The customer’s in charge in the digital enterprise

SayingThe customer is of course always right – a message that hasn’t entirely made it through to the current generation of call centre operatives unfortunately – but now it seems that customers are not only right, but actively shaping the business strategies of firms with which they engage.

According to a new global study from IBM – The Customer-Activated Enterprise – CEOs reckon that customers exert a bigger influence on their organization’s business strategy than anyone or anything outside of the C-suite itself.

As a result, 60% of CEOs now see it as a priority to engage directly with their customers and use that input in their business plans in the next three to five years – and digitization of process is seen as a key enabler to that end.

Bridget van Kralingen, senior vice president, IBM Global Business Services, states:

“Our research with C-suite leaders over the past decade has shown that organizations have steadily shifted to embrace more open, collaborative and reciprocal models. Today, CEO’s recognize that they can’t do it all alone. They’re opening up their organizations, breaking down barriers and actively engaging customers — providing customers a seat at the table to help shape their business model and strategy.”

Bottom line

From the IBM poll of 4,000 CEOs, CMOs, CFOs, CIOs and other C-suite leaders from 70 countries and 20 industries worldwide, the conclusion comes back that a high degree of customer involvement leads to bottom line uptick.

The study suggests that outperforming companies are 24% more likely than underperformers to have given the customer a prime seat at the boardroom table and are 54% more likely to collaborate extensively with their customers.

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The report acknowledges that this degree of engagement will not always come easily to organisations:

Accepting customers as stakeholders in determining an enterprise’s future has huge cultural and organizational implications.

These businesses can’t just be customer-centric. They must be customer-activated.

That requires creating fully reciprocal relationships with customers. It means being ready— and willing—to change course to pursue those paths that create mutual value. And it requires finding ways to include customers in key decisions.

For organizations still struggling to integrate global divisions, align a recalcitrant C-suite or even reengineer a customer-facing process, this can seem an impossible burden.

But accepting customers as active stakeholders is one sure way to quell the factions and unite the C-suite in a common purpose.

Digital channels are being increasingly looked to provide a mechanism to improve engagement and create a one-to-one relationship.

Screen Shot 2013-10-14 at 10.48.36Priorities have changed rapidly. In the same study last year, 57% of CEOs expected digital channels to become one of their company’s key means of interacting with customers within the next five years. But by the time of this year’s survey, 52% of C-suite leaders reckon that they are already there.

The report notes:

The intersection between the digital and physical is the leading edge of innovation. Smart pills and smartphone heart monitors, intelligent vehicles and crowd-sourced traffic routing, books that respond to a reader’s location and apps that enhance the in-store experience: the possibilities are enormous. Indeed, with 3-D printing, the very distinction between the virtual and material is evaporating.

That, as CxOs realize, means it is becoming increasingly important to meld the two dimensions. CMOs, in particular, consider it critical to put the components of a strong digital strategy in place. They want to overhaul every aspect of the customer interface.

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But there are barriers in the way to combining the business and digital strategies. According to respondents:

Two-thirds of enterprises have a weak digital-physical strategy—or none at all. Some organizations are reconfiguring their offerings to capitalize on social networks and mobile connectivity. Others are reshaping their operating models to inject customer input into every aspect of the buying and selling chain. But they’re often not doing both at once.

Social problem

The biggest obstacle turns out to be social media and where it fits into the overall mix. There’s a need to focus social media efforts onto critical aspects of the organisation’s overall business strategy and brand, but all too many C-Suites just don’t know where to start when making such decisions.

The IBM study concludes:

The most progressive enterprises analyze social data to understand customers’ core values and what’s happening in their lives. Such attributes, when well understood, lay the base for customer experiences tailored to the individual.

They get us closer to cracking the “social genome”: the traits that make each of us uniquely human.

And outperformers show the way. CxOs in these enterprises are 29% more likely to plan on spending more time crafting engaging customer experiences.

Screen Shot 2013-10-14 at 10.48.43That CMO/CIO thing

At a time when the accepted wisdom is that CMOs are the new IT powerbrokers, it’s interesting to note that the IBM study suggests that while most believe that technology will play a key role in helping them realize their ambitions, they are struggling to keep abreast of the rapid pace of change in the digital and online worlds. It finds:

CMOs feel even less prepared to cope with big data than they did in 2011 And they have made little headway in coming to grips with the social media landscape. Lack of a cohesive social media plan and competing initiatives are the two biggest barriers preventing CMOs from implementing their strategies in an increasingly connected world.

At the same time, CIOs are staging their own incursion into CMO territory:

CIOs foresee a major shift in the IT function’s priorities over the next few years, as they reposition it from service provider to critical strategic enabler. They expect their own role to change, too. They anticipate spending much more time on activities that have traditionally fallen within the CMO’s sphere, such as customer experience management and new business development.

Verdict

Over at Forrester Research, Ted Schadler makes an interesting observation.

It’s time to go beyond social listening and customer feedback programs to instead place customers front and center in your ecosystem of existence. You need to become customer-obsessed. Invite customers to see your product operations, get their buy-in on product enhancements, give them immediate feedback that their help has translated into something positive.

Schadler also picks up on division in the ranks:

CEOs place technology factors first. CMOs and CIOs rank market factors first ahead of technology factors. Now we see the challenge facing CIOs and CMOs: Who’s right?

Well, customer-obsession says that you are all right. Customers come first. So CMOs and CIOs are right. And only business technology – which we define as “technology, systems, and processes to win, serve, and retain customers” – can help you acknowledge your customers’ power and surpass their expectations. So CEOs are right, too. Maybe more right :-).

So it’s a yes to both camps – which may not take many organisations on very much in their thinking, but IBM’s study does make for interesting reading.

I’m intrigued by the confidence of over half the respondents that they’ve got their digital acts in order. A triumph of hope over reality?

Equally it’s ironic that the holy grail of social media as customer outreach and feedback tool should now be a perceived inhibitor.

But can organisations genuinely get to what Schadler dubbed obsession this time as opposed to the lip service that all too many have paid in the past to concepts such as customer-centricity or that arch cliche – the single view of the customer? Will it be better this time around?

That’s the great thing about the CRM market – it’s the gift that keeps on giving!

 

Graphics: IBM/The Customer-Activated Enterprise

Stuart Lauchlan

Stuart Lauchlan

Stuart Lauchlan has been tracking and commenting on the enterprise IT market for 23 years during which time he's managed to amuse, inform and irritate buy and sell side participants in equal and appropriate measure. Lauchlan also helps companies understand the needs of technology readers.
Stuart Lauchlan

@whostu

Tech journalism - the accident from which I've never recovered

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  • Diginomica says:

    I’ll fix that :)

  • Sarah Lafferty says:

    Sorry for the pedantry but I think there’s a missing word in that first sentence – ‘been’ maybe? x