THE CUSTOMER-CENTRIC IMPERATIVE IN TODAY’S HYPER-COMPETITIVE GLOBAL BUSINESS ENVIRONMENT

The rapid rise of global competition, combined with the adoption of Internet-based communications and cloud processing power, has created a state of hypercompetition across most industries.

This phenomena was outlined by Dartmouth Professor of Strategy Richard D’Aveni, who defined the term hypercompetition as the challenge presented by innovative, aggressive, or even predatory competitors. If the barriers to market entry are low or minimal, competitors can easily and quickly move into your market. Their entry can quickly erode whatever competitive advantage you may have created for your brand or brands.

The Wharton Business School is credited with identifying a key competitive response to the threat of hypercompetition, namely “a continuous process of scanning the dynamically changing competitive environment and consumer behavior trends.”

In other words, becoming a “customer-centric” organization.

A STATE OF HYPERCOMPETITION

THE DEFINITION OF CUSTOMER CENTRICITY

The concept of customer centricity was originated in the 1980s and defined most thoroughly recently by Wharton Professor Peter Fader, author of Customer Centricity: Focus on the Right Customers for Strategic Advantage.

There is a difference between the concept of customer focus, which means “offering a consistently great and relevant experience to customers”, and customer centric, which means “looking at a customer’s lifetime value and focusing marketing efforts squarely on that real-world, high-value customer segment to drive profit.”

Fader argues that “too many companies are customer friendly, but not customer centric. In other words, they treat each customer the same, missing an opportunity to discover who their best customers are.”

Concepts such as “customer experience”, which encapsulates the ease and delight in which customers engage with your organization on all levels, should be considered a subset of customer centricity.

Forrester actually tracks the Customer Experience Index, which seeks to measure the highest

performing companies in the area of customer experience and measure their results vs. the S&P 500. According to Forrester, upon looking back on previous data starting 2007 to present, “the CEI 200 has outperformed the S&P 500 Index by generating a 10.7% annualized rate of return.”

Forrester also provides a Customer Experience Ecosystem Playbook to guide organizations in the employees, partners, policies, processes, and technologies required for delivering excellent customer experiences

IT MANDATES FOR CUSTOMER CENTRICITY“Everything you do has to begin and end with the customers; otherwise you shouldn’t be doing it.” – Multinational CIO

Of course, like any strategic initiative, beginning a journey toward customer centricity begins with the support of senior management and must be embedded within the organization’s culture. It takes commitment and persistence for any strategic initiative to take root and produce measurable results.

One of the most tangible and enabling forms of commitment that executives can deliver is in the form of information technology. IT provides the capabilities and competitive advantages that turn inspiration and strategy into process and performance. CIOs play a critical role in enabling an organization to execute market leadership strategy of choice, whether it be product leadership, operational leadership, or customer intimacy.

From our perspective, there are three core IT foundations required for any organization to move toward becoming a customer-centric entity.

INFORMATION The free flow of information between organizations and their customers and partners, and between their internal team members, forms the basis for several critical requirements for becoming a customer- centric organization:

• Understanding which customers are most valuable (Customer Lifetime Value, among other potential metrics).

• Understanding customers’ current and future needs.

• Understanding competitive threats in realtime.

• Tracking the organization’s performance against customer-centric goals and following through on accountability and rewards for performance.

iINTERACTIONSCustomer experience has become an important initiative in the hypercompetitive marketplace. Customers can be won or lost in split seconds, as any analysis of ecommerce shopping-cart leakage can attest. But customer experience goes beyond website shopping experience. It includes intelligent, personalized experiences such as:

• Email communications.

• Print communications, such as direct mail and billing inserts.

• Mobile communications, including real-time, contextual offers in-store or at an event.

• In-store kiosks and intelligent checkout systems.

• Social media engagement (“systems of engagement”) combined with customer relationship management (“systems of record”).

• Customer support call centers.

• In-person engagement via sales or customer support representatives empowered by mobile devices and connected to cloud-based customer data sources.

Every step of customer engagement has the opportunity to be tracked and enhanced for improved customer

experience.

INFRASTRUCTURE

An organization’s information technology (IT) infrastructure has never been more important. All of the above competitive assets can be inhibited or completely destroyed by a data breach (see Target and Michael’s Stores, among other recent examples) or the inability of your team members to gather, understand, and act upon customer and market information.

Critical infrastructure issues related to the customer centric journey:

• Security – Customers obviously share less about themselves and their needs if they have less confidence their information will be kept secure.

• Cloud scalability – Organizations must be able to rise to the occasion with the computing capacity required to maintain service during peak levels. The availability of utility-like cloud computing power can help the organization reach customer-centric milestones faster and, often, less expensively.

• Cloud applications – Employees, partners, and even customers are expecting to create, collaborate, and gain access to needed information regardless of their location. Cloud-based applications can expand the capabilities of the entire organization and value chain.

COMPETITIVE ASSETS CAN BE INHIBITED OR DESTROYED

CUSTOMER-CENTRIC BUSINESS PROCESS

Of course, uniting these capabilities into a day-to-day customer-centric reality requires well-defined business processes upon which IT systems are designed and implemented. CIOs are aware that many siloed business applications have ended careers and set companies in inferior positions vs. their competitors. For over ten years, industry analysts and practitioners have lamented the lack of return on investment delivered by most CRM systems, for example.

“Customer-centric companies use every customer touch point to stimulate interest, close business, satisfy a need, or demonstrate commitment to the relationship.” – Yankee Group, Customer-Centric CRM: Fully Optimizing CRM

Process guru Janne Ohtonen expresses it this way: “Process excellence is a way to produce successful customer outcomes. In a service economy, what you make is not the competitive differentiator, it is why your organization exists, how you deliver your services, and what you do for your customers. The customer experience your organization produces to its customers is the biggest asset you have!”

Customer-centric organizations inherently understand this formula: Processes deliver customer experiences; customer experiences drive repeat business and word-of-mouth, which drive growth and profitability.

CUSTOMER CENTRIC COMPANIES USE EVERY CUSTOMER TOUCH POINT

ASSESSING CUSTOMER CENTRICITY

HOW DOES YOUR ORGANIZATION COMPARE TO LEADING CUSTOMER-CENTRIC ORGANIZATIONS?

CULTURE AND EXECUTIVE SUPPORT

Has your leadership team charted a course towards orienting your organization towards customer centric leadership?

◎ Customer centricity is the core of our strategy and processes.◎ We’re in execution mode but haven’t reach goals yet.◎ We’re planning but haven’t yet launched. ◎ “Customer” doesn’t really define priorities around here.

Are your teams incentivized to focus on the most valuable customers (MVCs)?

◎ We wake up and go to bed with these priority customers in mind.◎ We’re getting there; at least we know who they are.◎ If someone could tell us who they are, we might focus on them.◎ We don’t know and don’t really care who the MVCs are.

INFORMATION

Do customer-facing and product/service development teams have access to a steady flow of customer information that keeps your entire organization focused on winning, keeping, and growing customers?

◎ We err on the side of ensuring team members have access to information in a secure, access-anywhere manner.◎ We ensure key managers have access to information, but it’s not an integral element of the organization’s overall business approach.◎ Capturing data and turning it into actionable information is a challenge around here.

Do partners and customers have access and incentive to update information in your systems as part of a broader network of intelligence?

◎ Yes, through secure extranets, our customers and partners feed us valuable information, which we turn into value for them.◎ Customers and partners share information with us, but not through real-time or secure systems.◎ Information is one-way, from our teams to theirs.

INTERACTIONS Have you comprehensively mapped all the customer experience touch points, including channel, retail, and web partners and developed a plan for improving the overall integrated experience?

◎ Yes, we know our touch points and have made progress in improving the overall experience.◎ We’re in the process of identifying and improving integrated customer experience.◎ We’re uncertain of what the experiences are like at various customer touch points or how to improve them.

Do you make the lives of customers and partners easier through well-designed web-based and/or mobile systems and tools?

◎ We’ve saved customers money and increased their loyalty through systems and processes that make it easier to do business with us.◎ We’re beginning to learn what our customers’ needs and preferences are in this area and are planning to make changes.◎ We’re not the easiest people to do business with, quite honestly.

Are your team members in sales, service, support, and delivery plugged into business systems that make it easier for them to service customers?

◎ Our team members have access to secure real-time customer and product/service information via their mobile devices.◎ Our team members can get a question answered in a reasonable amount of time, but usually not while with the customer.◎ Team members have to work pretty hard to get answers back to customers, or proactively find ways to serve them.

INFRASTRUCTURE AND SECURITY Have you completed a comprehensive security assessment and implemented a continuous, proactive security plan for your organization?

◎ Yes, we have a systematic and persistent security risk assessment and mitigation process in place.◎ We’ve assessed our security ecosystem and are making plans to build a proactive process around protecting it.◎ We have not fully assessed our security ecosystem and may have significant security gaps we’re unaware of.

Are your team members fully equipped with access to reliable, integrated mobile productivity and analysis tools regardless of where they may be working in order to understand and respond to customers?

◎ Our team members have 24/7 secure access to the productivity and analysis tools they need to do their jobs.◎ Our team members have access to integrated productivity and analysis tools but are limited when traveling or not at their desk.◎ We’re limited in the capabilities we provide team members due to poor system uptime and lack of connected tools.

BUSINESS PROCESS AND PILOTS

Is your organization operating from a comprehensive map of customer- centric business processes in order to prioritize the development of competitive capabilities?

◎ Yes, we have a stack-ranked list of critical business processes that we’re systematically making more streamlined and effective.◎ We’re in the process of mapping our processes!◎ We currently have no process map or list of critical priorities to improve for customer experience and competitive improvements.

Does your organization have an efficient process for piloting and scaling new business applications and systems to improve return on investment?

◎ Yes, every business process and IT project goes through a predictable planning, piloting, testing, and scaling methodology.◎ Depends on the department or situation; some do, so don’t.◎ Things are a little ad hoc around here; we could use a better method for our business IT madness.

LAUNCHING YOUR CUSTOMER-CENTRIC INITIATIVE

How can your organization get started on a serious initiative to grow and profit through customer centricity?

Plus Consulting advises the following steps for business and IT leaders:

• Analyze most valuable customers. Based on your culture, competitive situation, and growth/profit goals, determine what criteria you will use to determine which customers should be sought, cultivated, or avoided.

• Map customer-facing business processes. Consider how your sales, marketing, production, delivery, and support processes intersect. Envision

where they can be streamlined and/or prioritized to pivot based on the requirements of your most valuable customers.

• Identify low-hanging fruit processes. Doing so will help you know where to automate and/or improve from a customer experience standpoint.

• Assess and develop a customer-centric security strategy. If customers can’t trust you with their data, they will not trust you with their business.

• Assess and develop an infrastructure and information-needs roadmap. Identify the capabilities your sales,

support, and development teams need to deliver on customer centricity, and decide which are most critical to deliver short-, mid- and long-term?

• Pilot the IT-enabled process. Consider the power that advancements in mobile, cloud, business intelligence, collaboration, social media, and marketing automation provide.

• Scale the process. Keep in mind the significance of security and cloud-enablement. .

• Begin the next wave of pilots. By now you’re getting good at this, so why not keep going?

IDENTIFY LOW-HANGING FRUIT

ABOUT PLUS CONSULTING

Plus Consulting empowers senior business and IT leaders of growth-oriented organizations to become more customer centric and competitive. We develop innovative business-focused solutions that improve an organization’s information, interactions, and infrastructure capabilities to lay the groundwork for customer-centric growth and profitability.

• Information – Business intelligence and content management

• Interactions – CRM, marketing automation, mobile and web extranets, intranets, and external sites

• Infrastructure – Security, cloud, management, productivity

A perennial winner of “Best Places to Work” recognition, Plus Consulting combines the top business-minded technical talent with leading technology partners such as Microsoft, SalesLogix, SugarCRM, and others to develop powerful business solutions via CRM, business intelligence, collaboration, messaging, security, infrastructure, and cloud services.

For references or questions, please contact info@plusconsulting.com, visit www.plusconsulting.com, or call 412-206-0160.

Plus Consulting is a Gold Certified Microsoft Solution Provider

REFERENCES Day, George S. and Reibstein, Gary (2004) Wharton on Dynamic Competitive Strategy, John Wiley & Sons

Fader, Peter (2004), Peter Fader on Customer Centricity and Why It Matters. Retrieved April 2, 2014, from http://knowledge.wharton.upenn.edu/article/peter-fader-on-customer-centricity-and-why-it-matters/

2014 Customer Experience Index. Retrieved April 2, 2014, from http://solutions.forrester.com/customer-experience/prove-roi-49RA-161472.html

The Customer Experience Ecosystem Playbook. Retrieved April 2, 2014, from http://www.forrester.com/The+Customer+Experience+Ecosystem+Playbook/-/E-PLA490?objectid=PLA490

Rowsell-Jones, Andrew (2007) Driving Customer-Centric IT. Retrieved April 2, 2014 from http://www.cio.com.au/article/205119/driving_customer-centric_it/

Kingstone, Sheryl (2004) Customer-Centric CRM: Fully Optimizing CRM. Retrieved April 2, 2014 from http://www.ianbrooks.com/useful-ideas/articles_whitepapers/Customer%20Centric%20CRM.pdf

Ohtonen, Janne (2013) Process excellence is all about the customer. Retrieved April 2, 2014 from http://www.bpmleader.com/2013/10/01/process-excellence-is-all-about-the-customer/

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