To deliver a distinctive, loyalty-inducing experience, customer centricity needs to be a focus for every part of the business, not just sales.
What do consumers want? That question is reverberating more loudly in boardrooms across the world than at any time since the Great Recession of 2008. Companies in the consumer and retail sector have invested billions endeavoring to answer that question. Much time and money has been spent fleshing out such fashionable concepts as ‘omni-channel strategies’ and ‘customer-journey mapping’ but, if pressed, few managers could honestly say they really know what consumers want.
In some ways, it’s easier to say what shoppers don’t want. In her Issuetrak blog, Sarah Spangler identifies five things they definitely don’t like: sales staff who are rude to them (or ignore them or can’t help them); mistakes in billing them; having the wrong goods being delivered (or the right goods delivered to the wrong place or at the wrong time); confusing returns policies and a product that doesn’t do what they bought it to do. To which, you could easily add two more bugbears: long checkout queues and complicated online ordering processes, with hidden (or poorly explained) delivery charges.
These seven deadly sins have one thing in common: they degrade the quality of the customer experience – and that matters because, as Duncan Avis, Customer Solutions Leader, KPMG in the US and Global Connected Enterprise Architect, says: “In many different sectors – and in many countries – success is defined by the quality of the customer experience. How distinctive is it? How seamless is it? How personalized is it? Does it create value for the customer – and for that matter, your company? We call this ‘experience centricity’.”
These are mission-critical questions for manufacturers and retailers as they try to survive and thrive in an industry experiencing unprecedented change.
In his latest annual statement to shareholders, Amazon CEO Jeff Bezos explained why the need to please consumers is more urgent than ever: “One thing I love about customers is that they are divinely discontented. Their expectations are never static – they go up. It’s human nature. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’. I see that cycle of improvement happening at a faster rate than ever before. It may be because customers have such easy access to more information than ever before – in only a few seconds and with a couple of taps on their phones, customers can read reviews, compare prices from multiple retailers, see whether something’s in stock, find out how fast it will ship or be available for pick-up, and more. These examples are from retail, but I sense that the same customer empowerment phenomenon is happening broadly across everything we do at Amazon and most other industries. You cannot rest on your laurels in this world. Customers won’t have it.”
Inspired by the success of platform companies, putting the customer at the heart of the business has become a fashionable soundbite among executives, but is it really the key to improving performance?
“Many companies have doubled-down on the front line of customer interaction, investing time, money and resource in an effort to become more customer centric. Many businesses have made substantial progress but they weren’t getting the return they expected,” says Avis.
To get to the bottom of the issue, KPMG International commissioned Forrester to research 1,200 organizations in different sectors and countries. The study found that only 24 percent of the companies surveyed had actually connected the entire enterprise in their effort to become customer centric1.
What did this mean in practice? Avis cites the example of data. Truly connected enterprises share data quickly and freely so that the supply chain leader has the same information as the head of sales. If that doesn’t happen, the supply chain may not be able to deliver what the sales department has promised the customer. “You have to remember how big a change this is,” he says, “we’re going from a model where you ship pallets of shoes to one where you deliver one pair of shoes to an individual customer.”
When data is siloed, out of date or inaccurate, executives may find it hard to know where they generate value and if they are really satisfying the customer.
One of the most notorious recent examples of misleading data is the sofa that took 22 weeks to arrive in the New York apartment building of Priyanka Asera, Head of Retail at Eft Supply Chain & Logistics Intelligence, where it was left in the lobby. When Asera complained, the company replied: “Our notes indicate your apartment doesn’t have an elevator so we successfully delivered the couch to your lobby.” Unfortunately for the company, the building did have an elevator – the sofa had been left in front of it – and it had failed to notify Asera that it had been delivered. According to the business’s metrics, this was categorized as a successful transaction. No wonder the KPMG/Forrester study showed that 45 percent of CEOs did not have great confidence in the data they used to make decisions.
“Becoming a truly connected enterprise – and delivering a great customer experience – isn’t just about investing in the customer facing side of the business,” says Avis. “We have identified a broad range of eight capabilities that companies need to develop. Some of them are obvious – getting your product, pricing and customer strategy right. But some of them aren’t, for example, investing in the right customer technology is important, but it’s just as critical that staff have the technology they need to do their job.
“We have seen many companies not take their staff with them as they pursued customer centricity, only to have it come back to bite them later. Sometimes, that’s been because the entire organization is not aligned to the goal, on board with the agenda or agile enough to change.”
In an age when consumer preferences are more unpredictable than ever – with Millennials especially likely to be ‘experience centric’ rather than loyal to a brand – agility is the new resilience. Yet, as Avis says, agility isn’t something any organization, large or small, can fix by waving technology at it. “To embed the customer perspective in everything they do, companies need to have a clear vision from the executive team, align the organization behind that vision and make people and culture a priority.”
For CEOs impatient for change – or rendered impatient by restless investors – prioritizing people and culture may sound like something that will take too long. Yet Avis says, this is just something that has to be done: “The bottom line is that people who don’t like their jobs are unlikely to deliver a great customer experience.”
One of the favorite mantras of J. Willard Marriott, who started out selling root beer before diversifying, in 1957, and founding the famous chain of hotels that bears his name, was: “Take care of your people and they will take care of your customers.”
Intriguingly, KPMG International’s 2018 Global Consumer Executive Top of Mind Survey found that 24 percent of ‘digitally mature’ companies believed that one of the key benefits of technological transformation was improving employee engagement and performance2.
Recent attempts to make US corporations more agile have been stymied by skeptical middle management, unconvinced by the new CEO’s agenda; leaders who failed to recognize that digital transformation was not just about applying new technology to an old business model, and insular bureaucracies which couldn’t grasp the imperative for change. That is why Avis says, it is also important for companies to reach out and draw on the best-of-breed third-party expertise from partners, allies and vendors.
In a global marketplace disrupted by platform companies, no one business can be the best at everything. In reality, they never could, but the disparity between an organization’s strengths and weaknesses is becoming more dangerous as the marketplace becomes more volatile.
The good news is that volatility can be an opportunity, as well as a threat. Retailers that move on from the old business model – buy low, sell high and optimize everything in the middle – and focus on a digital value chain based on collecting data (about customers, products, competitors, lifestyles and locations), generating insights and then acting on them are well placed to succeed.
The biggest factor restraining digital transformation, according to the 2018 Global Consumer Executive Top of Mind Survey, is uncertainty over the return on investment. Avis says that, done right, there is no doubt that becoming a truly connected enterprise, and investing in all eight of those capabilities, will be worth the money.
“The research on connected enterprises showed that they retained 88 percent of customers (compared to 33 percent with weaker omni-channel strategies), reduced their cost per customer contact by 7.5 percent (compared to 0.2 percent for other companies), and generated 9.5 percent more revenue (compared to 3.4 percent).”
Those are compelling figures but, Avis cautions, companies can’t get there tomorrow if they aren’t realistic about where they are today. “You can start by asking what your customers are telling you about the services and products you are delivering to them – are they satisfied, promoters, profitable? If not, where is the breakdown occurring.” Asking tough questions will help managers define the customer experience they want to deliver based on a clearer, deeper understanding of what customers value, how effective that proposition is in the marketplace, and what the organization needs to deliver that experience.
In the real world, every company has to succeed in the present – and the future. That is one reason (of many) change management is so hard. Avis says managers can improve their chances of success. “Less than a decade ago, organizations would look to execute a five-year plan that was officially supposed to change everything.” The problem is that, as management theorist Rosabeth Moss Kanter remarked. “Everything looks like failure in the middle”.
By the second year, Avis says, “executives may be looking at each other, asking, ‘Have we really got three more years of this?’ ”A wiser strategy, he says, would be to take one part of the business – for example, a group of products, develop that into a connected enterprise, learn from that and move on to another part of the organization, taking due care to publicize success to maintain momentum for change.
Momentum is critical. “Why?” is not a question that can be answered once and for all. It is a question that needs to be answered again and again as the organization transforms itself, step by step, into a truly connected enterprise. That is the only way, Avis says, “companies can design and deliver a seamless and personal customer experience that continually meets evolving expectations across all physical and digital touch points to drive engagement, satisfaction and loyalty.”
During that transformation, answering the question “why?” may involve organizational change. “It’s not that the traditional functions – sales, marketing, operations, finance – disappear, it’s more that they become less important than the need to deliver capabilities across the entire enterprise.”
A truly connected enterprise will have a culture that is driven by insight and the agility to turn those insights into actions that create experience centricity. Even in an industry being buffeted by as much turbulence as the consumer and retail sector, some things don’t change. The old adage “The customer is always right”, coined in 1909 by Harry Gordon Selfridge, founder of Selfridges department store in London, still applies. The question CEOs need to ask themselves is: “Are we always right about the customer?”