Competition, coexistence or symbiosis? The DNA of C-suite sales and marketing leaders

Businesses must adapt to a new commercial world order by implementing a customer-centric approach

 LONDON, 17 September 2014. Companies that reject a customer-centric approach, by maintaining their traditional organisational structures rather than the voice of the customer, will fail to grow and increase their competitive advantage according to a new global report by EY released today.

Competition, coexistence or symbiosis? The DNA of C-suite sales and marketing leaders, which includes a qualitative survey of 700 sales and marketing leaders and more than 120 C-suite respondents, finds that sales and marketing leaders are not ensuring the right analytics are being used to deliver the best customer insights. Only 47% of CMOs and 58% of CSOs saying they have a good relationship with the chief information officer (CIO).

Furthermore, only 58% of chief marketing officers (CMO) and 68% of chief sales officers (CSO) believe strongly that they add significant value by using customer feedback to develop their business.

 Aaron Bean, UK Advisory Customer Director at EY, says:  “In today’s volatile commercial environment, when world-dominating brands can rise and fall within a couple of years, no strategy can guarantee sustainable success. However, one thing is certain: companies that are driven by customer-centricity and that gear their entire organisation toward the personalised wants and needs of their customers are more likely to succeed.”

The report also highlights that CMOs and CSOs are failing to work together at their full potential. Only 59% of CMOs are convinced that the two functions share the same corporate vision, and just 54% believe strongly that they ”work well together in tasks and initiatives.”

 Bean adds: “Companies must integrate all their operations, including sales and marketing, to deliver a truly differentiated and positive purchasing experience. Executive boards also need to be more open. Sales and marketing functions could be merged together by creating a dedicated chief commercial officer role which puts the customer at the heart of the organisation.”

The new report follows in the footsteps of The DNA of the CFO, The DNA of the CIO and The DNA of the COO, which focus on the competencies and characteristics of today’s finance, information technology (IT) and operations leaders.

For further information and to download the full report please go to www.ey.com/dna-csmo

Key customer experience trends and design considerations

Sound advice for new CEOs

Now you may be wondering what authority a business consultant who has spent his life in consulting has to give advice to prospective CEOs starting a new role. Well the short answer is none whatsoever - but I know a man who does. Last year my old boss, career counsellor and mentor was appointed CEO of a global market research and market intelligence group with a turnover of over $500m annually and in my mind this makes him well qualified to comment. I am sure he wont mind me sharing his advice that he gave in an article he wrote for our monthly newsletter. Before starting he sought the advice of many leaders who had some very sound advice and in no particular order, with no caveats or explanations, with no quotes or citations, and no attempt to analyse or de-construct, here’s an excellent summary of what they had to say:

1.       Seek help. Everyone needs it and some are good at giving it.

2.       Get the right people around you, and get the wrong people away from you.

3.        Understand how every part of the company operates and how it is performing.

4.       If you want people to be transparent and honest (which you do), be transparent and honest yourself. More broadly, behave well.

5.       Focus on the small number of things that matter and trade-off the rest.

6.      Spend at least 30% of your time with the Board. Lead through the team. It’s not about what you do; it’s about what the team (including you) does.

7.      Culture is crucial. The tone is set by the leadership and it can be the most powerful and lasting legacy that you will leave.

8.      Have people you can confide in. Leadership is lonely so find someone you can talk with in confidence. But, be selective in listening to advice – caveat emptor.

9.      You don’t need to decide today. But once you have decided, act with pace and determination, not with haste and aggression.

10.   Get the balance right. Everything is important and everyone wants some time, but don’t sacrifice your family, friends and health at the altar of the Office.

11.   You haven’t got funnier, your kids haven’t got smarter and you aren’t a brilliant leader – no matter how many times people tell you the opposite.

12.   Forget all of that stuff. In the end, it’s just about good people.

Wise words indeed and I wish him the best of luck in his new role, not that he will need it.

Avoiding moments of vulnerability

The case for customer centricity is well documented. Most organisations today are fully bought into the need to be customer focused and the perils of not. In the last article on how to be customer centric, I set out five opportunities for companies to become more customer centric. In this article I outline how organisations can build on these and use them to avoid internal ‘moments of vulnerability’ in how they market and sell their products. Those that do will not only avoid unnecessary value leakage but surprisingly, reinforce their efforts to be customer centric. Four key moments of vulnerability have been identified when:

1.      Price points are determined for a product or service

2.      A sales person is in front of a customer negotiating (or at the point of sale)

3.      Policies (i.e. trade terms, SLAs) are set relating to your offering

4.      The product/service is actually used and/or delivered

Revenue Loss

EY have found that between 3-6% of net revenue is being lost at these key points where organisations are at their most vulnerable. The surprise here is that, done correctly with the right intent, the customer will also benefit from an organisations effort to address them. This is because the key to doing this lies in truly understanding your customer and aligning your business to address their needs in an efficient and effective way.

For years organisations have been charged with being too internally focused and neglecting the people that ‘pay the bills’. To counter this ‘inside out’ thinking, organisations have undertaken huge programs to make sure customers are at the heart of every decision and they do everything they can to keep the customer happy - often at considerable cost. The danger is that in these ‘altruistic' customer societies, profit often becomes a dirty word and viewed as something that organisations pursue at the expense of the customer. But does tension between the two always have to exist? Or can being customer and profit centric exist in perfect harmony to create ‘win-win’ situations for both sides? Luckily, the answer is a categorical yes and businesses that mitigate these moments of vulnerability stand to benefit in a number of ways:

·         They avoid being beaten down on price by increasingly sophisticated procurement teams

·         They are able to effectively negotiate price increases

·         They avoid folding under tough negotiations and giving too much away

·         They don’t end up selling solutions which subsequently cost them more to deliver

·         They are better at identifying and managing risk and therefore protecting profitability

·         They are able to access a greater share of their customers’ wallet

But more importantly there is real value in it for the customer too:

·         They understand the value they are getting and are therefore happy with the price

·         It can help shorten the sales cycle (and therefore time to benefit) by building greater understanding and trust

·         They get a something that ultimately better meets their needs

·         There are no hidden surprises when it comes to using the product/service

Customer Insight

So the key question is how does being customer centric help avoid ‘moments of vulnerability’ and what can marketers do to help overcome these vulnerabilities? Ultimately, customer insight is key, which is why the role of marketing is critical. Taking each moment of vulnerability, we offer some recommendations for avoiding value leakage at the same time as improving the customer experience:

1. Determining price points – Customers need to understand, believe and trust the value you create for them and your price needs to be aligned to this. Any disconnect between the two leads to lost value and dissatisfied customers. Cost plus pricing, lack of innovation in pricing models, defining your proposition too narrowly and over promising or delivering on things customers don’t care about are all examples of this.

 

2. Effective negotiation – If a negotiation has come down to a pure price discussion something has gone wrong and the customer doesn’t understand the value your organisation can deliver. The sales process is about creating mutual value. To do this the sales person needs to understand the customers business and issues as well as, if not better than, the customer. This then needs to be backed up by sales people having the capability and confidence to effectively negotiate deals that are win-win for both parties and them easily understanding the profit impact of what they are negotiating.

3. Setting policy – Policies such as trade terms and sales guidelines are always created with the best of intent but can end up being highly restrictive and annoying for customers. Confused sales people who are unclear on what they can and can’t do, terms that drive the wrong purchasing behaviours, poor compliance are all outcomes of poor policy setting.

4. Understanding product/service use – When companies do not understand how their products and services are used in the real world they end up annoying the customer through a poor customer experience.  To make matters worse it then usually costs more to deliver which reduces profitability.

Finally, the above doesn’t happen by chance. It is supported and sustained by putting the right enablers in place. These include making sure the people making decisions have the right data and insight to do so, that roles, responsibilities and accountabilities are clear and making sure you don’t fall into the trap of doing great analysis but failing to “make it stick” and executing on it when it matters, time and again.  With the right focus and effort, vulnerabilities can be turned into strengths that not only drive margin improvement but also customer satisfaction.

How to put customers first

In today’s intense competitive environment, where customers are increasingly informed buyers with a plethora of options at their fingertips, every organisation understands the importance of meeting the needs of their customers. After all, if you don’t someone else will. Most organisations nowadays have bold customer ambitions but, in our experience, often fall short in delivering on these good intentions. In reality, most organisations talk a good game and may well be customer focused but fail to deliver on being truly customer centric. Evidence suggests this is costing them between 12-18 per cent of incremental profit per year.

Customer centricity can mean many things. Just typing the term into Google returns over 645,000 hits. We define it as ‘truly understanding and anticipating customers’ needs and using this to design and deliver a unique experience across the entire organisation that effectively meets these needs in a profitable way.’ This is easier said than done, but getting it right unlocks huge value in the form of increased loyalty and cross-sell, improved acquisition and lower cost-to-serve.

Here are five key reasons why companies fall short, and how they should respond:

1. Organisation first, customer second – organising the customer experience around internal functions and constraints as opposed to making the customer’s life easy.

• Ensure customer journeys are designed without organisation constraints in mind and are agnostic of organisational structure, minimise handoffs and focus on solving the customer’s problem in the most efficient and effective way for them.

• Beware the hidden impact of aggressive cost cutting efforts and driving customers online. Customers like choice (but not too much) and to do business on their terms.

2. Poor sales and marketing alignment – the success of sales and marketing is inextricably linked, contrary to the perception of many sales and marketing functions. Often the role of one of these groups needs overhauling to give it more influence and drive mutual value.

• Get marketing involved further downstream (i.e. supporting the sales cycle) and sales involved further upstream (defining customer strategy, campaigns etc) and create mutual objectives.

• Increase the value of marketing in the eyes of sales by making them responsible for articulating (in your customers’ own words) how your offering helps make your customers more money, what this equates to in profit versus your competitors, and getting this insight into the hands of the sales teams when it matters.

3. Too much self-promotion – nothing turns a customer off and fosters distrust more than pushy sales. The era of pushy sales is over.

• Focus on understanding customers’ true needs and help them make the right, informed decisions about how to best address those needs – it’s a far more powerful way to sell.

• Improve insight-based selling that creates customer pull.

4. Talking big data and not using the ‘little’ data available – failing to use data to manage and optimise the customer experience. A recent Harvard Business Review blog showed, on average, marketers depend on data for just 11 per cent of all customer-related decisions. Too often data does not lead to insight, and insight into practical action.

• Don’t obsess over big data –focus on extracting maximum value from your ‘little’ data first, which is in abundance.

• Ask the right questions and capture data that helps you do something different or make a decision.

• Understand the economics of your business including potential value and the cost of poor service so you can invest accordingly.

• Invest in analytical software packages to put advanced analytics in the hands of decision makers in an easily digestible format.

5. Not focusing on what really matters – under-investing in the things that do matter and over investing in things that don’t, and then measuring and rewarding the wrong behaviours, such as average call times instead of spending adequate time resolving the customer’s issue first time.

• Understand the true drivers of satisfaction and dissatisfaction. Not all touch points are equal in the mind of customers.

• Beware volume or time-based activity metrics that can have an adverse effect on quality outcomes.

• Design flexibility into customer processes and empower your employees to deal with issues when they occur– avoid over-managing processes.

• Don’t overlook the emotional aspects of a great experience. As Maya Angelou wrote: “People will forget what you said, forget what you did, but never forget how you made them feel.” So you should hire attitudes. Develop skills.

• Design in opportunities for staff to be spontaneous when dealing with customers and foster authenticity.

 

There are no silver bullets with being customer centric. It’s tough to achieve and takes time, but the rewards are worth it; typically that incremental 12-18 per cent of profit. Getting it right requires strong discipline, commitment and ownership from across the organisation, not just one area. As organisations look towards growth again, now is the time to take a step back, carry out an assessment of how customer centric they are and really challenge themselves to avoid being left behind. The ones that do are often surprised by what they find, the opportunities for improvement it uncovers, and what it is worth to their bottom lines.

 

Welcome to the Customer Matters

Hello and welcome to The Customer Matters.

To build on the short description of what this blog is about in the “About Me” box to the left I wanted to answer three key questions for prospective followers and readers of this blog. Who am I? Why I care so much about this topic and why you should bother reading this blog. So without further ado…

1)  Who am I?

I am a business consultant and have been for all my working career. I started at IBM as a graduate after gaining my degree in Business and Management from Aston University before moving onto Accenture where I spent 4-5 years in their Marketing Sciences division focused on sales and marketing analytics and RoI improvement. At that time Accenture was increasingly focusing on systems integration which is definitely not my bag so I went looking for a new home and after a short stint in PA Consulting’s Strategy & Marketing Practice I found it. EY came calling with a very intriguing offer to be part of the team to form a leading Customer Advisory business. I liked what they had to offer so I joined back in January 2008 and haven’t looked back.

Throughout my career I have been predominately cross sector, working across many industries to help my clients deliver customer centric growth strategies and improve their commercial performance. In the past few years I have however focused almost entirely on Life Sciences. For me this represents one of the most exciting areas to do customer work. The sector is years behind in the ‘customer centricity’ movement and has some serious catching up to do. The current climate along with the drive towards a health outcomes model makes tackling related customer issues the number focus for Life Sciences in the future.

Finally, it is important to define what I mean by ‘customer’? We all know what an actual ‘customer’ is (although even this often gets confused looks in Life Sciences) but this is not a blog about how lovely Mrs Jones was who brought a 2 for 1 on Persil at Tesco’s last week. This is the related strategies, tactics and operations of delivering a better customer serve, selling more, and improving marketing effectiveness to drive profitable growth. There are many elements to this but I think it is best described by EY’s view of the world in terms of customer.

2) Why care?

My passion has always been, and still remains, anything in business that touches the customer. I get excited when I see or experience examples of great customer service, innovative customer strategies or clever sales and marketing and equally frustrated when companies (far too often) get this horribly wrong. I can’t really explain why, I have just been wired that way. It is probably down to my early realisation that the customer is by far the most important thing in business. Without them there is no business so you had better be damn good at attracting and retaining them. Lucky for me there are lots of companies who fall short of the mark of this.

So I decided to start this blog to share my views on the good, the bad and the ugly (but with more emphasis on the good). If this blog succeeds in helping even one company do something differently to improve their customer experience I will consider it well worth the effort.

3) Why bother?

So what is my value proposition to attract and then successfully retain prospective readers? (see what I did there?). I would like to share my three key principles of this blog that will hopefully resonate with you.

i)     Make it interesting and thought provoking - I will do my best here to keep articles short, sharp and engaging. I’ll even try to add a bit of wit here and there although no promises on this one (and not through lack of trying)
 

ii)     Consistent themes – You don’t want a collection of random articles based on whatever piqued my interest on the tube this morning. I will focus on the themes of customer strategy and experience, sales and marketing effectiveness and commercial improvement.
 

iii)    Regular, current and relevant – there is never enough time in the day but I will do my best to provide regular updates and keep the content current and relevant.

Thanks for visiting the blog – please bookmark it and come back soon.

Aaron