It's not you, it's them - 3 lessons from the IDM Annual Lecture

One statement more than any other at the IDM Annual Lecture on 8th November got picked up on by delegates - you need your customers more than they need you. Marketers might find that hard to accept. After all, brands have spent decades establishing themselves, developing products, gaining distribution and telling consumers about themselves. That inside-out model underpins the classic principles of marketing...

Which is why Harley Manning, VP and research director at Forrester, described the arrival of customer experience as "a profound shift in perception." The title of his book makes the nature of that shift clear: "Outside In: The power of putting customers at the centre of your business".

It's a challenging concept for many organisations to adopt and marketers might be forgiven for thinking that they already have enough on their plate, what with social media and the explosion of data. But customer experience should not be seen as separate from those other disciplines. Instead, it offers one end point for all the effort being put into understanding the connected consumer or drilling down into Big Data.

As Manning noted, "customer experience is how an individual perceives their interactions with the company." Since that has tended to be invisible in the past, it has often been ignored. What is becoming clear is that customers are now speaking out, via blogs, ratings, tweets and the rest of the panoply of social media. Each of those is now generating data flows that present their own potential insights and challenges.

Previously, those opinions would have remained unseen by marketers, even if they were still being voiced (albeit in the physical, rather than digital world). And access to that data was almost impossible, not least because of the cost to store, process and analyse it. Now marketers can see what is happening and begin to make business decisions on the back of it.

Here are three lessons about customer experience from Manning's lecture:

Lesson One: complaints can save you money

So why should senior executives pay any attention to customer experience when there are so many other calls on their time and resources? Manning presented an example from T-Mobile which illustrates how the outside-in approach can deliver business benefits.

By listening to its subscribers, the mobile network realised that many were frustrated at how long it took to get a problem resolved. That led to a focus on first call resolution - an approach which has been adopted by many telcos.

But that wasn't the end point. "What really got them excited was to work out how the customer could not have a problem in the first place," said Manning. Drilling down into complaints data revealed where there were recurring problems, such as particular cells or handsets. Fixing those root causes removes a significant customer service overhead - in this case as much as 15 per cent of call centre traffic, equal to millions of pounds in cost.

Lesson Two: Cx makes the CEO a hero

Marketers struggle most with proving what they are contributing to the business, not just in terms of sales but to the enterprise overall. Brand value has been their biggest win, since it explains what most marketing has achieved.

With customer experience (Cx), proof might seem even harder. But Forrester has been running its Customer Experience Index for five years and it reveals genuine benefits from getting it right. According to Manning, the Top 10 performers on Cx saw their share prices rise by an average of 22.5 per cent between 2007 and 2011, compared to overall market growth of just 1.3 per cent. The Bottom 10 saw a drop of 46.3 per cent.

Analysts and investors may not yet be using Cx as a direct measure of company performance to drive their buy or sell decisions. But there does appear to be a clear link between getting it right with customers and getting it right with the City.

Lesson Three: think like your customers, not like your accountants

Pressure to deliver quarterly results is not going to go away, even though it is one of the biggest distractions in business. Optimising for your customer is hard when you are managing by the next report.

Even so, changing to a customer perspective can start to pay dividends when it helps to reduce things that affect the bottom line negatively, like bad debt. Manning pointed to John Deere Finance and its two-year customer experience project. It found a growing number of customers in the farming community were struggling to meet payments on agricultural equipment, leading to increase collections activity.

As Manning said, the company does not want its tractors back. Instead, it listened to the problems farmers were having and realised that problems with harvests have a direct impact on cash flow. By adjusting its terms to reflect the market conditions faced by farmers, it has been able to improve its bad debt position. Remarkably, the John Deere Finance collections department now has one of the highest Cx scores across the company.

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