customer centricity. If you have truly learned what your customers want and need--what makes one customer different from another and how to serve all of them based on those differences--you will have an unassailable competitive advantage. Assuming, of course, that you actually use this knowledge to better serve your customers.
Come to think of it, that alone will probably make your company unique.

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