3 Reasons Customer Centricity Brands Aren’t Walking The Talk

The executive meeting of a client became quickly heated. Their frustration was rooted in the discovery that the company was not as customer centric as it had led itself to believe.

With C-Suite support, new marketing campaigns, messaging and content, new technology and processes the company could not reach the next level of target results. NPS, cross-product sales, and CSAT scores had increased but customers still complained about repeated service mistakes, billing errors, slow response times, sales not understanding their business, and not enough perceived value-add for the price.  The root cause was hard for the executives to hear – they were so focused on tactical, spot ‘fixes’ that they missed the essence of what cross-organizational customer alignment meant.  In short they weren’t walking the talk of customer centricity.

How does that happen?

This is actually a very common situation except that most companies don’t realize it. Jason Wadler, Chief Strategy Officer of Leapfrog Online and Chair of the Leapfrog Marketing Institute, says there are three common root causes:

  1. Culture
  2. Data
  3. Operations

Shifting from a product focused company to a customer-aligned organization changes how a company must operate.  “It requires a bit of a leap of faith and having the right controls in place,” according to Wadler. “Companies are competing against their customers’ expectations, less against their competitors.”

Customer-alignment transformation must be led by the C-Suite, not delegated down, and takes around 24-36 months to complete. The CEO owns defining the alignment approach, target business outcomes, timetables and KPIs.

The data companies collect and manage today don’t support customer-centric operations. The right data is either not available and or categorized correctly. On top of that, the data needs to be tied together at the customer level, not at the product or function level.

Lots of companies do data analysis and come up with insights. But they are not actionable – they can’t leverage the data to drive the right individual customer interaction at the right time. While data completeness, accuracy and consistency is a centuries old problem, the difference today is that customers control the interaction at speeds unimagined before.

The third root cause is operational. Is the company structured around the customer? Have the various functions been redefined in the context of the customer lifecycle relationship and how are they working together?  It’s not business as usual.  Wadler stresses that establishing clarity on who owns which decisions and who is accountability for implementing those decisions is critical.

Aside from the root causes, most implement customer-aligned transformation plans miss:  Alignment of the annual budget and planning process.

According to Deb Hall-Lefevre, SVP/CIO of Couche-Tard, “The process only works when priorities and goals are aligned across the functions.” She goes on to say, “Beyond that, funding decisions and execution becomes much more effective when there is a culture of collaboration, healthy debate, customer-first orientation, joint expectation setting, and fast decision making across the functions.”

According to Leapfrog Marketing Institute’s 2017 Planning Report, part of the issue is that “55% of the respondents built their budgets with a primary focus on prospects or customers – a drop from 60% reported last year.”  If study participants weren’t focusing their budget planning on customers, where was their attention? On products and services offered.

Of those companies that did build their budget to be more customer and prospect focused only “9% focused on cross-functional alignment.” That’s pretty low and is a direct contributor to missing out on the rewards of customer alignment.  Without collaboration and aligning strategies and budgets cross-functionally, customer alignment cannot be achieved.

In fact, only 38 percent of study respondents report they currently have a dedicated customer experience budget.  The low percentage could be attributed to the difficulty in controlling, measuring and getting cross-functional resources aligned on key strategies and metrics. Company functions need to team up and co-create strategies, execution plans and supporting budgets focused on the larger goal of company-wide customer alignment.

The other key requirement is measurable ROI accountability.  Since in most organizations Marketing owns customer experience (53%), marketers need to have over half of their budgets ROI accountable. The good news is that the Leapfrog study found that ROI accountability is gaining in acceptance along with increases in dedicated customer experience budgets. In fact, almost 10 percent of respondents “now have their first customer experience budget.”

For companies trying to understand what ROI metrics look like, Wadler recommends asking these questions:

  • Did the activity move the business on the growth or efficiency axis?
  • Did it make the company more relevant to customers?
  • Is the organization more aligned on behavior and actions while reducing spend?
  • Are customer interactions managed according to an assigned value for each touchpoint?
  • Can the company move faster on market, customer or competitive opportunities?

Of the study respondents that were customer/prospect focused, 55% anchored their marketing budgets in customer life stages and 30% on customer value /LTV models.  The expectation is that over the coming years more companies will build budgets anchored in customer lifecycle stages in order to effectively respond to the continued pressure to deliver value, as defined by customers and prospects.  Wadler says “it is increasingly important for marketers to align investments with opportunities to drive scale and ROI.”

Marketers are the change agents in operationalizing customer centricity.  If CMOs wish to remain with a seat at the table they will accept responsibility for forging cross-organizational collaboration and leading teams to develop the necessary strategic plans, tactics and budgets to achieve full organizational alignment to customer expectations.

If your organization isn’t where it would like to be in the customer-alignment transformation, Leapfrog Marketing Institute offers these suggestions for walking the talk:

  • True customer experience ownership – dedicated customer experience plans and budgets are a necessity. Devices, channels and customer expectations are changing too fast for customer centricity to be treated as a decentralized initiative.
  • Customer-based planning and budgeting – with just 50 percent of budgets built to be customer centric, companies run the risk of investments being misaligned and high value customers lost. “Companies should consider a value-based segmentation strategy and test/optimize/scale methodology to validate the approach.”
  • Heightened focus on ROI/accountability – marketers must create performance investment tiers based on opportunity and value to both capture and report on clear financial-based business results if they want to keep their seat at the executive table.


First published in Forbes.

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