ROUNDMAP-News-Excellence

Driving Customer Excellence™

A tagline serves to clarify a thought, product, brand or proposition. The tagline for ROUNDMAP™ is Driving Customer Excellence™. However, the problem with words is that they are highly open to interpretation – words mean different things to different people.

So without further ado, this is my definition of Customer Excellence:

Customer Excellence is a firm’s collective, cross-disciplinary commitment to help customers achieve their objectives, sooner rather than later, while anticipating that in the process customers and employees become a better version of themselves. This can be achieved by operationalizing customer empathy – with which to distinguish customer behavior and intent while democratizing customer insights across separate teams and departments – to create personalized experiences and deliver meaningful, sustainable, affordable, and EQuitable solutions, in a compassionate manner; throughout each consecutive sales cycle.

For most readers, this definition will suffice. However, if you would like to learn how I got to it, you’re invited to continue.

Purpose of Business

Management Consultant and author Peter Drucker wrote in The Practice of Management (1954):

The purpose of business is to create (and keep) a customer.

Regardless of culture, structure, system, procedures, processes, or products, a business has no reason for being unless it is unable to serve paying customers. Therefore, as stated by Drucker, it has to create customers and hold on to them.

Growing a share of the market, by creating more customers, has long been considered the primary goal of any business enterprise. Then came the internet and with it e-commerce, mobile commerce, social commerce, and digital platforms. Industries restructured, disrupted by digital initiatives, bringing global competition at our doorsteps.

Customer Development

While the digital world unfolded, Steve Blank introduced the customer development method that launched the lean startup movement, made popular by Eric Ries (a student of Steve Blank) through his bestseller The Lean Startup.

Customer development method is a scientic approach that can be applied to startups and entrepreneurs to improve their products success by developing a better understanding of customers’ problems/needs as well as the other hypotheses necessary to build a commercial successful company, relying on relies on validated learning, scientific experimentation, and iterative product releases to shorten product development cycles, measure progress, and gain valuable customer feedback.

Blank, a successful Silicon Valley entrepreneur, had studied startups in the ’90s and noticed a pattern that was quite different from the traditional product development approach. Which was to conduct extensive market research to uncover demand, develop a ready product and then launch an expensive marketing campaign to market the product against a target group.

In contrast, startups – being short on cash – started with an assumption and were quick to develop a primitive product (later known as a minimum viable product) which was being tested on a small group of users. By asking users to offer feedback, they could improve the product while also growing their userbase.

This enabled them to develop a full fletched product and validate customer demand at the same time, thereby justifying the product/market fit. This all happened while remaining under the incumbents’ radar. After investors learned about these use cases they were eager to invest, allowing startups to scale up their operation with unprecedented speed.

Experience Design

Customers no longer extract their loyalty from price or product. Instead, they remain loyal because of how they:

  • Appreciated/remembered the interactions with the brand,
  • Value being associated with the brand, or
  • Perceive the future value a product/brand has to offer them.

If you cannot keep up with their increasing demands, your customers will leave you. PWC reports:

  • The payoffs for valued, great experiences are tangible: up to a 16% price premium on products and services, plus increased loyalty.
  • One in three consumers (32%) say they will walk away from a brand they love after just one bad experience.
  • Nearly 80% of American consumers point to speed, convenience, knowledgeable help, and friendly service as the most important elements of positive customer experience.
  • Human interaction matters now: 82% of U.S. and 74% of non-U.S. consumers want more of it in the future.
  • Regardless, the technology supporting human interaction must be seamless and unobtrusive across platforms.
  • 73% of all people point to customer experience as an important factor in their purchasing decisions.

Cost Leadership

Meanwhile, Western manufacturers, due to the internet, have to compete locally with Chinese manufacturers which are dealt with superior hands:

  • They have access to the largest, cheapest and most productive labor force in the world,
  • They have access to the most advanced technology and production techniques, and,
  • They control the largest worldwide distribution network: the $900 billion New Silk Road (Belt and Road Action Plan).

Shortly after Uber had entered the Chinese market, Didi – its local competitor in the ride-sharing industry – started to subsidize rides, allowing neither companies to make any money. After two years and losing more than $10 billion while being frustrated over new government regulation, Uber sold its operation to Didi and left the Chinese market.

Chinese consumers prefer Chinese companies over foreign competitors, contrary to how Western consumers respond to foreign competition. As a consequence, Chinese companies are allowed to grow locally and expand their business globally while being under the supervision of the Chinese government. Western manufacturers are not able to operate nearly as cost-effective as their Chinese counterparts. China will reach cost leadership in most industries.

Social Responsibility

Research shows that 91% of global consumers expect companies to do more than make a profit, but also operate responsibly to address social and environmental issues, while 84% say they seek out responsible products whenever possible. 90% would even boycott a company if they learned of irresponsible or deceptive business practices.

Cutting corners is one way of dealing with the pressure of global competition, however, if customers find out about it, public scrutiny can be fierce. Like Monsanto (glyphosate), British Petroleum (CEO), United Airline (broken guitar), and Volkswagen (dieselgate) have discovered. Corporate Social Responsibility (CSR) has become a decisive aspect.

Products to Services

With the rise of the network economy and sharing economy, businesses have started to shift from AS-A-PRODUCT to AS-A-SERVICE business models. This will have a deep impact on how companies create and deliver value. For instance: Luxury cars are typically designed to break down prematurely to allow a dealer network to make a living off of recurring service intervals. However, when this car becomes part of a car-sharing service is has to be available 24/7, motivating the service provider to demand a better product with much fewer service intervals.

This will lead to a paradigm shift: from optimizing cost (low price/high volume) to optimizing utilization (high price/low volume).

Customer Excellence

These challenges combined: fierce global competition, the lean movement, experience design, China’s cost leadership, social impact, and the shift towards AS-A-SERVICE business models indicate the vital importance of building strong customer bonds.

Let’s have a look at some of the differences between the traditional approach towards Customer Creation and Retention, and Customer Excellence:

CUSTOMER CREATION/RETENTION CUSTOMER EXCELLENCE
Driven by
Satisfaction (memory of past experiences) Significance (perception of future value)
Customer Expectations Match / Satisfy Exceed / Delight
Interactions A series of touchpoints Integrated Customer Lifecycle™
Performance Commercial Excellence Service Excellence
Product Development Mass-Customization Hyper-Personalization
Growth Focus on customer creation Focus on customer retention
Responsiveness Reactive (customer service) Proactive (customer success)
Data Intelligence
Market Ínsights (siloed) Customer Insights (democratized)
Goal
Fulfill a want or need Customer’s Job-to-be-done
Target Definition
Target Market (Segments) Target Customer (Personas)
Development Product/Platform Development Customer/Resource Development
Approach Equality (standardization) EQuitability (driven by empathy)
Incorporating All customer-facing activities All customer-touching activities
KPI’s
Website Conversion Rate
Cost per Conversion
Average Conversion Time
Net Promoter Score
Annual Sales
Relative Market Share
Customer Turnover Rate (Churn)
Retention Rate
Lifetime Value
Customer Profitability
Net Value Score
Product/Service Usage

Business Model

Customer Excellence does not imply to become customer-centric. Sure, there are limits to our resources, and while Customer Centricity demands a focus on a select group of customers, Customer Excellence is not confined to any particular business model.

As a matter of fact, a product-centric supermarket like Amazon Go can be Customer Excellent. Just like a resource-centric airliner like Emirates can be Customer Excellent. Additionally, a network-centric platform like eToro can be Customer Excellent. And yes, customer-centric stores like Best Buy and Target are Customer Excellent too.

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Edwin Korver

Edwin Korver

Architect of ROUNDMAP™ - Advancing Grandmastership of Business™ ✪ Business Model Matrix™ ✪ Polymath ✪ Generalist ✪ Systems Thinker ✪ Board Member, CEO CROSS-SILO BV

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