Customer strategy is the only strategy. Product and producer-driven strategies are dead - though not altogether buried. Few businesses, even in retail, let alone sectors further removed from customers, have reinvented themselves to achieve a truly customer-centric business system. Such a system starts with the customer, reworks all processes back from the customer, and aims them towards achieving excellence in the customer's eyes.
The superb results are clear from patronising a business like Dell Computer, which can accomplish wonders of customer service. Order a PC over the Net, and you may be told to allow four days for delivery. The computer has been configured to your precise wishes, but you suddenly recall next day that you have forgotten to order the necessary feature for an ISDN telephone line. You ring up, and get the same operator. No problem: the computer hasn't yet been loaded onto the factory. The PC arrives on your doorstep, precisely as ordered, but in two days - not four.
Considerable and very clever technology is required to delight customers so thoroughly. That technology is available to any other business. But to make the most of the hardware and software, any other business will have to be managed differently. Look at Michael Dell's recommendations from his book, Direct from Dell:
• See the big picture
• Run with the suggestions your customers provide
• Always think bottom line. But not just yours
• Go beyond selling, and make yourself valuable as advisor
• Be a student. Learn as well as counsel
The object of such a customer-centric system is to deeply understand the customers. Then you can give them what they want, how, where and when they want it, at a profitable price that they are happy to pay. All the rest of marketing won't make up for failures on these key strategic elements. Not only must the technology support the service, and the product support the promise, but quality must support the value proposition, and HR policies must support the customer focus.
That is a key issue, underlined by the Sears research which shows that a 5 unit increase in employee attitude drives a 1.3 unit increase in customer impression, which drives 0.5% increase in revenue growth. Such incremental improvement, however, is not enough. You can make real breakthroughs, like Dell, by the excellence of your systems, but only provided that they are truly focused on insights into what consumers 'want'.
How do you know what that is? You ask, using quantitative and qualitative consumer research. That will not, however, provide enough answers. What customers 'want' is partly what they say, partly what you say. You may well be first to know what they want. All successful consumer businesses achieved their original breakthroughs by telling customers what they wanted before the customers knew themselves. Effective strategy leads the customers in directions which they then desire, and go on desiring.
Any industry provides plentiful evidence of this powerful truth. In IT, nobody was calling out for personal computers or the World Wide Web, any more than they screamed for mobile phones, VCRs, digital cameras, or browsers. Visionary scientists, engineers and managers saw the technical possibilities, developed them, and brought them to a market which these pioneers in effect created. The great low-tech brands, from Gillette to Benetton, likewise sprang from entrepreneurs who gave no thought to 'gaps in the market'. There was no market, period, when they formed their ambitions.
Listening to the customers, hearing 'what they say' is still vital, just as Michael Dell says. Their perceptions are the essential guide to setting and meeting quality standards and achieving excellent customer retention. Talk to people in unstructured, anonymous interviews and you establish the 'perception gap' between what top managements believe to be true, and what their 'constituents' actually think (customers, employees, managers, suppliers, opinion formers). The perception gap is always great - far too great for any kind of comfort.
The research in this area is convincing, ample and not to be ignored. Customers who rate your service 'excllent' or described themselves as 'very satisfied' are six times more likely to buy from you again than those who think that service 'good' or who are just 'satisfied'. Those are Xerox figures, but AT&T research is just as cogent. If the customers think your service is excellent, all but 10% of your market share is secure - without any need for promotion. A 'good' rating, however, sees 40% of the customer share depart.
