Do you speak ‘customer-centricity’ when you actually mean ‘profit-centric’?
Once upon a time, companies were fat and complacent. Spurred on by activist shareholders, private-equity firms and bonuses based on stock prices, corporate managers and executives had become obsessed with maximising profits, with much increased focus on the bottom line. In such companies, for example, laying off employees, cutting research and development expenses had become routine to increasing the year’s earnings. As shareholder value had been treated as a much higher priority than the other kinds of value that great companies create: value for the customer, the employee and society – it had become all too short-term thinking and entirely self-serving.
But these companies continued to operate to create profits as long as they could: by designing and producing based on what they were good at, and what they could. It wasn’t long till customers’ requirements started to change, and these companies found themselves in situations where they were unable to gauge these requirements and correct their course. These companies often realised their folly only when customers stopped buying. By this time, it was too late – damage had been done.
So in order to continue thriving and to ensure the preservation of their very own existence, a few companies set out to focus on their customers. These companies began to understand their customers which enabled them to spot latent needs and new segments, which they could then serve profitably. These companies created distinctive and compelling value for their customers – doing more than just responding to what their customers said they had wanted. These companies had become better suited to retaining their competitive advantage, because they were more willing, flexible and open to completely overhauling their businesses to adapt to the marketplace. These companies had proven that being customer-orientated was a solid business strategy.
There are no shortcuts: Customers first, then profits.
Many companies today claim that they are ”customer obsessed” but I don’t really know how many truly are. It may just all be lip service, I don’t really buy it. I just don’t know whether companies can truly recognise what it means in the face of seeking profits, but more importantly do they understand the culture that is required to drive customer obsession in a company successfully?
Simply put, to be a customer obsessed company is asking the question “What value can I give to my customers?”. Then, crafting a true customer focus in which everyone throughout the company is involved – from C-suite to the front line. And everyone needs to be believe wholeheartedly, otherwise any slightest effort will just fail miserably. This means, everyone committed to constantly listening, continuously testing, enhancing and personalising the customer experience – from the first time potential customers discover the company, to every interaction they have with the company. It is the focus on the complete customer life cycle: with much more emphasis on retention, loyalty, risk mitigation and win back than even, acquisition. To understand the true impact of a customer obsessed company, performance measurement is necessary to determine what most monetises the customers’ behaviours – this may include loyalty, emotion or communication metrics. This is to capture what most companies forget, that the relationships with customers do not end upon closing the sale. Customer service, along with pipelines and processes should be a company’s priority too which is a vital and profitable element of value delivery. Keeping the customers’ best interests at heart is the best way to build a reciprocal, long-lasting relationship – but to yield maximum results, this takes time.
Today, companies adopting a customer-oriented view should be putting customer needs ahead of short-term profits because that’s how long-term business value is driven. But what if the prevailing ethos is that companies exist to make money for their (share)owners – and the more and the sooner, the better – so every decision is made in the context of that. This constant drive to deliver on short-term profits has now created an unhealthy sales-obsession in the expense of marketing effectiveness. The difference may seem subtle, but it is between short-term success versus long-term growth.
In a short-term world.
In most companies, there is a Sales/Marketing confusion. Many companies are still sales-minded, profit-driven no matter how customer-obsessed they claim themselves to be. Only a few are truly customer-minded who actually understand and practice Marketing. The rest, operate under the illusion that they practice Marketing.
You see, the effectiveness of marketing is imperceptible – some might even say it is inspirational, theoretical to an extent, whereas sales is tangible, visible even. Sales provides the immediacy of accountability which brings commercial and shareholder value – in which is comfort for any company in itself. I get that.
But what I find most troubling is that the role of marketing in many companies is still seen as demand stimulation, hence why many companies fail to see the value it brings into the organisation. This risk to business is real – the misalignment of marketing as the top line, and sales as the bottom line. Only a few actually use Marketing to manage demand – for example, when demand is too low it must be stimulated, or when demand is too irregular it must be evened out and attaining new demand through the harvesting of sales through the marketing mix, business functions and distribution systems.
Marketing tactics are instead deployed as desperate attempts to drive sales; the marketing operation becomes nothing more than a glorified sales department. On paper, this appears to be the only way Marketing can be justified as bringing value into the company. Sales, Marketing – two departments working in silo like ships passing in the night – completely disjointed. This is where most companies confuse marketing effectiveness with sales effectiveness. In such cases, Marketing tends to get misunderstood, or once understood, easily forgotten in the wake of success and easily blamed in the face of failure.
Close cousins: Sales and Marketing are feeding into the same buyer journey.
Salespeople and marketers ultimately share the same goal: generating revenue for the company. The only difference between them is in the tactics they use. However, the term ‘Sales’ and ‘Marketing’ are often used interchangeably – this is when the roles start to blur in definition. Nonetheless, there are also very clear lines of what Marketing is responsible for and what Sales is responsible for.
Think of salespeople as ‘hunters’, marketers as ‘farmers’. Hunters are required to venture out into other, even hostile territories each day to stalk their prey, in hopes for a killing. This tactic is purely a reaction – a response to fixing a problem (danger) or supporting a need (hunger). Farmers stay in their grounds, plant seeds, reaping the fruits of their efforts – and eventually, the land becomes valuable because of its consistent harvest and quality produce outputs. The latter requires hard work and takes a long time; but in the long-term, generating positive results becomes easier because it will be harnessed organically.
When this definition is blurred, known more commonly in the boardroom as ‘Sales Marketing alignment’, it can cause more confusion and conflict. This combined function is usually biased towards Sales suggesting that Marketing as part of the sales function and not the other way around. The power skewing to Sales also means that information, research and creative/production budgets are not as well planned and shared, if at all.
And what happens when a different mix of responsibilities are lumped together – such as cold prospecting, closing and customer service into one general ‘sales’ role? Many companies expect their salespeople to do their prospecting. If they are successful, as soon as they generate some pipeline, they will become too busy. Any qualifying leads will soon be perceived as lower in value when compared to managing current customers.
We know anyone that tries to juggle too many responsibilities will have a lower ability to get things done. In the long run, this becomes unsustainable. If short-term thinking is the approach of a company, it’s basically just attracting customers who have short-term goals. In certain industries where the product is a commodity, as long as customers continue to buy, companies will continue to think that anything can be sold with sufficient sales effort. Business is growing and everyone’s staying busy, so why bother with the expense and hassle? This becomes hardwired within the company’s philosophy which is difficult to shake.
So, if it’s all about the customer…
We’ve entered the age of the customer. We believe we are at the beginning of a 20 year business cycle in which the most successful enterprises will reinvent themselves to systematically serve their customers.
Companies must first align to the customer and move away from a product line or channel-based focus. How they go to market is based on new customer focused organisation structures – to support the full customer life cycle. For example, sales success is highly dependent on the quality of the salespeople in terms of their training, skill base and black book. However, increasingly customers do not like being pitched or sold to. This is where Marketing becomes relevant – especially in the era of engagement. Only when companies merge the brand experience with the customer experience, can they be truly customer-orientated. Marketing is fundamental, at least when it is properly understood and practiced, as it is concerned with orienting the entire company around what the customer wants to buy, and not what the company has to sell. To align and better serve customers, it is crucial to have in place track selling systems as an integral part of Sales and Marketing to establish a common language between these two functions to take all the mystery out of the selling process. Despite how tempting it is to go down the path to chase short-term returns, the value from the Return on Relationship is more important now than ever. So, what’s your call?