Have the Courage to Start with the Customer

Have the Courage to Start with the Customer

Skip those grand predictions about the year ahead for businesses, brands and communicators. Based on stunning turns in events at home and abroad, you could argue that the world needs to rid itself of way too many cracked crystal balls. What shines through the rubble of institutional thinking about business growth is pure communications logic: Get closer to your customers. Now.

In a 2016 survey of 1,200 chief executives around the world, KPMG International found that “CEOs from the core 10 countries are most likely to be concerned about customer loyalty and the impact of global forces (both 88 percent).” Close behind, among other top CEO concerns, is the ability of competitors to poach business (85 percent).

Staying nearest to those dearest makes a lot of sense in a business environment marked by heightened competition and volatility. As business communicators guide anxious chief executives, it would be wise to recall stirring words from the regretful Groupon CEO Andrew Mason in his 2013 resignation letter to employees: “Have the courage to start with the customer.”
Customers to Keep

By getting closer to customers, business communicators can also understand which ones should stay and which ones should go. You’ve heard of companies restructuring to nurture more promising business segments while releasing others that no longer uphold strategic goals. Which customers should be kept?

 

According to Francis Buttle and Stan Maklan in their 2003 book, “Customer Relationship Management,” there are five strategically significant customers to retain:

  • High lifetime value customers who contribute materially to profits throughout the relationship
  • High volume customers whose predictable purchases can cover fixed costs
  • Benchmark customers representing aspirational brands other customers want to emulate
  • Inspirational customers whose interactions help reveal improvements needed in the business’s products or process
  • Door opener customers who provide access to new markets (e.g., geographic areas or adjacent categories)

Customer selection is a natural part of business strategy. For decades, companies have depended on credit ratings and FICO scores to determine which customers are high risk, thus unlikely to contribute meaningfully to their businesses.

In addition, a 2008 Harvard Business Review article on customer divestment pointed to TXU and Sprint, which pruned customers who had been delinquent payers and chronically dissatisfied despite reasonable attempts to service their needs, respectively.

Now consider eBay, Lyft and Airbnb, all of which are membership businesses that have extended the power of public endorsement into a two-way exchange between suppliers and customers. Once the exclusive domain of employees and customers who posted their reviews on sites such as Glassdoor, Yelp and TripAdvisor, today recommendation sites can offer a more level playing field for service providers.

Get Real to the Core

Now that you know which customers to keep, how do you keep them satisfied?

Even if your brand is built on the promise of scale-based advantages or innovation, those tangible benefits won’t be enough to meet or exceed the expectations of your customers. There are also insights gained from firsthand interactions with customers that can deepen trust and delight them.

Take Tesla Motors Inc., which at the age of 13 has entered its own awkward, acne-speckled puberty. And break out is what investors are betting Tesla will do this year.

As the company strives to keep shareholders happy with the pursuit of mainstream growth for electric vehicles and solar technology, it still must pay attention to its core group of luxury green car aficionados. Tesla remains the top dog in that niche market, but nipping at its heels are scrappy competitors such as Lucid Motors and Faraday Futures. They, along with upscale auto maker Mercedes-Benz, took direct aim at Tesla by unveiling their green rides at the 2017 Consumer Electronics Show.

It’s good thing that CEO Elon Musk is a blue sky thinker who can still stay down to earth—especially with his company’s diehard fans. In December 2016, Musk personally responded to a complaint posted on Twitter by an irritated customer who saw fellow Tesla owners hogging local charging spots with their fully powered cars. Less than a week after the Twitter exchange, Tesla announced its new policy to impose an idling fee that would reduce wait times and improve customer experience.

Despite the pressure to expand aggressively, Musk knows how to keep the spark alive in existing customer relationships, one car at a time. And it’s working. According to Consumer Reports, a whopping nine out of 10 of Tesla owners say they would buy another one.

Technology and Intimacy 

Musk is among a growing group of high-profile leaders who actively communicate on social media. But for less sophisticated business executives, online platforms that enable customer engagement should be approached with caution.

Technology isn’t a substitute for relationships. However, it can help a complex organization simplify and devote its energy to making customers happy. One example is Amazon, the online retail giant whose two-part goal is “to be Earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”

Emphasizing a commitment to customer experience, Amazon founder and CEO Jeff Bezos told investors in 2016: “Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift. This year, we pass $100 billion in annual sales and serve 300 million customers.”

Surprisingly, such an expansive vision has led Amazon to its brick-and-mortar strategy.

As other struggling traditional retailers like Macy’s and Sears shed thousands of jobs, Bezos recognizes that not all transactions are well suited for e-commerce. Some online customer experiences can even be enhanced offline. To sell books and food, the retail company has responded by going omnichannel and establishing physical stores. One example is Amazon Go, where there are no employees to assist customers with their grocery shopping.

The refinement of Amazon’s quest for a frictionless customer experience has unfolded like this: Provide the convenience of buying cheaply shipped, lightweight goods (e.g., books), and then up the ante by offering faster shipments (e.g., Amazon Prime, drone delivery). Now, combine convenience with direct access, and give Amazon members a liberating experience akin to shoplifting, according to one sheepish customer.

Advances in cognitive technology such as “computer vision, sensor fusion, and deep learning” make the self-service purchase possible. As a “digitally native” enterprise, Amazon also has the advantage of insights from rich data to help shape future customer strategies and personalize each customer’s experience.

What’s helping Amazon negotiate the tacit exchange of privacy for convenience? Trust, which is earned from an established history of knowing customers and delivering on promises made.

Let Them Eat Cake

For a company founded by linking local merchants with consumers through daily deals, Groupon had grown deeply disconnected.

Unfettered demand caused bargain hunters to overwhelm participating proprietors. Groupon’s aggressive price slashing and unrestricted voucher redemption terms were blamed.

One British bakery was forced to produce 102,000 cupcakes at a loss. A massage salon owner in Washington took emergency measures to accommodate appointments for 4,000 vouchers sold. Unfortunately, the extra bookings came with a new set of costs for more masseuses and laundry services—leading her to borrow $150,000 to continue operations.

Before CEO Mason left Groupon, he wrote: “My biggest regrets are the moments that I let a lack of data override my intuition on what’s best for our customers. This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness – don’t waste the opportunity!”

These parting thoughts may be the most practical way for business chiefs and communicators to embark on the new year.

Luke Lambert is president and CEO of G&S Business Communications. Luke knows how to unlock lasting value – from businesses, brands and people. As steward of the agency’s vision, Luke is responsible for its global performance in client service and operations. Luke joined G&S in 1996, and his diverse background of agency, corporate and consulting experience brings clients a fresh perspective on their business with an eye toward fully integrated business and communications strategies. The agency’s evolution into a strong professional community of employees, clients and partners is a source of tremendous pride for him. Luke is a prominent leader of the Arthur W. Page Society and the Council of PR Firms, and is a member of the Public Relations Society of America. Within the media industry, Luke regularly hosts exclusive events featuring influential executives and journalists from news organizations ranging from IBT Media/Newsweek and Forbes to Huffington Post. Luke holds a B.A. in Journalism and Public Relations from Utica College of Syracuse University, which conferred alumni honors upon him in 2011 and 2014. When away from the office, Luke’s favorite spots are the Adirondack Mountains and Napa Valley.

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