Why do Customer-Centric Organizations Fail?

In an earlier post on customer-centricity I had argued that executive reviews rarely go beyond the numbers (revenue, subscribers, traffic, etc.) and fail to capture a more powerful growth engine – our customers. But, what if our strategies are built around customer success, yet the goals are not achieved? 

There could be a multitude of reasons namely, market saturation, competitive pressures, product quality, marketing success, operational effectiveness, etc. While most of the listed here may be in play, in some form or the other, I want to bring our attention to “operational readiness.” 

We can hire the best consultants to design our product, consumer and marketing strategy, but it is our operational readiness that will determine how well we deliver on this strategy. 

Let’s take an example, we have our corporate mandates such as; expand our footprint, diversify our product offerings, increase ARPU, reduce cost, sign a new partnership, etc. We conduct due diligence, come up with a strategy to achieve that objective, and with a fancy deck, will have all the approvals needed for a launch. However, there is often a need for "incremental investments" and a shift from "corporate ways" that are critical for our operations to deliver. 

In my experience at leading new product launches and customer-facing site enhancements, the build phase often springs up unexpected surprises that either cause delays, or force a go-ahead with a compromised product/service features. These could be in the form of systems and process updates (may require capital investments), shift in strategy to offer a "beta" version of the product, shrink the scope of support offered through CRM, etc. As a P&L manager, it is important to highlight the larger gains and keep the project ROI positive and within acceptable range.

A well thought out and “realistic” implementation plan should be integral to the strategy deck for a new initiative. 

So, don’t underestimate the value of conducting due diligence and investments around building operational capabilities to meet the strategic goals. That is one activity which will significantly impact the success of; new product launch, analytics integration, a website redesign, and systems upgrade, etc.  

The bottom-line is that the cost of an unsatisfied customer is far too high to under-estimate the costs of poor delivery. 

In one of my client engagements, I had to re-evaluate the product features and SLAs that were agreed upon with the partner, as these were leading to customer complaints and unacceptable levels of churn. Part of the strategic redo included a better communication collateral for sales and marketing channels. The compromises made during the launch to meet the deadlines would come back to bite so quickly - no one had imagined! 

Is your organization truly in a digital age?

Data is in abundance on consumers and their online engagement, be it content and/or eCommerce. What this means is that the marketers need to be more savvy about customer needs than applying “one size fits all” approach to talking to their customers. Digital competency is hence about harnessing this data and utilizing it to segment, target and serve the customers – need I say “real time!” 

To become a digital-savvy organization, we require an understanding of our marketing touch points and internal infrastructure that can support a multi-pronged approach to customer reach. Marketers need to ask the following questions in their organization:

1. What digital experience drives engagement and conversion in our company/industry?
2. What marketing channels are effective for what customer segments and why (data to support the claim)?
3. What data is captured in our systems and is it compatible across customer touch points?
4. Who owns the digital experience and are the right people empowered to make “consumer-centric” decisions?

If the answer is not a definitive yes to all of the above, I’d suggest there is some work that needs to be done in achieving true digital competence. The road map should hence, clearly identify deficiencies and investment needs to start utilizing the amazing power of our digital interaction with customers. Some of our more familiar metrics such as; customer acquisition rate, retention, marketing ROI, CLV, ARPU, etc., will then truly represent a view into our marketing success and provide deeper insights into how to optimize customer experience.

Planning to succeed with Analytics

Analytics and insights play into the business planning cycle in more ways than most organizations apply. It is a standard practice to use historical data and known events to prepare outlooks for the upcoming year. However, success metrics can be utilized to make business planning more robust and measurable. Businesses should identify a set of metrics that are bound to change during the course of the year, primarily from, shifting consumer, market and corporate needs. It is also imperative to earmark the metrics that cannot be influenced during the year and define appropriate measures to control the impact of these “fixed” variables on overall quarterly/yearly goals.

Pitfalls may come from unknown market forces – shifts in economy and consumer sentiment impacted overall usage patterns for online businesses in 2008 and 2009, thus significantly reducing the bottom line. In such times, it became imperative to focus our efforts on targeting and relevance to drive higher conversion and better average revenue per user (ARPU) to ensure viability. Ignoring the obvious may also lead to a lot of pain – for instance, drops in online shopping impacted not just the number of items sold, but also lower cost per clicks (CPCs) for online retailers and aggregators. The other hurdle, in my experience was, when external partners started to rewrite deals to cut costs, leaving us with no choice but to find innovative ways of managing/achieving our revenue and OIBDA goals.

As part of the annual planning, it is important to keep an eye on the key variables that “we control,” in order to be able to react to unforeseen market conditions and/or revenue dips. We started to listen more to our consumers and reacted appropriately to provide more engaging experience thus driving incremental revenue to offset the losses. The frequent A/B testing and agile project management to incorporate resulting recommendations assumed a whole new meaning. It also highlighted the need for a nimble annual planning process and metrics tracking/monitoring, so we are not caught with our pants down when; market softens, consumers leave, partners bail and corporate goals are “reorg’d.”