Building the Case for Customer-Centricity: How to Make Your Customers and the CFO Happy

CustomerThink’s 2008 study found that delivering a great experience is a crucial part of being customer-centric. Unfortunately, we also learned that it can very difficult to make a compelling business case based on creating differentiation and long-term customer loyalty. The economic downturn will no doubt make matters worse.

There's no lack of research that shows customer-centric leadership can pay off on the top and bottom line. ACSI data has been shown to predict individual firm performance such as corporate revenue and earnings growth and stock market performance. In The Value Profit Chain: Treat Employees Like Customers and Customers Like Employees, authors James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger conclude, based on 31 years of research, that employee engagement (satisfaction, loyalty and commitment) influence customer engagement, which ultimately drives the organization’s profit and growth.

And yet we find that most business leaders are unmoved by these studies. When it comes time to build the business case for investing in a customer-centric approach to doing business, it’s exceedingly difficult to answer an executive’s question: "What do I get for that?"

When times get tough, it’s tempting to put "customer-centricity" on the back burner. But it doesn’t have to be that way. To weather the economic storms ahead, it’s critical that you reach out to your customers, fix lose-lose problems, and personalize the business case for both sponsors and stakeholders.

Reach Out

Think about what that term "customer-centric" really means: giving customers what they want. If you can deliver a better total value than your competitors, and do it at a competitive cost, you’ll win in good times and bad.

The key question is this: Do you know what is driving your customer decisions now?

In general, our research has found that customer experiences (interactions with a brand) are weighted about equal in creating loyalty with the core product or service being purchased. Price is not a loyalty driver. That said, what customers perceive as valuable can change. A necessity in good times may be viewed as a luxury when paying the rent is a challenge.

The key question is this: Do you know what is driving your customer decisions now? If not, the first order of business is to reach out to your customers and find out what they are experiencing in their lives. You may find that they’re looking for a better deal, but dig deeper and you’ll discover that experiences are still important and can swing decisions in your favor and help retain customers.

By reaching out, I don’t mean just launching yet another survey. There is a role for statistical analysis, to be sure, but now is the time for executives to get on the phone or meet with key customers and have a real dialog. Show them that you care. Learn what’s most important in the solutions they need. Offer to be a partner through the hard times.

These conversations will not only help you make better decisions during the downturn but will also strengthen relationships that will pay off in the future.

Fix Lose-Lose Problems

Let’s face reality. In a down economy budgets will get whacked. That includes contact centers—a critical point of interaction for most consumer-focused companies. Does the customer experience need to suffer? Not necessarily, if cuts are made with a scalpel instead of a machete.

Instead of building a customer experience plan around growing revenue, build it around efficiency and retention. Advanced analytic tools can help. For example, speech analytics can help you “mine” the actual voices of customers in call center audio recordings, to reveal opportunities to fix the root cause of problems that frustrate customers and cost your money. At Blue Cross of Northeastern Pennsylvania, customer service director Bob McDonald wanted to learn why customers were calling. Sure, agents can note in their records that customers were calling about a benefit, claim or other issue, but he said this didn’t "give me actionable items to work on." So McDonald turned to a speech analytics solution to get to the root cause of the calls.

In the fall of 2007 the insurance company experienced extremely high call volumes. Speech analytics enabled McDonald to validate that a recent system change caused the spike, and give him "ammunition that the problem really needed fixing." In another case he discovered to his surprise that customers were circumventing processes to get faster service. Customers are clever like that. Armed with this insight, he changed the call flow and improved agent training.

Budgets cuts may be a painful reality, but you don’t have to share that pain with your customers. You can use insights gained from analytics to improve the customer experience while operating more efficiently.

Personalize the Business Case

When it comes time to allocate funds, many customer-centric champions find themselves face-to-face with a funding executive asking a simple question: "Why should I do this?"

To make matters worse, the next question may be: "Who else is on board?" In other words, is the initiative going to help a key functional area, and is that manager willing to back the effort?

Budget cuts may be a painful reality, but you don’t have to share that pain with your customers.

This is precisely what happened to Krista Sheridan, a marketing manager at Canadian telecommunications firm TELUS. Sheridan initially made a high-level business case that launching an extensive customer experience research project would pay off by addressing major customer frustrations. But then, executives decided to re-evaluate budgets and Sheridan’s team had to start over. This time, instead of a grand and glorious plan, they concentrated on building coalitions. They met with small groups of marketing, sales and customer service leaders to explain how their research would create actionable data. Most importantly, they crafted a personalized "what’s in it for me?" story for each group.

Funding was restored to move forward with a phased approach, with strong support from top executives and support from within the organization. And, as a side benefit, Sheridan got more than a budget—she got real commitment to make the effort a success. You see, the key people all believed that the project would be personally helpful to them.

Now What?

Congratulations, you’ve got funding. That’s an important battle, but remember the goal is to drive real business results. That means continuing to answer the WIIFM question with your reward systems.

Our research finds that about 70 percent of companies have significant room for improvement in this area. To consistently deliver a more effective and efficient experience, don’t forget to use appropriate tangible and intangible rewards to encourage the behavior you seek.

This article is part of "The Importance of the Customer Experience in a Down Economy" and is published here with permission of Customer Futures. In this free publication, eighteen international thought leaders make the case that a focus on the customer is not a fair weather endeavour, but rather an essential competitive strategy that is especially important in a down economy. Download from Research Library.

Bob Thompson is CEO of CustomerThink Corp., an independent research and publishing firm focused on customer-centric business management, and founder of CustomerThink.com. Thompson is a popular keynote speaker, blogger and author of numerous reports, articles and papers, including Five Warning Signs for Danger Ahead on Your Customer-Centric Journey. Follow Bob on Twitter.