My Advice for CEOs: Consider 2007 the Year of Alignment

In my work with companies around the world, I see CEOs trying to balance the demands of customers and shareholders in an increasingly competitive and global landscape, one that is forcing down costs and margins while increasing the need for customer focus. The result is that the business is being pulled in two directions at once, creating external inconsistencies and internal tensions.

The secret of success lies in getting this balance right. It isn't just about one or the other; it's how well you align them. Consider these top targets for alignment, and you will see an increased use of resources, improved customer experience and satisfaction and a reduction in internal conflicts and tension:

1. Set customer-centric company goals. It all starts here. Goals create behaviors right through the organization. They are the walk that goes with the talk. If they are not aligned with your customer-centric vision, confusion reigns. Typically, company goals are based on marketing forecasts and shareholder needs. Like the organization design, itself, goals fall into two convenient parts: revenue generation and cost consumption.
   
   At this level, the debate about balance and alignment, if it takes place at all, is usually one-sided. Delivering the revenue comes before everything else, including servicing existing customers. That's why goals such as customer acquisition and product sales drive the organization. However, enlightened organizations—particularly subscription- or service-based industries such as telecoms and financial services—now understand that developing high-value customers comes more from the service than from sales or marketing. Customer loyalty is certainly driven by the customer experience and not from advertising or marketing communications. Therefore, when you align service goals with those of sales and marketing, you're more likely to create a joined-up and consistent customer experience, which, in turn, will lead to increased customer loyalty and revenue.



2. Horizontal business planning. Typically, when you set company goals, they, then, cascade down the organization to the "working level," driving its operating plans. This is the part of the organization that interfaces with customers; makes decisions about customers and the experience they receive; or simply influences these two groups. In other words, it's most of the people in the business. But the customer experience is an amalgam of different capabilities that all come together when the customer engages with the organization. When you align these functional operating capabilities horizontally in a new method of business planning to prioritize investment and maximize return, you ensure consistency.



3. Holistic project and program scoping. If there is one thing that irritates CFOs, it is investing in capital projects, such as IT, and having the feeling that they will not see the return on that investment. There is nothing wrong with the business case; it's just that they fear the deployment of a capital capability, itself, will never result in the required business outcome. But all project managers are trained (or quickly learn) to draw a firm box around the deliverables of their project. So the other capabilities required to deliver the outcome never get scheduled and the ROI doesn't happen. If "horizontal" business planning will help improve operational ROI, then holistic scoping of projects and programs will improve ROCE by highlighting all the capabilities required to achieve the required business outcome and not just the project manager's deliverables.

   ‘ Customer service agents very often see what the customer needs, but they cannot do anything about it. ’

   
   
   The sounds like common sense, but as most organizations do not use capability management techniques, this valuable input to investment decisions is missing. An analysis of the business benefits claimed and delivered by IT investments over the last two years will reveal the extent of the problem. A root cause analysis of the reasons why the return was not achieved will identify the key capabilities that were missing from the scope and, therefore, not deployed.



4. Aligned performance metrics. If the performance metrics that drive operational capabilities are conflicting, it will create confusion, inconsistencies and tension. For example, setting contact center goals based on call handling times to drive down costs, even though marketing would like customer service to take the time to tell customers about the product or service that their analysis says each customer is highly likely to buy. Indeed, marketing doesn't even have to be involved for this conflict to arise.
   
   Customer service agents very often see what the customer needs, but they cannot do anything about it because it is not in their goals. All they can do is transfer the caller to the sales department. Best Buy is a real success story and is often credited with forcing Dell to change its direct sales model and enter the retail arena. Whatever the truth is, Best Buy does do not set sales goals for its store personnel. They are all focused totally on satisfying the customer—whatever their operational role. Dell sets goals for its sales, tech support and customer care teams separately.



5. Demand generation marcom optimization. Optimizing marcom spending on advertising and sales campaigns is a compelling proposition: Reduce marcom spend by up to 15 percent and get increased response rates. The principle is simple: analyzing each of the marketing channels with the response rates and business performance to obtain a better return on investment through improved alignment. The math involved is challenging, but early results are showing that it can be done. For most product organizations, demand-generation marketing is the major investment, so 15 percent reduction in cost and increased response rate are well worth the investment of time and resource to secure them.



6. Customer marketing optimization. It has always been easier and cheaper to sell to existing customers, but it is only recently that escalating customer churn or attrition rates have forced business leaders to recognize this. However, all too often, customer marketing stays within marketing and simply drives direct mail or sales campaigns.

Aligning all the customer channels as delivery vehicles is a smart way to catch the customer with a consistent message wherever they interface with the organization. Segmentation is a prerequisite to avoid over-spending on low-value customers, but optimization techniques now make it possible to create a unique plan for each customer that can be executed by all the touch-points to maximize customer level profitability—but only with fully aligned targets and capabilities. When customer marketing optimization is combined with the demand-generation optimization, the business benefits are simply staggering.

I hope these ideas are helpful and you enjoy an immensely successful 2007.