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Helping you put the customer at the heart of every decision.

Category: Strategy Consulting Firm

Leslie Pagel

A creative communication

Customer ListeningWhile I’ve heard the hype around the Old Spice social media campaign, I didn’t check out the videos on You Tube until earlier today. That is when I discovered over 150 "Old Spice Responses" videos.

What a creative communication approach! It is personal, was conducted in real time, and accomplished its goal – to increase sales.

As customer strategists, what we can learn from Old Spice?

  • We owe our customers a response when they participate in customer satisfaction surveys.
  • Our response should include a summary of what we heard.
  • It doesn’t have to be too lengthy. Stick to the key points.
  • Video is an effective communication tool.
  • Our communications should have an impact on our business through building customer loyalty, creating customer value, and increasing our customer retention programs. 


Who is Your Competitive Edge?

According to an Information Week article, Microsoft CEO Steve Ballmer’s #1 Competitive Statistic is that they win a disproportionately high market share of college recruits. He recognizes the importance of having top talent – seeing it as a key differentiator.

At Walker, we also recognize the importance of having the right players on the team. Recently I have witnessed the efforts of a team I work with come together and make the difference for our client. All team members are top notch and extremely committed to doing whatever it takes.

Although faced with a seemingly impossible task of making last minute changes, the group made it happen. They understand our process, as well as our client’s goals. They know how to leverage their expertise and our systems – and successfully developed a plan of attack. They are a great group of people and I’m honored to be able to work with them.

Ideally, the people leading your customer strategies would be a group of customer advocates who balance the tasks of executing customer feedback programs and acting on customer information in a way that generates results.

Your team might include those who….

·         Believe in the value of being customer focused

·         Encourage others to act on customer information

·         Articulate the business impact of efforts

·         Are committed to the success of your customer strategy initiative

Are the right people on your team?   

Kitty Radcliff
Vice President

 

Growth – when is it NOT a part of our lives?

Growth – it is something that encompasses our world the minute we enter it. We are born weighing so many pounds and so many inches in length and our ability to grow or not grow becomes a topic of conversation from that point forward, or at least for the next several years. We are constantly measured in these areas, compared to “norms and averages,” we are even judged by what percentile we are in related to both height and weight, for example, my son is 4 years old and in the 100 percentile in height. This is a great stat related to his growth, but I’m only 5’10” so I guess I will be looking up to him in the near future, literally. I’m slightly perplexed by that idea but that’s for another day. Maybe that means he is “best-in-class.”

As we get older, this topic of growth becomes less prevalent related to our outer-self and more a part of our inner-self. We look at how we grow as a person, whether it is intellectually, spiritually, or in a variety of other ways but growth is always something that we are either reflecting upon or acting on. Point being, growth is a part of our life, regardless of what stage of life we are in. This holds true in our professional lives as well. The difference between success and failure in the corporate world is directly related to one’s ability to grow or not grow. It takes many different shapes. It’s universal.

In the world of account management, growth is good, but profitable growth is king. Being able to manage your accounts in such a manner that lends to positive, profitable growth, year over year is the ultimate goal. How is this goal obtained? By providing unprecedented value. I’m not talking about successfully executing a statement of work, I’m talking about providing insightful, game-changing expertise and perspectives to your clients. This value can be provided through a variety of methods, regardless of the service you are offering or the widget you are representing.

Over the next several months, the SAM Source community is going to be concentrating on the theme of profitable growth and I would strongly urge you to engage in this discussion and share your insights and opinions related to this topic. We would love to hear your thoughts and perspectives. Stay tuned – more to come.

 
Michael Good
Vice President

Customer Capitalism: Does It Pay Off?

A recent Harvard Business Review article suggests a new management paradigm is developing. In “The Age of Customer Capitalism,” Roger Martin provides a brief history of management theory; simply put, Martin calls out two periods of managerial capitalism to date:

1)      Management Capitalism This period, which started in the early 1930’s, created the notion of professional management, prompted by the work of Adolf A. Berle and Gardiner C. Means, whose book The Modern Corporation and Private Property made the case for management that was separate from ownership of the firm. This work ushered in a period in which management became a valued discipline by creating processes and roles that help to fuel the economic growth of firms. It could be said that by creating the division of labor between owners (who are, ostensibly, more entrepreneurially-oriented and therefore more focused on the vision of the firm) and management (who are more oriented toward building systems and infrastructure that facilitates the realization of the vision), firms leveraged the unique skills of individuals in a way that was not only scalable, but also increased the probability of firm success.

2)      Shareholder Value Capitalism The second period emerged in the mid-1970’s, when Michael C. Jensen and William H. Meckling  suggested in their article “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure” that managers focused on their own financial well-being at the expense of the firm (and, therefore, shareholders). This work (along with other management-critical treatises such as The Peter Principle: Why Things Always Go Wrong, which posited that managers in a firm advance to their level of incompetence) created a skeptical view of management; Jensen and Meckling suggested that a better focus for the firm would be shareholder value maximization.

Professor Martin suggests that shareholder value capitalism is also a flawed theory, and provides some compelling evidence that the shareholder value paradigm did not pay off for shareholders (in short – between 1933 and 1976, when management capitalism was king, the S&P earned compounded annual returns of 7.6%; between 1977 and 2008, during which shareholder value capitalism has been in vogue, the S&P created compounded annual returns of 5.9%). Further, Martin argues that shareholder return cannot increase in perpetuity.

So, what is a firm to do? Martin suggests that the answer is Customer Value Capitalism – that is, the path to shareholder value creation comes by maximizing what we at Walker call customer loyalty. In Professor Martin’s words:

“…companies should seek to maximize customer satisfaction while ensuring that shareholders earn an acceptable risk-adjusted return on their equity.”[1]

Why can’t the firm focus on both customer value as well as shareholder value? Professor Martin provides two arguments. First, from the perspective of optimization theory, you can only maximize one variable while controlling for all other variables. While this is technically correct, the second reason cited is more compelling – shareholder value reflects the value stockholders place on the company’s future earnings, and it is impossible to any firm to continuously raise –and deliver on – expectations. If we assume that customers are the source of all future earnings, then logic would suggest that maximizing customer value would be the best way in which to maximize shareholder return in the long run.

Do the data bear this out? Professor Martin provides some anecdotal examples in support of customer capitalism; we can add several more from our work with clients (many of which we have previously discussed in this blog – see this entry and this entry for more information):

1)      We continue to see a statistical connection between what customers say they will do and what they actually do;

2)      We have witnessed the correlation between a customer’s loyalty and his/her revenue growth rate, profitability, willingness to buy across a firm’s multiple categories, etc.

3)      The Walker Index, a composite of Walker’s publicly-traded customers, continues to outpace the broader market indices in total (see this entry for more discussion on the Walker Index);

In addition, the academic literature provides analysis consistent with what we see in our client work.

However, the notion of Customer Capitalism is another example of easy strategy that is extremely hard to execute. In my next blog, I’ll look at some of things firms should be mindful of – and prepared to do – if they aspire to adopt the strategy of Customer Capitalism. In the meantime, what do you think – what has worked in your firm (or what have you witnessed as a best practice among firms, brands, or products that you use)?

Mark A. Ratekin
Sr. Vice President, Consulting Services & Resource Management



[1] Martin, Roger. “The Age of Customer Capitalism.” Harvard Business Review, Volume 88 (January-February 2010). 62.

Who are we making happy?

Dilbert

There are certain Dilbert strips that seem perfectly appropriate to the way people and companies can behave, even though they are never quite as blatant as the characters in the comic.

At this time of year, when we are more focused than usual in our personal lives on giving and making others happy, I think we can also take a moment to reflect on the focus of our professional lives. How often do we take something that is supposed to be about others – customers, employees, colleagues – and turn it into something that serves our happiness?

In the realm of voice of the customer programs, this usually means an over-emphasis on the "score" we get from customers and the method used to get it instead of focusing on the customer problems that are driving the score and how to fix them. This is very likely to occur when you tie compensation goals to customer survey scores (see my previous post on this topic).

So, as the new year begins, take some time to look at the metrics you use and the goals you pursue in your day-to-day job. Are they focused on the right objective? The only way to ensure long-term success in your job or your life is to ensure your actions towards those who matter the most to you will make them happier and more successful.

Happy Holidays!

Troy Powell, Ph.D.
Vice President
Walker Information

Patrick Gibbons

Customer focused — “born” that way?

Sometimes we are lulled into believing that things are just made a certain way and can’t really be changed.

Are you good at art? Most people will say "no." In fact they may say they are awful, or don’t have an artistic bone in their body. In other words, they believe that artistic talent is something you are born with — you either have it or you don’t.

It’s not true. While some have a natural inclination for such skills, artistic talent can be developed. There is a classic drawing book titled Drawing on the Right Side of the Brain. The author Betty Edwards shares loads of examples of ordinary people that learned to draw using her methods.

Sometimes I believe we feel the same way about our companies being customer focused. There is a tone or a feeling that is often hard to describe. Sometimes we call it culture or customer centricity or say it is part of their DNA (a term I’m not fond of — see previous blog). Using these terms make it feel like you either have it or you don’t.

In reality, I think it is an integral system of tactics that really bring focus on the customer. Leadership sets the tone. But after that it’s the nuts and bolts. It’s how companies gather customer insights and put them to use. It’s how they communicate the importance of customer initiatives and engage the enterprise. Its how they make sure the right people have the right information to make customer focused decisions and take action.

Just like the artist that practices, develops their skill, and consistently improves over time, companies need to do all the little things that drive customer focus in their business. The best news — the results will prove all their efforts to be worthwhile.