Here’s an interesting article from Finfacts, Irelands’s Business & Finance Portal, Study Says Genuine Customer-centric Strategies Lacking in Most Companies:
Few organisations have implemented truly customer-focused business strategies and reaped the rewards, according to a new report, Customer-centric IT strategies, published by the Economist Intelligence Unit and sponsored by US software firm CA.
Yet it is vital for companies to gain insight into customer behaviour and preferences—and to ensure that the organisation is able to translate this knowledge into innovative products and services. The report is based on in-depth interviews with a range of executives worldwide who are closely involved with customer management.
The report observes that most organisations are still weak in identifying their most profitable customers, despite the fact that companies say that 80% or more of their revenue comes from just 20% of their customers. The thrust of a firm’s customer-centric strategy should be to improve profitability, yet too many companies continue to segment their commercial customers by measures such as geography, product and industry. A careful analysis of customer data, by contrast, can highlight customers who spend little and cost a lot to cultivate. Such analysis helps companies to decide which customers to try to retain and which ones o pay less attention to.In order for companies to become truly customer-centric, the top executives must take the lead with such a strategy. Core processes and metrics must change, while the hiring of staff may also need to be re-examined—focusing on employees who understand both the importance of marketing and data analytics for successful customer relationship management (CRM). Breaking down departmental barriers is essential to gaining a single customer view. A CRM system may be effective at managing certain details of customer communications, provided it overcomes the challenge of data frequently residing in different places in the organisation.
Many organisations are currently deploying technology to improve their interaction with customers—for instance, by creating a more intelligent dialogue between callers (whether B2B or consumer) and call-centre agents, and by gathering information about customers that can be used effectively to sell further products to them. As the report shows, the trend towards technology usage in CRM is not by any means restricted to the private sector. “We’re spending a lot of time now on developing our ability to measure customer experience,†says Bill Gray, Deputy Commissioner of the Office of Systems at the US Social Security Administration, in the report.
Apart from the range of ‘data analytics’ technology now available for companies, which enables a deeper understanding of individual customers’ preferences, software can identify when a customer is likely to defect. This can trigger a set of marketing steps aimed at keeping the customer—such as the offer of a free trial of some new service, intended to bring him or her back on board. “This is a big change in the way companies try to retain customers,†says Nigel Holloway, director, Americas, Industry & Management Research at the Economist Intelligence Unit. “Until recently, customers were rarely contacted even to ask why they left.â€
The report shows how success today lies in turning the large volumes of customer data into actionable ‘customer intelligence’. Most companies now agree that the history of a customer’s buying habits is the best guide to their future behaviour and wishes. At every ‘touch point’, the individual’s behaviour can now be monitored by IT systems—and so can the impact of the company’s actions on the individual. An understanding of customer behaviour is becoming many companies’ chief differentiator.
That said, the traditional customer service of fixing faults remains as important as ever. The time when things go wrong with a product or service is also ironically a marketing opportunity for the organisation. A customer values a company more if it has fixed a problem well than if he/she has never had to contact it. “Most customers judge organisations on how they handle their problems,†says Paul Cooper, a director at the Institute of Customer Service. A company needs to look beyond creating innovative and reliable products and services, and additionally focus on the customer experience.
