Add value to customers

True customer focus means obtaining value for customers as well as value from customers, ie an integrated view of customers. This requires increasing the amount of spending customers do with the organisation. This can be done by

- addressing the longevity of spending over a customer's lifetime

- extending the depth of spending with a greater share of the customer's disposable income

- enhancing the breadth of spending with increased revenue from new sources of value

- diversifying spending by stretching into new areas

The winning organisations of the future will be those that come from the customers' perspectives and preferences and which are determined to develop internal processes attuned to and connected with those customer wants. Introspective viewpoints will be dead-ends. Great feature engineering alone will not make it. Traditional engineering/manufacturing/sales-dominated organisations must change into customer-focused enterprises.

Furthermore, in the new economy, customers themselves can create value by creating content and products, and providing customer service.

"...the balance of information economics is increasingly moving to the consumer...... instead of trying to stay ahead of the consumers, companies should work at learning from them...... consumers will be the source of innovation for the future..."

Stuart Henshall, 2001

Users are creating content and selling it to others, eg Amazon through book reviews. Furthermore, Microsoft sent out several hundred thousand copies of its Windows software to selected customers, who tried it out and wrote reports on how to improve the software for Microsoft. This resulted in a much better piece of software and saved Microsoft around $US1 billion in development costs. With customers creating more content, the distinction between employee and customer will blur!!!!!

"...Now Internet based businesses are a moving beyond customerised products; in future it will be all about customer control. The challenge lies in devising ways to generate revenue and capture value from the new business models enabled by those online advances. Empowered customers are now seeking more than free information and software. They want to create the content themselves..."

Australian Business Foundation, 2007

This is resulting in a "user-create" culture.

Examples of this included YouTube and MySpace. YouTube allows for self-broadcasting on-line in video; with over 45 million videos, Google paid $US 1.2 billion for it. A similar story prevails for MySpace, an on-line social networking community for which Rupert Murdoch paid $US 580 million.

Modern information technology has enabled organisations to serve their customers more personally and efficiently. At the same time it has raised customers' expectations so that they demand immediate service and instant gratification.

"...technology has compressed to nearly zero the time it takes to acquire and use information, learn, make decisions, initiate actions, deploy resources, and innovate...... we're operating in real-time when our credit card is verified in seconds, where we withdraw money at an ATM or when we use our computers to track a package..."

Regis McKenna, 1997

Organisations need to understand what it means to do business in this environment of vanishing time and space. As speed has become the differentiator, organisations need to manage the transition from economies of scale to economies of time. Furthermore,

- serving the never-satisfied customer is not a one-time event, it is a continuous process. It means eliminating time and space constraints on service to give customers the means to satisfy and serve themselves and obtain access to products and services anytime, any where.

- organisations must be prepared to respond instantaneously to the marketplace rather than trying to predict the future

- engaging customers now means creating a dialogue with them, not broadcasting at them

- capturing the attention of customers who are increasingly presented with a proliferation of data demands that information be clothed as interactive entertainment

Customer service is primarily about building relationships; secondly, about looking at value for money (rather than price), service, quality and convenience. As more and more customers become "cash rich, but time poor", they will favour organisations that save them time and energy by providing convenience in 4 main ways:

i) access convenience, ie accessible location, parking availability, long store hours, telephone and Internet access, etc

ii) search convenience, ie customers are able to speedily identify and select the products they want using techniques such as focused merchandising, intelligent store design and layout, knowledgeable sales persons, interactive systems, product displays, packaging and signage, etc

iii) possession convenience, ie the supply chain is critical with merchandise either in stock or available on a timely basis

iv) transaction convenience, ie self-scanning at checkout counters, automated product selection and drive-in access, etc

The first guideline in keeping ahead of any change is to start with the customers. You need to find ways to differentiate yourselves from the competition, so that you entice your customer. To stay ahead, you need to focus on 3 things:

- demographic, sociographic and psychographic trends of your customers

- emerging social and cultural directions

- advances in technology

Linked with this is the capability of recognizing emerging patterns and trends. Part of this involves being able to 'take a step back' and see the big picture. This is called cognitive pattern recognition and there are several types, ie

- convergence, ie several industries moving in the same direction, eg previously separate banking, insurance and financial industries are performing the same functions. Similarly, the convergence of the pharmaceutical and computing industries into the biotechnology industry. Is convergence going to happen in telecommunications and Microsoft; between hospitals, hotels and aged care industries; between universities and corporate giants, etc?

- oscillation, ie swinging from one extreme to another. An example of this includes organisational decentralisation which leads to greater divisional autonomy and innovation as against greater centralization, coordination and control.

- shift from the tangible to the intangible, ie the knowledge worker has the intangible knowledge and skills while the capital owners have the tangible factories. Products (tangible) are being supplemented or replaced by services (intangible)

Need to look at the patterns and to identify similarities and differences in what is happening. This involves looking at information from a variety of sources and challenging your assumptions. In fact, what might seem impossible today could be possible in the future!!!!!

Many successful organisations understand the advantages of the customer portfolio and manage it to give them a competitive advantage. It involves identifying customers' profitability and their potential. Managing an organisation is not merely looking after a collection of products and/or services, nor a group of territories, but also a portfolio of customers. There is a need to determine which individual customers or customer segments are profitable or unprofitable. Technology is now available to allow organisations to determine the profitability of individual customers and/or customer segments. For example, one bank calculates the profitability of every one of its 10 million customers monthly!!!!

 

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