We’ve entered a new era that Forrester calls the age of the customer. While companies have always,
to a greater or lesser extent, called themselves “customer-centric,” this is different. It is not about customer-centric thinking or taking the attitude that the customer is always right. Instead, the new power of customers means that a focus on the customer now matters more than any other strategic imperative. Competitive differentiation achieved through brand, manufacturing, distribution and IT are all now only table stakes. The only source of competitive advantage is the one that can survive technology-fueled disruption—an obsession with understanding, delighting, connecting with and serving customers. Effectively managing your company’s relationships with those who buy and use your company’s products and services has never been more important.
Ultimately, executives don’t get to decide how customer-centric their companies are—customers are the ultimate arbiters. Better customer experiences drive improvement for three types of customer loyalty:
willingness to consider another purchase,
likelihood to switch business to a competitor, and
likelihood to recommend to a friend or colleague.
But how does that affect a company’s bottom line? Our models estimate that the revenue impact from a 10-percentage point improvement in a company’s performance, as measured by Forrester’s Customer Experience Index (CXi) score, could exceed $1 billion.
As a result, managing customer relationships has become a top priority for continued business success. Tough economic conditions, the increasing cost of doing business, stiff competition, and the need to support and personalize every customer interaction are forcing business and technology leaders to think about the customer relationship management (CRM) life cycle beyond legacy CRM tools.
Forrester defines customer relationship management as: the business processes and supporting technologies that support the key activities of targeting, acquiring, retaining, understanding and collaborating with customers.
Although we do not advocate that organizations primarily define CRM solely as a set of technologies, interest in investing in technology solutions to improve customer-facing business processes continues to be strong (download chart 1 or see the chart at the top of page 17, KMWorld April 2013, Vol 22, Issue 4). Nearly half (47 percent) of the North American and European enterprises responding to the Forrsights Software Survey, Q4 2012, have already implemented a CRM solution in the form of a marketing, sales or customer service application. One-quarter (26 percent) are spending more to upgrade their tool set. Thirteen percent plan to adopt a CRM solution within the next 12 months, with a further 12 percent indicating longer CRM implementation road maps.
The strong demand for CRM technology solutions has prompted leading vendors to continue to invest in improving their solutions and make acquisitions to fill out their solution portfolios. However, business and technology pros tell us that they struggle to determine how to define the right CRM strategies, re-engineer customer-facing business processes, effectively acquire and deploy the appropriate supporting technology solutions, and lead and sustain the organizational changes required to transition to new ways of working. (download chart 2 or see the chart at the bottom of page 17, KMWorld April 2013, Vol 22, Issue 4)
Thanks to digital platforms, your customers live in a world of heightened expectations and abundant options; they can get more of what they want, in more places and at more times, than ever before. A new breed of competitors is on the scene—companies that use digital tools and platforms to get closer to customers and engage with them in deeper and novel ways. Digital disruptors, which Forrester’s James McQuivey writes about in the book Digital Disruption, threaten to make your organization irrelevant by delivering a more compelling product and service experience than you can and at a lower cost. Digital disruption is now set to turn its destructive force on even non-digital products and services, adding new competitors to the mix, revamping old economics and establishing new customer relationships along the way. We have entered the age of the customer; the only source of competitive advantage now is to focus on knowing and engaging with customers. Here’s why:
Why focus on customers?
The barriers to entry are lower. Empowered customers can easily find the cheapest prices from suppliers, large or small, anywhere in the world. That severely weakens traditional barriers to entry: Global outsourcing erodes economies of scale, online channels render distribution strength impotent, and customer word of mouth reverses huge brand investments.
Substitute products and channels gut profits. Digital substitution is collapsing value chains and erasing profits across multiple industries. The customer is at the center of this disruption, because innovators targeting any business know that if they give the customer what she perceives as value, she’ll gladly substitute their product for what she’s buying now.
Buyers have more knowledge—and therefore power—than ever. With online reviews and mobile Web access, your customers know more about your products, your services, your competitors and pricing than you do. The more information a buyer has, the greater his bargaining power with suppliers.
Employees have more clout with companies. In a knowledge economy, people are a key ingredient of any product. If they don’t get what they want, they can jump ship and go work for someone else—and they’re doing this more and more. Your customers will follow the talent that creates quality content and relationships, leaving your company behind.
Your competitors have instant access to your tactics and strategies. Your own customers share their experiences online, search engines expose interest in keywords, and everything your competition wants to know about you is on your website and those of your best influencers. In short, customers practically lay granular insight about you at your competitors’ feet.
Coping with digital disruption
As you make implementation plans, take into account these three customer experience (CX) trends identified in Forrester’s CRM Playbook that drive CRM strategy and planning agendas.
Trend 1: Enterprises are navigating digital disruption.
A new breed of competitors has arrived: digital disruptors. Those companies and individuals embrace digital tools and platforms to get closer to customers and engage them more deeply. The competitors can come from anywhere; unopposed, they will steal your customers and disrupt your business.
In 2013, more organizations will turn their attention to devising strategies to both cope with and take advantage of digital disruption. Although best practices are still emerging, Digital Disruption spotlights the most effective principles to follow:
Adopt a digital disruptor’s mindset—in an era where digital possibilities are rapidly erasing analog barriers, these organizations embrace an attitude of continuous innovation.
Behave like a digital disruptor—these organizations experiment and continually add new benefits to their product experience.
Disrupt yourself now—everyone, at every level, must accept that they have the responsibility to become digital disruptors within their domains as well as across traditional silos.
Trend 2: Companies are transforming to become experience-driven organizations.
CRM initiatives are often (and correctly) criticized as focusing too much on siloed, internal business processes in marketing, sales, support, the Web channel or the call center. As a result, CRM efforts miss key moments that matter to customers—for example, receiving a bill from the accounting department that accurately reflects customer expectations set by a purchase made over the phone with a customer service representative. More enlightened companies define customer management strategies from the outside in, articulating a customer management strategy defined in customers’ terms that can be used to guide organizational improvement efforts.
In 2013, more organizations will move beyond empty goals such as “becoming customer-obsessed” and instead begin to define clear, actionable and disciplined CX strategies. To orchestrate a consistent on-brand experience, firms need a CX strategy that defines the intended experience, directs employee activities and decision-making, and guides funding decisions and project prioritization. The intended experience specifies the target customers, describes the desired emotional response and offers unique value. Directing decision-making means spelling out the CX guiding principles for employees. Steering resources to the right projects means filtering funding requests using guidelines that include CX criteria.
Trend 3: Brands are turning their attention to CX design.
Companies in nearly every industry disappoint their customers, especially when customers cross channels. Even companies that make CX a strategic priority struggle to implement long-lasting improvements. Many CX initiatives don’t realize their full potential—or worse, fail completely—because neither employees nor partners have a complete picture of what CX actually entails or the dynamics that go into creating it.
In 2013, organizations will increasingly embrace the concept of the “customer experience ecosystem,” which we define as: the complex set of relationships among a company’s employees, partners and customers that determines the quality of all customer interactions.
The right customer interactions, across all touch points, don’t just happen. Instead, they must be actively designed. That requires learning—and then sticking to—the steps in a CX design process.
When putting the finishing touches on your CRM strategy, don’t forget the following trends that will impact the market over the next 12 months:
♦ Untamed processes are getting more attention. More organizations will move away from isolated BPM and/ or front-office CRM projects and toward cross-functional transformation initiatives to support the invisible and untamed customer management processes critical to exceptional customer experiences.
♦ Agile implementation approaches are scaling to the enterprise level. More organizations will adopt agile project management and software development methodologies. Agile development is based on principles of iterative development, where requirements evolve through collaboration within a self-organizing, cross-functional team.
♦ Social customer engagement is moving to the mainstream. Social CRM use cases spotlighting demonstrable business value will become more common. The key to value-added social customer engagement is to be clear about your objectives.
♦ Mobile apps are empowering employees and customers. Mobile CRM solution support will continue to evolve rapidly, but assembling the components of an effective mobile CRM solution to meet the precise use case for a specific type of mobile worker requires navigating a complex set of decisions.
♦ The marketing technology office is driving customer engagement innovation. Organizations will invest even more in harnessing marketing technologies to spur customer interaction innovation.
♦ The customer analytics ecosystem is increasing in complexity. Forrester anticipates that enterprises will increase their focus on data-driven marketing. But few firms have the budget, technology capabilities or analytical skills to advance their analytics agendas internally, and will frequently turn to extended analytics ecosystems for guidance.
♦ Organizations are adopting flexible CRM management practices. More enterprises will embrace emerging CRM solution governance best practices to better capitalize on the value of on-demand solutions.
♦ Customer experience disciplines are cutting costs and boosting profits. Forrester expects that organizations will start to adopt a more disciplined approach to transformation and start doing business in a new, more customer-centric way.
♦ Voice of the customer programs are driving action and defining results. More organizations will adopt best practices, which will help organizations determine process improvement priorities and enable back-office employees to better understand customer expectations.
Source By : www.kmworld.com