Customer Marketing Strategy

When we think about differentiation in a business-to-business context, our minds tend to go right to how products are unique.  We think about how Apple has been able to differentiate in the market through disruptive innovation or how a company made an acquisition to help strengthen their product portfolio.  We do see and understand, although less frequently, how service-related or customer-focused characteristics of a company can help to drive a competitive advantage as well.  But which is more important?  Differentiating by being a product-focused company or a customer-focused company?

Companies obviously have to pick one angle to stand on, likely supplemented by some level of operational excellence, in order to drive strategy. While that’s true, there obviously has to be a balance.  An extremely customer-focused company won’t succeed without a product that meets some bare minimum threshold of product satisfaction.  The same goes for product-focused companies that need to provide a level of service that allows them to retain customers.  Understanding this balance and the “breaking point” of profitability is what companies today continue to try and understand in order to separate themselves from the competition.

Where we as customer advocates can help our organizations with this balancing act is by helping to define what “customer focus” means.  Customer focus today requires a new approach, particularly with the shift towards customers having more power in the relationship than ever before.  They have greater access to information than in the past, access to many more alternatives, and the ability to communicate with other customers.

The key will be to figure out what’s next and how companies can continue to find their “sweet spot” that allows them to differentiate from their competitors.  One key component to this will be a focus on partnership.  Understanding from customers what you can do as a company to help their business be more profitable and using that as the driving force of strategy is critical.  More focus on customer profitability, less focus on product profitability.

We have continued to change our focus over time on how we measure customer feedback.  Shifting our thinking again to understand customer profitability and partnerships should be considered a logical next step in this evolution.  Without a focus on customer profitability and partnership aspects of the relationship, companies will struggle to differentiate in the future.

Katie Kiernan
Vice President, Consulting Services

While Channel Partners are customers too, unlike the traditional customer, partners are able to provide a unique perspective. When it comes to Voice of Partner versus Voice of Customer survey research, consider these four differences:

1 - Many Channel Partners sell competing products and services giving them a unique perspective on what drives customer purchase decisions. Their input can help companies understand what causes a customer to purchase one product over another competing product.

2 - In a similar manner, OEMs can use partner input to understand what drives a partner to recommend one product over another.

3 - Many partners are combining an OEM's products with other products to deliver a complete solution. Having a better understanding of solution offerings, can be valuable input for the product group.

4 - Customers who purchase from a channel partner often go to the partner for support. Partners can provide a unique perspective on what is needed to support the indirect customer. This input can also be leveraged for serving the direct customer.

Corporate business strategy can benefit from insights provided by the channel. The partner perspective can be used to grow market share, enhance the product roadmap, and deliver an experience that both direct and indirect customers value.

If you are working to create a customer focused leadership position, consider including the perspective from all customer types.

Photo credit: stevendepolo

Walker recently set out to answer the question, "What drives partner preference?" Or, asked a different way, "Why do partners recommend one product or brand over others?" 

As we analyzed data from more than 20,000 partner surveys across multiple IT OEMs, one of the findings that emerged is partners have similar needs as customers.  

As we reviewed the drivers of partner preference and compared them to the drivers of customer satisfaction and loyalty, we noticed some similarities:

• Partners and customers prefer OEMs that offer reliable products. This area, more than any other, including the financial incentives that OEMs provide to their channel, has the greatest impact on partner preference and is a common top driver of customer satisfaction and loyalty.
• Partners and customers want to work with companies that are easy to do business with. While this is a nebulous concept, partners and customers generally consider the people and the processes they interact with when evaluating a company as being easy to do business with.

As we sifted through all of the data, I couldn't help but wonder what would happen if OEMs adapted their voice of customer (VoC) best practices to their partner relationships. Best practices such as soliciting partner input, creating partner-specific action plans for vulnerable relationships, and leveraging partner feedback to prioritize improvement initiatives. Would that help them grow market share? Would this help them solidify their customer retention strategies?

Based on the work that we've done, the answer is yes.

I was recently with a business strategist from a Fortune 500 company who stated there were ultimately three reasons corporate strategies fail. Even though he was speaking of overarching corporate strategies, the three reasons align with what I have seen related to customer strategies:

1. You measure the wrong things – Good strategy is the result of careful, intelligent analysis; however, the old maxim “garbage in, garbage out” applies here. In customer strategy consulting, this can be the result of jumping on the bandwagon of the latest killer metric without a full analysis of whether or not the metric actually applies to your industry. One way to avoid this shortcoming would be to conduct a pre-program strategic assessment – this step will allow you to learn not only the key customer touchpoints, but also identify the critical needs of key stakeholders in the process. It will also help you make certain you are profiling the customers the right way and focusing on the most critical.
    
2. You make the wrong decisions – Even if you measure the right data, there is no guarantee you will make the right decisions. Some of this is related to the data itself – in customer strategy consulting, using statistical methods that allow us to determine which areas of focus will have the greatest impact on customer loyalty will provide some insulation against focusing on the wrong areas. There is, however, another source of potential error – and that is the direction of where the market in total is heading. Every decision is framed not only by the data you observe, but also by your outlook on the competitive environment in general. To ensure you get it right, there are three recommendations I would make:

• Include competitive assessments in your loyalty measurement program – Having an idea on your position relative to the competition can help fine-tune your analysis. You can read more about benchmarking options in this series.


• Commit to ongoing measurement – This does not necessarily mean an ongoing data collection effort; rather, it is about knowing when to re-assess the customer landscape to ensure you are accounting for all the relevant issues. Most clients do this every 18 to 24 months at a minimum.


• Build macro and micro-level strategic plans – The overall strategy that emerges from the statistical analysis is best used in the context of focal areas that have the greatest impact on the greatest number of customers; however, building more micro-level, customer-based action plans will ensure you are accounting for the individual differences that exist among customers.

3. You do not take action – This is the one we tend to see the most. I once worked with a person who was prone to saying “strategy is cheap; execution is hard.” When I first heard him say this, I thought he was saying that strategy was simple; I now realize what he meant was that even though strategy can be hard, it is infinitely more difficult to execute on a plan of attack you know is correct. The phenomenon of acting in ways that are not in your best interest is less about intelligence and more about discipline. I tend to use diet and exercise as an example – I know I should exercise more and eat less, but it is far easier to do the opposite. We at Walker have designed a framework to help navigate the key disciplinary elements needed to take action – namely, organization, process, communication, and motivation.

Certainly there are many reasons strategies can fail; however, I suspect that most of the reasons would fit into this framework. Being mindful of the potential pitfalls that may exist can help you be more proactive in building a plan that will maximize your probability of success.

Mark A. Ratekin
Sr. Vice President, Consulting Services

Customer strategists continue to look for creative ways to share their message and to inform others. They are looking for ways to demonstrate why customer focus is important to the business strategy and how customers feel about the organization.

The communication gets complex because the audience is varied, ranging from external groups like customers and shareholders, to internal teams like sales managers, account managers, product developers, product marketing, service reps, executives...the list goes on and on.

When this infographic came through my twitter feed, I couldn't help but think of different ways customer strategists can use this type of an approach to reach their audience. Here are some of the things that came to mind:

Communications to customers: Customers want to know that their feedback is being put to use. An infographic can be used to share some of the insights you learned from their feedback.

Reach an entire sales organization: Sales teams are geographically dispersed, requiring the use of technology to reach them and let's face it, sales teams want simple. They are busy serving customers and want to spend their time that way. Let's give them something that is easy and enjoyable to digest.

The broad organization: I can visualize an infographic that is focused on communicating how customer feedback is being used for customer retention strategies. It would include statistics like the financial benefit of Loyal customers and demonstrate how customer feedback can be used to predict future customer behaviors.   

The cloud is changing a variety of customer interactions, one of which is the purchase process. We've seen a shift from buying, to renting, and now to subscribing.

Consider movie viewing as an example. Years ago, to watch a movie at home, we bought a VHS or DVD. Shortly thereafter, we went to Blockbuster and rented the movie. Today, many subscribe to Netflix, where they pay a monthly fee and get unlimited rentals. 

This change is happening across many industries, including those providing business-to-business products and services. In the report titled, "Sizing the Cloud," Forrester predicts the "global market for cloud computing will grow from $40.7 billion in 2011 to more than $241 billion in 2020."

This shift is impacting the role of customer strategy consulting. Historically, customer strategy consulting has focused on predicting repeat purchases by identifying which customers are likely (or not likely) to purchase again, when the need arises.

With the cloud, customer strategy consulting is focused on protecting the ongoing and recurring revenue. It is focused on predicting which customers will continue their service versus those who will cancel.

While there are many similarities between the historical role of customer strategy consulting and the role for companies with cloud offerings, consider these differences.

- The switching barriers are minimized for cloud customers, shifting the risk from the customer to the company. To help protect their investment, the company needs to have an intimate understanding of their customer segments, sophisticated analytics to understand and predict renewals within each segment, and systems or business processes that optimize the renewal potential.

- For many cloud-based companies, one sales manager could have many customers. Having a clear line of sight into each customer becomes difficult, if not impossible. Companies need a system that leverages the various sources of customer information to help sales managers prioritize where and how to spend their time.

Acting on the voice of the customer doesn’t (or shouldn’t) happen in just one department or one area of the company. I like to think of it in levels. For simplicity sake, here are three common levels where VoC action should be taking place:

CORPORATE – At the corporate level, action should be very strategic. Based on customer insights, action plans should address issues such as overall retention, forecasting future revenues, projecting attrition, and considering customer perceptions on topics such as brand reputation, ethics, market position, and how you stack up against the competition.

FUNCTIONAL – Action at the functional level action becomes more tactical and involves specific areas such as business units and key departments. This middle level is the most diverse of the three. It refers to all groups throughout your enterprise that can benefit from the voice of the customer. These include departments such as service, account management, sales, and product development, R & D, marketing, and many others. In each case customer strategists should provide each group the customer information they need to improve their specific operation. What’s more, they should implement a prioritization process to ensure the most important issues are escalated to require action.

CUSTOMER-FACING – This is when action takes place one customer at a time. This is most common in business-to-business organizations where action is critical at the account level. To effectively manage at the account level customers advocates must work closely with strategic account managers and sales managers so highly customized information is provided to their people and they are trained on how to use it to drive business with specific accounts. Action at this level should be focused on improving account relationships to boost retention and grow revenue.

Too often voice-of-the-customer strategies are focused on one area or one department. Or, companies may do a good job of acting on customer insights at one level, but they don’t fully leverage insights across the organization. Customer strategists are wise to occasionally take inventory to determine the areas where customer insights could provide a well needed boost.

Patrick Gibbons
Principal/SVP
Walker

As a customer strategist, your role is to help your organization listen to customers and develop customer strategies that will help to earn more from customer relationships. (e.g. Strengthen customer loyalty. Retain customers. Attract new customers. Grow market share. Develop new markets. Be innovative.) It’s a big responsibility. As a result, it is important to have the required knowledge, experience, and expertise. 

But, what if you don’t have all of the answers? Our culture often sets the stage for people to feel compelled to give the impression they have all the answers - even when they don't. Despite that cultural phenomenon, I am starting to see signs where vulnerability is valued.

·         In the book Getting Naked, Patrick Lencioni challenges service providers to be, “completely transparent and vulnerable with clients in order to overcome the three fears that ultimately sabotage client allegiance.” 

·         A recent Harvard Business Review - Management Tip of the Day encouraged readers to, “Admit you don’t know all of the answers.” 

·         Steven D. Levitt made the case that it can pay to say, “I don’t know,” on the new Freakonomics Radio Podcast.   Pretending to know the answer to something can be destructive and makes it impossible to learn.

Of course one can’t use this approach all the time. But surely, no one is fooled into thinking we always have all of the answers…

Kitty Radcliff
Vice President

Have you ever had a two-by-four moment? By that, I mean an “a-ha” experience. It’s like someone hit you with a two-by-four and all of a sudden you have clarity about the situation. You see things in a brand new way.

Recently an executive of a leading U.S.-based distribution organization had a “two-by-four” moment when he reviewed their Customer Loyalty results. His company is pursuing a growth strategy, with the goal of increasing profitability and sales. In an effort to better understand the market position, the VOC initiative included a measure to gauge share of wallet. On first glance their results are extremely positive. They have the vast majority of their customers’ business.

But, wait a second. There is a small portion of business that is going to the competition. That share of business going to the competition is increasing. Furthermore, when you translate the amount of business that is going to other organizations into lost sales – here it comes – they are missing out on hundreds of millions of dollars in potential revenue.

The two-by-four moment: They left money on the table by not pursuing all potential business with new customers.

·         When acquiring new customers they targeted the core business, obtaining about 90% share on average.

·         Over time, their share of wallet eroded as the customer grew relationships with other providers (e.g. down to 80% SOW within five years).

Are you maximizing relationships with your customers?

Kitty Radcliff
Vice President

Serving customers in a way that creates a loyal following is hard. Add in the complexities created by an indirect go-to-market strategy and the degree of difficulty rivals the reverse 4 ½ somersault in the pike position (4.8 out of 5.0).

Why is such a strategy difficult? The main reason is that many of the actual interactions with the customers are conducted by your channel partners, not by your people. It also creates a more complex relationship comprised of several relationships as shown below.

There are several companies that have built a strong channel and leveraged that go-to-market strategy to drive revenues and create market expansion. Here are some of the ways in which these companies have created a strong customer experience with indirect customers.

1.      Listen to your customers. It doesn’t matter so much whether the customers are served directly or indirectly, their demand is still driving your revenues. A strong Voice of the Customer program helps understand the customer experience from their perspective. Make sure to share the feedback and insights with your channel partners—much of the action and follow-up required might come from the partners themselves.

2.      Listen to your partners. Lots to learn here. First, how can you improve the experience of partnering with you? How can you make it easier to work with you? How can you build a preference for your brand? How can we drive more business together, benefiting both our businesses and growing our market share?

3.      Listen some more to your partners. Your partners are dealing face-to-face with your customers and they are learning from your customers every day. They are learning what it is like to experience your products, what unmet needs they have, and how they interact with your partners. These insights can help us to create the consistent experience we know customers thirst for.

4.      Treat your partners like customers. I know we don’t think of them this way, but channel partners are customers. We sell to them (and through them), we invoice them, we collect from them. While they are a conduit to the ultimate customer, they buy from us and help us drive revenues. We need to treat them like customers and focus a little attention on them. Part of being customer-focused is being partner-focused.

The best way to deal with complex situations is to break them down into manageable pieces. Eat the elephant one bite at a time. In this case that means understanding all aspects of the channel and understanding how we interact and create an exceptional experience for channel partners and customers.

This is the fourth part of our ongoing series designed to understand some of the dynamics that help explain how companies in the Walker Index outperform the market by over six-to-one. So far, we have explored the dynamics of Relevance and Alignment, Team and Resources, and Information Gathering. In this entry, we will focus on the role that Communication plays in supporting and reinforcing the customer listening process.

Mary Young and James E. Post published an article in 1993[1] that outlined the approaches that world-class companies use in communicating with employees. Even though the article is a bit dated and focuses on employee communication, the content is still quite relevant. Moreover, I would make the argument that the principles work equally well when considering how to communicate with customers.

The eight approaches outlined by Young and Post were as follows:

1)      The CEO’s role as communicator – Young and Post make the case that the CEO has to not only be the chief communicator, but also must be a believer in communication. Those who excel in this tend to have frequent communication, reinforce their vision, are good listeners, are willing to answer tough questions, and are more disposed to quickly responding to sensitive topics.

2)      Walk the talk – If you talk about being committed to customers, make certain your actions reinforce that – for example, make certain your infrastructure is designed to serve customers effectively, and make certain you view your processes from the customers’ perspective.

3)      Be Open to Two-Way Dialogue – Surveys and other listening methods are a good way to start gathering the perspective of customers, but customers want (and expect) more. In an age of Twitter, Facebook, and other social media outlets, customers expect a two-way dialogue. At a minimum, be certain you are communicating back what you learned, what your action steps are, and when customers can expect to see improvements.

From an internal employee perspective, be certain that employees have an outlet to share their thoughts and ideas on how to improve. This personalizes the experiences for the employee and helps them to see how they can contribute to the bigger picture – plus, from an execution perspective, employees will often be able to identify with the issues the customers articulated and will often have thought of possible countermeasures to address those issues.

4)      Face-to-Face Communication – Customers want you to close the loop and to do it in a way that is personal; when possible, a face-to-face session can help to not only address issues that you have learned about that particular customer’s experience, but can also have an ancillary benefit of providing a framework for strategic account planning.

Employees, too, want to engage in a face-to-face conversation. Given geographic dispersion of companies, it may not be feasible (or cost-effective) to have the CEO (or Chief Customer Officer) visit every single location; however, the management of each location can and should endeavor to engage in a face-to-face communication process to ensure the core messages are being sent and to engage in the two-way dialogue that Young and Post recommend.

5)      Having a Shared Plan of Communication – While the CEO can be the chief communicator, it is incumbent that all employees be aware (and committed to) the key messages you wish to send to customers. This means that a rigorous, detailed plan of communication should be developed to ensure messages are reinforced in a consistent manner at the level that makes the most sense. One method in a B2B context divides the core messaging between two groups:

Senior Management – Addresses the “why,” “what,” and “when” of changes customers can expect related to strategic initiatives that emerged from a customer listening program

Account Managers – Address the “who,” “how,” and “what” of the changes – in other words, those that are generally more focused at a customer vs. systemic level.

6)      The Bad News/Good News Ratio – It is tempting to focus only what is working well; however, if you focus on only the positive, it can suggest that you did not hear the pain points that customers are experiencing, which can further imply that you are not really customer-focused. So, you should plan to share some of the less-than-stellar feedback – it will not only illustrate that you are listening and that you are intent on improving, but it will also make the good news more believable.

7)      Tailor the content to the audience – When communicating, it is important to consider who your intended audience is, what their needs and expectations are, and what methods work best in communicating with them. Even within an account, there are often different strategies for communicating – for example, the way you communicate with your client’s CEO will no doubt be different from how you communicate with your front-line contacts.

Also realize that your employees are a target audience as well. This means making certain you are communicating a consistent set of core messages both internally and externally in ways that best resonate with the unique stakeholder groups.

8)      Communication is a process, not an event – Young and Post suggest that companies migrate from communication being a transactional event that is focused on tactics to building a focus on process and strategy. They further recommend that firms focus on some specific aspects in this process:

a.       Communicate the what, why, and how – Tell a comprehensive story in order to set the expectation of what will occur from this point forward.

b.      Be timely in communicating – This is more important in our fast-paced, highly connected environment of today than it was when this article was published in 1993. It is better to communicate in a timely fashion, even if that means you do not have all the answers. Not doing so risks a loss of engagement and trust from your customers.

c.       Continuously communicate – This is particularly important if you are being timely in your communication – new information and details will emerge, which means you should communicate that not only as soon as possible, but also in an iterative fashion to reinforce the message.

d.      Make the connections – When describing what you learned, be sure to connect how your actions at a macro level will impact the experience the customers has at a micro level – in other words, make certain the message is relevant. For employees, tying how their work will lead to greater levels of customer loyalty (and the financial impact this has on the firm) is extremely important in securing commitment and buy-in.

Having a disciplined approach to communicating both internally and externally will help to ensure that what you learned in your customer listening process is internalized by both customers and employees. However, this internalization by itself is not enough – the communication must represent the initial action that the company takes on the results. This initial action must be followed up by action in both a macro (company) level as well as a micro (account) level. We will tackle the topic of Action in the next entry of this series.

Mark A. Ratekin
Senior Vice President, Consulting Services

• Technical Skill (for support and design)
• Capacity/Scalability The buyer company is not only growing and changing, but may also try out a new vendor with a small piece of business before ramping up the purchase.
• Competitive Pricing - the sum of vendor costs help keep the buyers competitive in their own markets
• Reputation/Brand counts, but often more as table stakes in B2B --  such as assuring financial stability, that the vendor stands by its work, etc.

Did you see that right away? You know, the extra “e” in details? If you did, you’ll appreciate this… If you didn’t see it, then you may need to really take this message to heart! 

I am one of those people who can get side tracked when I see a typo or similar kind of mistake. As soon as I see it, I want to fix it. 

Imagine my horror when I saw a typo on a communication for a company that specializes in helping their customers use perfect English in marketing materials and other business writing. 

The typo was ironic, and obviously not what they wanted prospective customers to see.   

For you and me, a typo in our customer strategy communications might simply be embarrassing. For this company, the typo could have negatively impacted their business. 

Fortunately their typo has been fixed. They are now presenting the message they want to send clients and prospects in their communications. Are you?

Kitty Radcliff
Vice President 

• The kind that are focused on other things - financial management, operational efficiency, or any number of other business concerns. They know it is important to have customers, but they may not be very committed to hearing what they have to say. That is, until there's a problem.
• The kind that are supportive, but not very involved - they know it's important to use customer insights in running the business, but aren't personally very involved. Instead, they leave it to others.  
• The kind that are very customer focused - they know customer strategies drive performance and believe it is everyone's responsibility take action on customer insights. What's more, they are involved and set the example for the organization.

In my last blog, I offered a hypothesis about why companies in the Walker Index tend to outperform the broader market indices by a factor of at least 6:1. The theory is that companies that have a customer-oriented culture are more likely to listen to – and react to – the needs of their customers. This creates a virtuous cycle – the needs of customers are addressed, which builds loyalty, which builds repeat purchase (and minimized attrition), which leads to robust financial results, which leads to better-than-average stock price appreciation.

There are a number of elements that have to be in place in order to set this cycle into motion, some of which are more strategically-oriented (such as Relevance and Alignment, which I discussed in my last blog), others are more tactical in nature (such as elements of Information Gathering, which we will look into in a future entry in this series), and still others are a blend of the strategic and the tactical. This is the case of today’s topic, Team and Resources.

There is a blend of both strategy and tactics when developing your customer advocacy steering team. From a strategic perspective, you want to consider:

1)      Do we have appropriate executive support and involvement?

2)      Do we have representation across the different lines of business and functions in the organization? Is it the right mix of customer-facing and internal support people?

3)      Do we have the right leader enlisted to keep the team moving forward?

The tactical aspects relate to the work that is involved – that is, the nuts-and-bolts, roll-up-your-sleeves activities that highly effective teams manage. My colleague Leslie Pagel recently provided some excellent guidelines on identifying the ideal candidates, articulating the task expectations, and outlining how each member should use customer feedback in their role.

The most effective teams that we have seen in our client organizations exhibit a number of characteristics:

1)      They have executive support/involvement – The support and reinforcement from the executive ranks is a must-have in order to implement true cultural change.

2)      They have diverse, widespread participation – It is not solely a top-down initiative; rather, there are representatives from the entire organization to ensure proper penetration across the entire enterprise.

3)      They have the right team dynamic – Smart teams recognize that forming a team is a disciplined, structured process - remember Tuckman’s “Forming-Storming-Norming-Performing” cycle. Working through the cycle will help the team to become a stronger unit in the long run.

4)      They understand the “inter-connectedness” of the group – Once the team successfully navigates Tuckman’s cycle, each team member understands the role he/she plays and how they can help each other.

5)      They create a network of allies, inside and outside the group – Smart team build and leverage a network outside of the team as well as inside the team. They specifically identify advocates that can help them advance the cause outside of the core group.

The process must start with executive support/involvement and, obviously, the formation of the team. How do the companies in the Walker Index stack up? Roughly nine out of ten companies have executive involvement, and a little less than two-thirds have a formal steering team in place. It makes sense that team formation lags executive support/involvement, as the executive sponsor is the catalyst for the implementation of a full-scale customer strategy.

We cannot really overstate the importance of having the right Team and Resources in place – in fact, without an effective team with the right members, our ability to execute on the remaining areas of world-class customer listening – Information Gathering, Communication, Action and Validation – is heavily constrained. As such, this is an area for careful, purposeful consideration and execution.

In my next entry, I will delve into the notion of Information Gathering and will discuss how the Walker Index companies stack up on some traditional and emerging aspects of the information gathering process.

Mark A. Ratekin
Senior Vice President, Consulting Services

When we show customers and prospects The Walker Index, we generally get two questions:

1)      Can I invest in that index? The answer is no – the Index is a “virtual” fund made up of our publicly-traded clients. The purpose of the Index is to provide a tangible proof-point for why adopting a customer-oriented strategy makes good business sense. In this case, the focus creates the kind of financial outcomes that the market at large finds attractive, and therefore, demand for stock in these companies increases (which makes the price of the stock increase).[1]

2)      What explains the differential in the long-term value of the Walker Index vs. the broader market indices? Since its inception in 1994, the Walker Index has outperformed the broader market indices by anywhere from a factor of 6:1 to 8:1. What explains this? I believe the answer is that companies that have a true orientation toward their customers are attracted to working with Walker, which increases their likelihood of long-term success. 

This answer, however, is not very actionable – so, with the help of my colleagues, we conducted an assessment of the companies in the Walker Index across the six areas of world-class customer listening in an effort to better understand what steps companies can take to emulate the success exhibited by our clients. Over the next several weeks, I will share some data from that assessment and will conclude with some additional insights that we have seen in the data that we have tracked over the last seventeen years.

The first area that we will examine is the notion of Relevance and Alignment. The idea is simple – for an organization to have an effective customer listening program, there has to be a firm connection to the company’s strategic initiatives. This effectively cements the notion of customer centricity with the key methods and indicators that management will use to assess the firm’s success. This critical first step is what keeps a customer-focused strategy from becoming the management “flavor of the day;” moreover, it creates the imperative to pursue the discipline of Validation. We will focus specifically on validation in a future blog.

Relevance and alignment are commonly thought of across two dimensions – business issues and financial outcomes. I tend to think of these in a cause-and-effect manner – we link to business issues so that we can connect the rationale of the customer strategy to the core issues facing the business; if we are successful in addressing these issues, then the financial outcome will be the outcome we achieve. Common business issues might include:

1)      How can we more effectively cross-sell our product/service portfolio across our existing client base?

2)      How do we make certain that our new product initiatives are aligned with the needs of our customers (and can we foresee those needs even before our customers – and our competitors – do)?

3)      How can we improve our revenue forecasting capability in an effort to minimize variance in our anticipated financial results?

4)      What firms would be an attractive acquisition candidate for us (and how do we maximize our probability for a successful integration of the two firms)?

The financial outcomes are generally the outcome from addressing the business issue; common examples include:

1)      The level of customer retention (and the corresponding impact to the top- and bottom lines);

2)      Share of wallet and growth within an account;

3)      Average customer spend and breadth of the product/service portfolio that a typical customer purchases;

4)      Adoption rates of new technologies or products among existing customers and the impact on firm revenue growth;

How do the firms in the Walker Index stack up? Over 90% of the Walker Index companies have clear connection to the core business issues, and nearly three out of five firms have strong alignment to financial outcomes and the trend appears to be showing signs of continual improvement.

This focus on relevance and alignment clearly creates a "stickiness" that is a hallmark of world-class customer listening, as it provides a foundation upon which customer-centricity can nurture and grow, which leads to superlative financial performance. 

In my next entry, I will focus on the importance of Team and Resources in the customer listening process and will share how the Walker Index companies perform on that dimension.

Mark A. Ratekin
Senior Vice President, Consulting Services