The Customer Now Rules
In the past, companies ran their own marketplace activities
and entirely controlled their products and services. Today, customers rule.
Numerous factors have aligned to put the emerging generation of consumers in
charge, most notably the power of technology and the Internet, which provide
comprehensive product data instantly and enable consumers to buy anything any
time, and to comment on everything all the time. The millennial generation –
also called generation Y – runs commerce today. This generation followed
generation X, which in turn followed the baby boomers. Members of gen Y grew up
in a fully digital world. They are becoming the world’s biggest consumer group.
They have huge expectations, are extremely demanding and have little patience
for companies that displease them. If generation Y doesn’t want what you offer,
doesn’t like how you operate or feels negative about your products or services,
its consumers will quickly call public attention to every failing. Often this
means enthusiastically wreaking havoc on the organizations they target. Many
victims could appear under that “rest in peace” sign, including Circuit City
and Borders. The first electronics superstore, Circuit City, went bankrupt in
2009. Former chairman Alan L. Wurtzel says it died because it failed to listen
to its customers. Having 500 US bookstores did not protect Borders from
bankruptcy and liquidation in 2011. Rick Newman of U.S. News & World Report
notes that Borders’s sin was failure to adapt to changing customer expectations.
“Customers are now in the driver’s seat,” write George Colony and Peter Burris
of Forrester Research. Former GM CEO Rick Wagoner agrees: “We used to ‘own’ the
customer. Now we hope and pray that they want to ‘own’ us,” he says. Firms that
can’t regain control of their businesses will die, undone by the slow
decomposition of their consumer base.
Gen Y has an outsize influence, in part due to its members’
tendency to broadcast their displeasure via online social networks. Companies
can foment this dislike simply by too overtly trying to influence how gen Yers
think, feel and act. If your gen Y target market learns that you’re campaigning
at them, “they will object, they will drop you and they will tell their
friends.”
Generation D Gen Yers are frightening enough, but the next
cohort, generation D, is downright terrifying. Gen Ders are the envoys of the
looming “customerpocalypse.” If you fail them, Gen Yers might want nothing to
do with your products or services. But if you get on the wrong side of
ferocious gen Ders, they may go out of their way to bury your firm. Think of
the D in generation D “as ‘doom’ or ‘death’ or ‘destruction’; gen D may well be
the “discover, devour” and “demonize” generation. Unlike generation Y, which
merely creates “suck sites” to denigrate the companies that disappoint its
members, gen D challenges such firms and may put them out of business. While
generation Y members may dislike the idea of being your targeted customers,
generation Ders don’t consider themselves anyone’s customers. They don’t want
any company to sell products and services directly to them as targets. Customer
relationship management has no relevance to gen Ders. Here is a typical gen D
tweet: “Never doing business again with –– bank totally [ruined] my account
went to –– bank and switched accounts...you should do the same!” When such
messages are retweeted again and again to thousands of people, the brand damage
can be irreparable. If your brand generates a traditional narrative about its
offerings, just one “influential blogger” can destroy your credibility by
listing facts that contradict your claims. That refutation will be retweeted by
millions until it becomes news and the traditional media report it. Disgruntled
Gen Ders will recruit their friends to bring down a company. For gen Ders, a
friend is “everyone they’ve ever known, or who is known by someone they know,
or who they have no relationship with other than what appears to the rest of us
to be the narrowest sliver of obscure commonality.” Gen D represents the future
of the marketplace and the future of your firm
Chasing Gen D’s Love
On the plus side, gen Ders avidly praise, support and buy
the goods and services they like, such as Apple and Google products. They seek
“radical authenticity” and insist on “trust, transparency and total openness.”
Gen Ders turn customer loyalty on its head; they demand “your loyalty to them.”
To establish relationships with them firms must offer rewarding, seamless
customer experiences. For most, this requires a dynamic transformation of
business processes, most notably digital operations, and it calls for the
complete integration of a company’s business side with its
information-technology side. Companies must teach employees game-changing
mind-sets. Thanks in part to Frederick Winslow Taylor’s “scientific management”
approach, most companies work to reduce costs, often at the expense of their
customers. Consider Ryanair’s 2010 decision to charge passengers for using the
restrooms and First National Bank of Chicago’s decision during the mid-1990s to
charge customers $2 to speak with live customer-service representatives. Such
decisions don’t endear companies to their customers.
The Limits and Risks of Big Data
Organizations must take control of their data before the
volume of the data becomes a ruinous hazard. Big data – an enormously large and
complex collection of data sets – requires sophisticated management and
analysis systems. The amount of data companies handle is expanding “from the
terabyte to the yottabyte, which equals one septillion bytes (a
septillion...has 24 zeros).” Companies use this vast information base, in part,
to develop 360-degree views of their customers. A 360-degree customer view compiles
a lot of existing data about a single individual. However, any one customer is
not “a standalone amoeba swimming in a round petri dish.” What you need is a
“1080 high-definition” view that involves data, customer intent and reorganized
business processes. Focusing on data alone means exploring only the customer’s
past actions. In this context, “data is who”; intent is “what and why”; and
processes supply the “when and where and how.” To begin with, navigating
enormous data presents certain problems. Companies must determine how to
interpret data and must teach their customer service personnel how to use them.
Companies that are drowning in information can even suffer “data suicide.” They
must supplement big data with “syndicated market research, opinion inferred
from voice and text analysis, and data aggregated from social media and
websites.” Even a mountain of data can tell you only “who the customer was.”
You must learn why customers seek your company, what to offer them, where they
like to receive services and how to give them what they want. “Thinking in
layers” can provide the context you need to understand and best serve your
consumers. You can use it to identify your clients’ intent – why someone wants
to do business with you. Intent encompasses clients’ personalities, “goals,
desires, needs and preferences. You also want to understand and maximize your
company’s intent so that you act in harmony with what it wants to achieve. “If
data is memory, intent is desire moderated by judgment.” Astute judgment
provides the power you need to understand your customers fully and to serve
them best. Data accumulation for its own sake is self-defeating. Instead, use
data to detect patterns about your customers’ future behavior. Establish
hypotheses and test them to determine your customers’ intent. Combining data
and customer intent will help you plot your “nextbest action,” so that you can
“offer and promote the right thing to the right person at the right time.”
Transform your processes to personalize your customers’ experiences so their
encounters with your company are seamless, dynamic, fluid and “sticky.” Always
ask, “How does my customer want to engage with me?” and adapt your processes
accordingly. Vodafone answers these questions successfully. Each time a
pay-as-you-go customer reloads a cellphone, he or she automatically receives a
next-best-action message, a “‘daily special’ – or new individual offer” – to
improve individual phone plans based on that client’s actual usage. Vodofone
seeks to do all it can to “retain the customer.” The equation notes the
customer’s intentions and objectives (“the who and the why”), includes
Vodafone’s goals (“the what”) based on the customer’s intentions, and develops
a specially tailored deal for each customer. Vodafone’s clientele loves these
offers. Such an approach can bring generation Y and D customers to your company
and can retain them.
The “Outside-In” Approach
Senior management at Farmers Insurance decided to pursue the
business-owners’ insurance market by supplying highly specific policies, each
developed for individual types of businesses. Normally, this would demand
extensive, time-consuming underwriting. For most insurance companies, this
level of comprehensive work with specialty underwriters would make such a
project prohibitively impractical. Instead, Farmers took an outside-in approach
that leveraged its knowledge of its consumers. Farmers successfully developed a
“seamless experience for insurance agents and their customers.” Farmers “went
beyond the data to get to intent.” It focused on customers’ goals – for
example, “Give me a reliable quote quickly”– as an intelligent strategy for
developing context” within following the required “business rules and state and
local regulations.” Farmers created a “customer-centric platform that captured
its business intent and operationalized it.” This involved transforming its
processes, including its involvement with its clients “Liberating Your
Organization” and Engaging Your Customers For most companies, this transformation
requires changing how your culture views technology and IT. It challenges “the
grips of channels and silos.” The problem is that computer programming – the
bedrock of IT – is a complex mess at many businesses, mired in “zombie systems”
that are impossible to change, “manual systems” using old workarounds and
“rogue systems” filled with stopgaps created along the way. These systems are
all flawed. The traditional approach that spawned them will never supply a
solution. They will never change until personnel first change how they think
about technology. Making such changes may require reorganizing certain
functions. Start with the chief financial officer, since you can’t make radical
changes without major investments in personnel and technology. To make this
corporate change, the CFO needs to be willing to make “directionally correct
decisions” to spend money in ways that are “validated by intermediate results.”
Set up two new positions: chief process officer and chief customer officer.
These changes will help you find new ways to engage customers for every
interaction. Try to incorporate three basic principles: 1. “Democratize how you
do technology” – Involve your staff in your firm’s technology by speaking the
“language of business, not the programming language of the machines.” For
instance, one goal might be to program computers to use business language. 2.
“Think in layers” – Your technology must work across all “customers, products
and jurisdictions.” 3. “Use analytics to optimize continually” – Never stop
analyzing your customers or analyzing how you analyze. These changes will
increase the positive expectations your customers have about your firm and its
products or services, and will define what it means for them to deal with you.
•
Today, customers control
commerce and they’re threatening a “customerpocalypse.”
•
• Generation Y, the world’s largest consumer
group, has no patience for companies that displease it.
•
• A rapidly growing subset of generation Y –
called generation D – refuses to let companies control it. These connected,
informed consumers insist on having control.
•
• Gen D turns customer
loyalty on its head; its members demand “your loyalty to them.”
•
• “Data is who.” Intent is “what and why.”
Processes supply the “when and where and how.”
•
• Most companies need to
transform their systems, customer service processes and technology in order to
offer the most satisfying experiences to their customers.
•
• Such transformation requires a radical
mind-set change for executives.
•
• Companies spend too much time accumulating
data and too little understanding them.
•
• Brands and traditional forms of customer
loyalty are increasingly irrelevant.
•
• Firms need to operate
with an “outside-in” approach that focuses on customers.
good work!
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