Who’s In Charge?
Most CEOs would claim to be steering their business, but the smart ones are starting to realize that it’s the customers who are really setting the direction.
President, C Space Americas
Jessica DeVlieger is the President of C Space Americas. In her previous position as SVP of Sales and Marketing, Jessica oversaw go-to-market strategy and was responsible for top line revenue performance at C Space. Jessica’s team includes field sales, sales operations and marketing. Jessica has been with C Space for 12 years, always in a sales and sales management capacity. Outside of work, she loves traveling, cooking and is an avid downhill skier. Jessica is on the board of Positive Tracks, an organization that combines philanthropy with athletics to get kids active in both.
Speaking with an insight leader recently, she told me how her team had received a call from the CEO, demanding immediate answers to questions about their customers. That was a first for her. And one that’s indicative of a huge shift: the customer has become a C-suite-level conversation. We’re hearing about this happening in more and more of our client organizations – but why?
A 2016 PwC survey of global CEOs revealed something fascinating. 71% of CEOs now see customers as the most powerful disruptive force facing business. Not distribution, production or regulation. Not even competition. But their own customers. How did that happen?
BUSINESS HAS CHANGED
In the old days, brands were defined in an ivory tower, brought to life in ad shops and broadcast their benefits through third-party publishers. Competitive advantage was won through efficiencies in manufacturing logistics, supply chains and distribution. In other words, businesses used to be supply-oriented. They organised themselves around their own needs, not those of their customers. But that simply doesn’t work anymore. Business is evolving from an era of supply-driven to demand-driven relationships. Brands need to start meeting customers on their terms, where they live. Today’s successful brands are addressing customers’ values just as much as their needs. Because in the age of instant information, customers also make decisions on factors ranging from the ethics of the supply chain, the private actions of the CEO and the experiences of employees. Increasingly, they make buying choices based on what they hear about the way companies operate.
Today’s better-informed, less-loyal customers are quick to go elsewhere for what they want if they don’t feel comfortable about a brand. And when customers embrace or reject a product or service, the values underlying their response will tell you a great deal about business success in the long term.
THE CUSTOMER EXPERIENCE CODE
We’ve spent the last five years working with more than 100,000 US and UK consumers to understand this behavior better. What we have consistently found is that customers are evaluating companies in entirely new ways – spending more with, and staying more loyal to, companies that share their values, speak their language, act authentically, and much more. We’ve summarized our findings into what we call the Customer Experience Code (CXC) – in brief, the five emotional drivers of business outcomes. In short, customers want relevance, ease, openness, empathy and emotional rewards. For the full details you can get our Customer, Experienced report here.
But the real point that our CXC demonstrates is that the companies that can match its customers’ values are companies that demonstrate longer-term financial success.
Intuitively, we know this relationship to be true: To take one example, Gillette’s ‘The Best Man Can Be’ ad campaign didn’t feel authentic to consumers, so they stopped buying the product and sales dropped, thus proving again that the customer is the most disruptive force in business. Changing tack and recovering from that misstep took some time.
So, as customers become more sensitive to the actions of a company, companies need to find ways to democratize the customer perspective across the whole business. It’s obvious that customer expectation has to inform the customer experience.
The challenge is that in reality the customer experience exists just as much in decision-making around the supply chain, the corporate culture and the employee experience as anywhere else.
CUSTOMERS AS DISRUPTORS
As we’ve already mentioned, of all of the disruptive forces that could affect business, CEOs say that the one with the most disruptive potential is the customer (see graph, below left).
How do they disrupt? As well as having far more, and more accessible, choices, they are more informed than ever before – largely because of greater use of social media and a societal shift to greater transparency – so they choose companies according to a whole new set of rules.
The first rule is that functionality of the product is table stakes and has been for a long time. It’s just assumed that your product will work as advertized.
The second rule is that customer experience is critical – but that’s rapidly becoming table stakes too. If your customer service isn’t excellent these days, you’re in trouble.
Thirdly, your corporate behavior needs to be consistent with your customers’ values (again, this comes up a lot in our Customer Experience Code research).
There are diverse factors that could affect a value-driven customers’ choice around your brand, which quite a few well-known brands have fallen foul of recently (see our panel). More examples will no doubt surface as society changes and customers’ expectations evolve. So ultimately, your ability to understand your customers’ deeply-held values and factor them into decision making across the whole business (from marketing to supply chain and everything in between) is now vitally important. This is true customer centricity.
The problem is that this is incredibly challenging for businesses that are – necessarily siloed. It requires a business to democratize the customer across their business. Departments that don’t ever talk to each other need to join up – and deliver against – an understanding of the customer.
THE IMPORTANCE OF INSIGHT
In this new world, where the customer’s values have to touch every line and aspect of business, the role of the insight department has to change drastically.
In the old days, insight teams did worthy, in-depth research which had a tendency to end up sitting in PowerPoint decks on shelves. But in the new world, customer insight can’t be retrospective; it can’t just be a way of validating existing hypotheses. It needs to become forward-looking and active. Insight teams need to be activists for the customer right across the business.
In fact, we’d take this thinking further. We’d say businesses should start with a customer strategy and let the business strategy follow. No longer can insight be about quantifying hypotheses or validating arguments. It has to become a way to spot opportunities and galvanize change.
It’s insights as the headlights of a business – activating and democratizing the customer across the whole business, and lighting a path for the brand to follow. It’s tough, but it’s possible. One of our clients, Bose, brought customer KPIs into performance reviews across the entire company, pivoting the culture from engineer-led to customer-led. In the first 6 months Bose trained over 400 key line-level designers, store managers, and executive team members, which directly impacted a year-on-year revenue increase.
We helped grocery chain Stop & Shop bring customers in to test a new mobile shopping app’s value, features, rewards, and messaging concepts. As a result of customer-inspired feedback, the app achieved a five-fold increase in anticipated daily downloads.
And bringing shoppers together with executives from confectionery giant Mars, one of the world’s biggest retailers, to develop fresh and innovative ideas to boost sales led to a better relationship with Mars’ biggest retail partner, an M&M brand lift of 8.9%, an overall candy category lift of 11.3%, and a sell-through rate of 98.3%.
But there’s an opportunity for a business to take this even further. I strongly believe that every company should have a customer strategy book that sits out in front of their business strategy. If companies really want to be customer-centric, instead of having a business strategy and trying to find ways to squeeze their customer within that, they should have a customer strategy that the business strategy develops from.
And that’s where the insight team comes in. They’re answering questions that are vital right now. Who is your customer, what does she value, how can we meet those needs? If understanding the customer is the path to growth, maybe in the future all CEOs will have been Heads of Insight…
Do you have a customer strategy?
At C Space, we have a system to align your company with what really matters to customers and most effectively drives business growth. Learn more about what it takes to develop a winning customer strategy.