Why customer-orientation does not (always) do the trick
Do you know any organization which thinks customer-orientation is not important? Just about every company goes the extra mile to listen to its customers, to study market trends and to adapt its services to the client’s wishes. But all those efforts do not (always) seem to lead to positive results. The famous 20/80 Pareto rule – 20% of your clients ensures 80% of your turnover – has rather turned into a 40/60 rule, which indicates that customer loyalty is under pressure. Between 1965 and 2011 the average return on company investments decreased from 6.2% to 1.3%, suggesting that the ‘return on customer’ is decreasing.
The problem with customer-orientation
The way most companies fill in the notion of customer-orientation is problematic in several ways. They continue to maintain a sort of ‘adult / child’ relationship with their clients, where the adult asks the questions and the child is supposed to answer them. Just think about the classic focus groups where a sort of iron curtain (in this case a mirror) is drawn between the company’s and the clients’ worlds.
Only too often do they behold the world through the narrow lens of their own brands, products and services. They start off from their own expertise and attribute too much value to their field of expertise, thus focusing too little on client impulses which do not fit in with their plans. All too frequently do they demotivate their own employers by stating that ‘the client is always right’. This often gives collaborators the feeling of not being involved sufficiently in trying to formulate an answer to help solve client issues.
Copernican marketing revolution
The Internet and the increasing globalization have entailed a change in power ratios. Just like the Polish astronomer Nicolas Copernicus defended the idea that the sun rather than the earth is the center of our universe, today the consumers rather than the brands have obtained all the power.
In their recent report, The Customer-Activated Enterprise, IBM measured the opinions of more than 4,000 company leaders: more than 60% of them admitted that the clients’ influence on policy choices will fundamentally increase in the coming 3 to 5 years.
The Customer-Activated Organization
We can transcend the limitations of the classic customer-orientation by giving clients a more active and more equivalent vote within organizations, possibly even at the expense of short-term profitability. Customer-activated organizations allow clients to behave like collaborators and collaborators to think like clients. They integrate clients as ‘adults’ by involving them more actively and by creating the context required for thinking along. A few examples: at Heinz the marketers and brand users play a game together which aims at obtaining new insights which can stimulate growth; they go beyond listening passively and ensure that clients collaborate actively on specific projects. The pharmaceutical company UCB gives its patients the opportunity to be part of multi-disciplinary work groups, operating exactly as the R&D managers in the organization do. By involving both client and collaborator equally in your organization’s future, positive energy will emerge and will you support long-term success.
Building a customer-activated organization requires strong leadership where openness and vulnerability are key. It requires building at the right conditions for collaboration: autonomy (‘I am free to do this or not’), competence (‘I am good at this’), connection (‘others like me do this’) and appreciation (‘what I do is important’).