Corporate Customer-Centered Strategies
How do you measure your company’s success? Is it stock price, revenue growth, earnings, or something more difficult to quantify like customer value?
Peter Drucker writes, “It is the customer who determines what a business is, what it produces, and whether it will prosper.”
But what is customer value, and how can it be measured?
There are many definitions of customer value, but one unassuming measurement mentioned in the linked HBR Article can be summed up as, “the total lifetime value of a company’s customer base”.
Does it work? Amazon’s Jeff Bezos, Costco’s Jim Sinegal, and Vanguard’s Jack Brennan say that it does for them.
If you want statistics- loyalty leaders grew revenues roughly 2.5 times as fast as their industry peers.
It seems an obvious dictum – care about customers, your company will do well.
But then what goes wrong?
In a word, or three – poor customer service – de-emphasizing customer value in favor of short-term shareholder value.
Ask yourself if the following examples describe your company:
- Enterprise software companies charge corporate customers change fees that can raise the total cost of ownership to as much as three times the original bid.
- Call centers cutting labor costs, incentivizing the minimization of call-handling times.
- Restaurant chains reducing operating costs by substituting frozen and precooked ingredients in place of fresh and made-to-order food.
Not surprisingly, these short-team gains eventually lead to the customer swiping left to start looking for something better.
What to do instead
- Instill a culture that rewards delivering customer value
- Develop metrics to track customer value
- Use and emphasize those metrics
- Educate your investors/shareholders that this is the key metric to drive share prices
Instill a culture means avowing to do with the type of activities above. Metrics, such as the Net Promoter Score or the Bain & Company framework outlined by HBR, can in part to be used track customer value. Companies will need to formulate more personalized approaches that suit their company. Educating investors/shareholders may be the hardest of all, especially when the expectations are ensconced in their DNA. The best way to start is giving example of success stories.
Here are more concrete ways this can be done according to the article
- Combine design thinking with loyalty-earning technologies
Companies earn loyalty when they anticipate customer needs. This relies on two capabilities: design thinking applying cutting-edge technologies. Example – using AI/past to data to anticipate a customer’s problem when calling customer service, re-routing to the correct center/best rep. Compare that to current cost-cutting, anti-customer service of increasing waiting times.
- Organize data customer needs
Forget data silos – leverage data from marketing, sales, etc. to create a 360-degree view that can be accessed by multiple departments. Additionally, create customer-centric metrics throughout the organization to track intradepartmental success.
- Lead for loyalty
Get in buy-in from the company at all levels, including investor boards, managers, and employees closer to the customer. For the latter, this can include inspiring employees from the satisfaction that comes from making customers’ lives better. Changing decision criteria, supporting policy changes, and celebrating customer loyalty wins can have a trickle-down effect.
Putting it together
The more reliable the metrics to measure, the more investors will value this. The more investors value this, the more companies will too – a virtuous cycle. However, the first question your company needs to ask – is this the best measure to track your company’s success?
