Anticipate E-Book

Bill Thomas

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 278

Veröffentlichungsjahr: 2012

Beschreibung

Design and implement the ideal customer focus Anticipate provides business readers with a practical how-to approach for taking their customer-supplier relationship to one that is more sustainable and more mutually profitable. Much of the discussion on customer experience has centered on the hospitality or retail industries and has showcased the discrete techniques organizations use to deliver better service and create more satisfied customers. Anticipate extends and integrates those techniques to deliver an end-to-end customer experience that can be applied in any industry, by any type of organization. Get proven guidance on how to design and implement a customer-focused journey that moves beyond the transaction and satisfied customers, to a relationship and culture that creates and leverages loyalty - and the profitability that comes with it. * Explains proprietary methods--such as the Customer Focus Maturity Model ® and Value Chain Labs ® --that teach readers the steps and tools organizations use to create, drive and optimize their customer focus. * Authors Bill Thomas and Jeff Tobe have used their 10-point framework to guide Fortune 500's, start-ups as well as non-profits in charting a customer-focused journey that matures, anticipates and delivers increasing levels of loyalty and profitability with their customers, and across their broader value chain. Anticipate will provide you with field-proven steps, tools and examples that you'll use to take your customer-focused strategy, execution and culture to the ideal level.

Leseprobe

CONTENTS

Chapter 1: Strategy—Creating and Destroying Customer Value

Assessing Your Strategy’s Potential for Success

Debunking Some Key Myths

Customer Focus—One Part Plan, One Part Roadmap

Chapter 2: Doing the Right Things for the Wrong Reasons

Addressing the Priority Predicament

Differentiating Customer Behavior, Satisfaction, and Loyalty

Don’t Measure What You Can—Measure What Matters

Chapter 3: Not All Customers Are Good Customers

Customer Segmentation Is Vital

Loyalty Generates Mutual Profitability

Mutual Profitability Starts the Customer Focus Journey

Chapter 4: When Customers Speak—Who Hears Them?

Level I—Voice of the Customer (VOC)

Advantages and Limitations of VOC

Chapter 5: Input Is Vital—But Involvement Multiplies the Value

Differentiation—One Touch Point at a Time

Teaming Turns Feedback into Dialogue

Chapter 6: It Takes Two to Be Engaged

Customer Focus Cannot Be a Department or Title

Expect Everyone to Play a Role

Create Roles for Everyone to Play

Maintaining Awareness of Expectations and Opportunities

Sample Customer Experience Readiness Survey

Chapter 7: Customer Focus Is a Process—Not an Event

Value Chain and Business Modeling

Mapping Customer Focus Pivot Points

Mapping Customer Experience Touch Points

Value Chain Labs® —the Ultimate Dialogue

Chapter 8: Culture—The Soft Stuff Is the Hard Stuff

Key Element 1: Develop a Value Creation Mindset

Key Element 2: Ask, Act, and Align Everything You Do

Chapter 9: Managing Change, Performance, and Talent

Key Element 3: Apply An Effective Internal Management System

Key Change Management Practices

Key Performance Management Practices

Key Talent Management Practices

Chapter 10: Leveraging Your Culture and Value Chain

Leverage Existing Loyalty

Increase Level II Teaming

Elevate Teaming to Partnering

Extend Level III Efforts Across the Value Chain

To Summarize . . .

Index

Cover image: Getty Images / © Rebecca Van Ommen

Cover design: Paul McCarthy

Copyright © 2013 by Bill Thomas and Jeff Tobe. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

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Library of Congress Cataloging-in-Publication Data:

Tobe, Jeff.

Anticipate : knowing what customers need before they do / Jeff Tobe, Bill Thomas.

p. cm.

Includes index.

ISBN 978-1-118-35691-3 (cloth : alk. paper); ISBN 978-1-118-41721-8 (ebk); ISBN 978-1-118-42023-2 (ebk); ISBN 978-1-118-43408-6

1. Customer relations. 2. Strategic planning. I. Thomas, Bill, 1955– II. Title.

HF5415.5.T63 2013

658.8’342—dc23

2012035833

Chapter 1

Strategy—Creating and Destroying Customer Value

Assess your strategy’s potential for successDispel common myths about strategy and its driversIntroduce the Customer Focus Framework and Maturity Model

It’s estimated that as many as 90 percent of strategies fail to deliver the value or results they were intended to.1 In most cases, that “value” is generally interpreted to mean shareholder value, return on capital employed, or some other proxy for a predictable and dependable return on investment. Some of those failures are significant, some are modest, and some are incremental—but in all cases, the feeling is . . . they could have done better.

Our experience shows two main reasons why strategies fail to deliver as promised. They were either faulty in design, or they were faulty in implementation. And oftentimes, it’s some of both. This holds true whether you’re trying to develop a broad business strategy or a more specific customer focus strategy. Chances are, if your organization has a formal customer focus strategy, you feel pretty good about its chances for success. And if you personally played a role in designing that strategy, you’re most likely feeling quite bullish about it. Let’s see. The following pages contain a brief assessment that will give you some insight into what you might realistically expect about your customer focus strategy’s likelihood of success.

Assessing Your Strategy’s Potential for Success

This self-assessment is meant to help you evaluate the potential for success of your business growth strategy and its underlying customer focus. Generally, the higher your score in a given question or area, the greater potential your organization has of succeeding in its customer focus efforts—thus generating the growth you want from your business strategy.

The thirty (30) questions address various aspects of the Customer Focus Maturity Model® (CFMM) and 10-Point Customer Focus Framework, which will be covered in great detail throughout this book. We’ve chosen questions that represent a wide range of customer focus critical success factors, but it is not meant to be an exhaustive or all-inclusive list of such questions.

NOTE: There are no right or wrong answers, only the answers that most closely reflect your company’s current state. Some of the questions may sound similar, so please read them carefully to understand the difference they’re meant to capture. You may struggle a bit on some of them trying to differentiate between a specific department or function in your company and the company as a whole. For this assessment, we are focusing on your company as a whole. Reflect the answer that most closely describes your views about the entire company. Once you have answered all thirty questions, there are instructions at the end of the assessment to help you through the next steps.

To begin, for each question, indicate which answer most appropriately reflects your current view of your company (note we use the term “company” to mean both for-profit and non-profit organizations).

Scan for printable copy

Access this assessment online at www.ANTICIPATEtheExperience.com/assessment or scan the QR code.

Once you’ve recorded your answer for each of the thirty questions, add up your totals for sections A, B, and C, as well as your Grand Total Score. Then look to the comments below to understand the implications of your ratings.

Questions 1–10 examine the strength of your company’s customer-strategy connection and your focus on the unique sources and drivers of customer value as a growth enabler. These questions generally correspond to Level I of the Customer Focus Maturity Model® and tie most closely to steps 1–3 of the Ten-Point Customer Focus Framework.

Questions 11–20 examine the extent to which your people are trained, equipped, and inspired to understand and do their part in creating and leveraging loyal customers. These questions generally correspond to Level II of the Customer Focus Maturity Model® and tie most closely to steps 3–7 of the Ten-Point Customer Focus Framework.

Questions 21–30 examine the steps you take to create a customer-focused culture that consistently generates the mutual profitability of true value chain partnerships. These questions generally correspond to Level III of the Customer Focus Maturity Model® and tie most closely to steps 8–10 of the 10-Point Customer Focus Framework.

Look at your scores for each of the three areas, and see which area(s) you might have the most room for improving relative to another. You can pay particular attention to the relatively weaker area(s) as you proceed through the book.

You can also look at your Grand Total Score. Generally speaking, we find that companies’ scores for this assessment correspond to the following maturity levels in the Customer Focus Maturity Model® (CFMM):

Scores Less than 75 = CFMM Level I

Scores Between 75 and 104 = CFMM Level II

Scores Between 105 and 120 = CFMM Level III

Anticipate is about identifying selected customers or customer segments, and taking specific steps to move them along your Customer Focus efforts to increasingly more mature levels; with the ultimate goal of gaining the mutual profitability associated with Level III relationships.

As you’ll see in our early discussions, we don’t believe a business strategy, if it truly is intended to drive growth and create value, will succeed unless it is built on the design and implementation of a strong customer focus. To better appreciate why and how organizations miss out on creating value, let’s look at some commonly held beliefs about the customer–strategy connection.

Debunking Some Key Myths

One thing about commonly held beliefs: They don’t always reflect the reality of the situation, or the wisdom to recognize it.

Myth #1: A Strategy Must Inspire Your People

First and foremost, at the heart of, and running throughout, any worthwhile business strategy must be the goal of creating customer value. It’s not the shareholders, C-level executives, or board members that tell you whether or not your strategy was successful. It’s your customers—and the decisions they make each day about your products and services and those of your competitors—that determine your strategy’s success. It’s those customer decisions that translate into sales, profits, and your ultimate return on investment. A good strategy must and should inspire your people—but it first must inspire your customers to act. If it doesn’t, then you end up with an inspired organization that isn’t as successful as it wants to be. If your desired end state is to be happy or inspired, regardless of your business’s success, then you don’t need a strategy. It’s pretty easy to end up happy, but broke.

To make customers act, an effectively designed strategy must recognize that growth isn’t about finding new customers for your products and services as much as it is about finding new ways to create value for your customers (both existing and prospective customers). That value often comes from being able to identify and meet the customers’ unmet, unstated, and unknown needs better than, or before, your competitors do. And that ability comes from building and leveraging a relationship and sense of partnership with a customer that uniquely positions you to anticipate future value streams that mutually profit both sides.

Myth #2: Not All Strategies Produce Change

They better! If they don’t . . . why bother?

Without getting bogged down in theory or academic definitions, a strategy is about the decisions an organization makes, that when implemented, create the most value over time. Strategies are about creating new, more productive, faster or cheaper, more unique, or more sustainable sources of value. Their core purpose is to create a future state that’s better than the current state. They are every bit about change!

And that is precisely one of the reasons strategies often fail or underperform in implementation. Companies fail to recognize the extent to which a strategy requires change—change in culture, change in leadership practices, change in customer-facing processes, change in customer decisions, change in employee behaviors, change in business systems, and so forth. Strategies are about anticipating where the next value-creating opportunities might be in the marketplace, determining what changes the company might have to make to exploit those opportunities, and then ensuring the company has the capabilities needed to execute them effectively. We’ll spend a significant amount of time understanding and addressing the change factors—both those that accelerate and those that frustrate—in the implementation of an otherwise sound growth strategy.

Myth #3: Strategies Must Be Achievable

Unfortunately, many organizations first determine what they can afford, or what their current capabilities are, and then use those parameters to shape (limit) their strategic ambitions and choices. So “achievable” often first becomes a question of being affordable or readily doable. We disagree with that thinking in two very important respects.

First of all, no strategy should be developed in a vacuum. A company’s financial capacity must certainly be a key consideration because no company has enough money to tackle all the things they want to tackle at a given point in time. There’s only so much money to go around. But too often the financial considerations come into play before the rigorous market considerations, or they’re considered simultaneously. Either way, the outcome is usually a strategy that was based more on affordability than on market opportunity.

An effectively designed strategy must first be based on an unrestricted, blue-sky search for the most promising market opportunities or investment options we might pursue. Some of those options might be totally out of reach financially, but they should still be on the long list of strategic possibilities. Once that long list is developed, then financial considerations can come into play to help prioritize which of the options on the long list we can afford to pursue. It’s a cart-before-the-horse kind of situation. We shouldn’t look at what we can afford first and then look for options that fit within those financial parameters. We should develop our list of most optimal options first, and then see which ones we can afford—which ones have the most favorable cost-benefit value. It might seem like a play on words, but it’s a very real and significant mindset that can mean the difference between a breakthrough strategy and a benign strategy. (See Figure 1.1.)

Figure 1.1 Improving the Flow of Strategic Planning

Secondly, we agree a strategy must be doable, but we also believe it must represent some degree of stretch. It’s better to achieve 80 percent of a strategy that dramatically changes the game for your company or your industry, than to achieve 100 percent of a strategy that creates only modest or minimal change or improvements in your results. If you aim high in your growth goals, you may or may not get there. But if you aim low, you certainly won’t get there. Too many companies talk about game-changing results but settle for incremental tactics or initiatives when building their strategy.

There are many possible reasons companies end up creating a strategy that lacks sufficient stretch. One of the more common ones we see is fear of missing your strategic targets. Sentiments that we’ve heard in more than one strategic planning meeting often sound something like this: Let’s set ourselves up for success and commit to strategic goals that we know we can hit. Who would argue the logic of that? We would!

In 2000, a popular movie, The Patriot, portrayed selected battles of the American Revolutionary War. In one scene, a Continental solider and two of his young sons are staging an ambush of British soldiers. His instructions to his sons, each armed with musket in hand, was “aim small—miss small.”

Similarly, when it comes to a company’s customer focus, far too many companies also aim small. They settle for the low-hanging fruit. Things like customer service skills and recovery techniques, voice of the customer (VOC) programs, customer satisfaction measures (CSM), or loyalty metrics such as net promoter scores (NPS) and others—while playing an important and valuable role—are small hits that usually yield small or incremental wins.

As we’ll discuss, an organization’s ability to achieve great things with its strategy will depend on its willingness to commit to a customer focus that stretches well beyond these and other incremental steps.

Myth #4: Strategy Defines a Desired State or Vision

This myth is somewhat viable but not sufficiently true. The business journals are stacked high with examples of strategies having a compelling vision or desired state but where that vision was only partly or minimally achieved. Just as important as that desired state or vision, if not more important, is that a strategy must also define a roadmap for reaching that end state. We’re continually surprised by the number of times an executive team will think their strategic planning job is done because they have fully vetted, defined, and justified the company’s strategic direction. Then they mistakenly assume they can just “turn it over” to the next level of management to implement it. Effective planners must also focus on the doing, or execution phase, of their strategy. Similarly, those who will be tasked with managing the execution should have involvement in the defining and planning of it. Far too often, those who plan and those who execute are separated by two discrete processes. An effective strategy should focus on implementation as much as it focuses on planning.

The same challenge often exists in the company’s customer focus. We have seen numerous companies launch a specific customer-centric practice or an initiative du jour only to see it die on the vine. Among the myriad reasons or causes for false starts or short-lived initiatives, common causes typically include:

Not engaging the customer

before

designing and/or launching the initiative.

Not ensuring everyone internally is aligned and equally motivated to support it.

Not knowing what to do with the results or not having a longer-term plan or process in place for continually leveraging the effort.

Not anticipating or dealing with the types of resistance or obstacles one might encounter.

These so-called execution derailers create problems that many companies don’t anticipate and can’t overcome or effectively manage. As a result, implementation of their customer-centric initiative, or their strategy in general, fails or falls short. In sum, you need a solid customer focus to shape and drive your strategy, and you need to be a great implementer of both.

Any source of competitive advantage that is not based on doing something truly unique, wonderful, and imaginative for customers, is simply going to disappear.

—Gary Hamel, named by Fortune magazine as “the world’s leading expert on business strategy”

Customer Focus—One Part Plan, One Part Roadmap

An effective business strategy must first and foremost inspire your customers to act. It must produce a change inside and outside that is more valuable to your customers than the current state. It must represent an achievable stretch. And it must include both the desired new end state, as well as a path for getting there.

Over the years, we have come to recognize that any customer-centric business strategy generating any amount of success has contained the same 10 key elements. These 10 elements have proven to be critical for both effective design and effective implementation. And the degree of success for a given organization’s strategy depends on two variables around these key elements. Those two variables are:

1. The time it takes the company to see the value of and effectively develop and implement each of the 10 elements

2. The degree to which all 10 elements are aligned with each other and aligned with the rest of the business

In the chapters to come, we’ll use our 10-Point Customer Focus Framework to illustrate the key steps, techniques, and examples companies use in each element to create a clear and compelling linkage between their customer focus and broader growth strategy. This framework, in effect, provides the template for a solid customer focus plan.

The 10 elements are presented in Figure 1.2. We have listed them in the most logical order such that each subsequent element builds on the prior one. Please note, however, that in practice we have seen many different sequences followed. We have even seen some companies try to skip one or two particular steps—only to learn a tough lesson from it later down the road. More on some of those lessons later.

Figure 1.2 10-Point Framework for Customer Focus

As for that roadmap we’ve been placing so much emphasis on, a company typically goes through different stages or levels of success in terms of implementing its customer-centric strategies. Using our Customer Focus Maturity Model® (CFMM), we’ll show you the three main stages (maturity levels) of that implementation journey, the tips and traps (lessons learned) of each stage, and suggested techniques and examples to move the organization from one stage (or level) to the next. The basic version of the CFMM is shown in Figure 1.3.

Figure 1.3 Customer Focus Maturity Model®

Our CFMM is based on more than two decades of working with various organizations in the design and implementation of their customer-focused strategies. It is based on the efforts, results, and learning of those organizations over time and describes the path or journey most organizations take as they seek to put customers first among their business priorities. The model is used to identify the drivers, opportunities, and techniques needed to increasingly optimize an organization’s customer-centric strategy by continually progressing until they reach Level III, which represents optimal profitability for both customer and supplier.

The model uses four dimensions to define the customer–supplier relationship: the supplier’s approach to the relationship; the customer’s view of the value provided by the supplier; the types of customer–supplier connections involved; and the supplier’s maturity level in terms of leveraging the total relationship into mutual profit growth.

The model uses three maturity levels (Levels I, II, and III) to describe and evaluate the techniques used in, and the interactions between, each of the four dimensions—and the resultant impact on mutual profitability at each level.

Our ultimate goal is to show you the benefits of and the way to achieve a Level III customer focus. This is the level where your organization operates as an end-to-end process that exists for one sole purpose: to anticipate, deliver, and profit from creating customer value. A level where everyone in every function is aligned—from the executive level to the entry level—and from employees who face the customer to employees whose faces you never see, around that one common purpose: developing a culture that connects the things going on inside your company to the things going on outside—both with your customers and your suppliers—to create a new way of viewing and leveraging your entire value chain.

Both the 10-Point Customer Focus Framework and the Customer Focus Maturity Model® will be used to guide us through the planning, design, and effective implementation of a truly customer-centric business strategy. As such, we will move back and forth between the two models frequently, showing how and when companies deploy a part of the framework to improve a certain level of customer-focus maturity or how they apply it to get to the next level of maturity. In general, the two models map together as shown in Figure 1.4.

Figure 1.4 Two Models for a Customer-Centric Business Strategy

In the next chapter we will begin with the strategic drivers that should, but too often don’t, form the basis of starting any customer-centric strategy or initiative.

1 Scott Glatstein, “Why Strategies Fail: Bridging the Gap between Thinkers and Doers,” MWORLD, Fall 2008; The Journal of the American Management Association, Volume 7, Number 3, page 26.

Chapter 2

Doing the Right Things for the Wrong Reasons

Link customer focus and your growth strategyDifferentiate between customer behavior, satisfaction, and loyaltyDetermine the metrics that matter the most

Interest in, support of, and resistance to customer focus can come from any number of places in a company. Just looking at the range of inquiries and requests we receive about it, we note that sometimes the interest comes from a CEO, an executive director, or a COO who wants to increase a business’s customer intimacy to grow sales, membership, or gross margin. Other times the interest might come from a senior sales leader (e.g., a sales VP, a sales GM, or a regional sales director) who is concerned about customer retention or account penetration rates, or from a chief marketing officer (CMO) who is trying to advance the organization’s brand or understand and improve its win-loss rates in new customer bids, proposals, and tenders. And yet in other situations, the impetus might come from the head of customer service or customer care, or even from a chief customer experience officer (CXO) who wants to get better traction and broader company-wide involvement in the company’s customer experience campaign.

No matter how they frame their initial questions, or what they describe as their respective reason for thinking about customer focus, the conversation with each of these different players must eventually get back to the same initial fundamental questions: What is the strategic benefit of focusing on the customer? How does this customer focus you’re asking about help you shape, drive, or support your business strategy? You would be surprised at how few of them think in these terms. That’s why the Customer Focus Framework starts with strategic drivers. If you are pursuing customer focus for the sake of happier customers, or because you instinctively feel it is the right thing to do, you’re going to come up short. Here’s an actual example that happens more often than you might think.

10-Point Customer Focus Framework

#1. Strategic Drivers

Several years ago, we were contacted by a chief commercial officer (CCO) who was very perplexed and frustrated by his company’s performance in its industry’s customer satisfaction rating indices. For three years running, the company’s performance against benchmark peers had been slipping, and it got to the point that competitors were starting to use the survey results to their advantage (and to the disadvantage of this CCO’s company). He wanted us to launch a separate survey process—specifically for his company—that would help identify and resolve customer satisfaction issues before the next industry survey was conducted. The results he ultimately wanted were to see his company rising again in the industry-wide survey.

In one of our early meetings with the CCO and his team, we probed to really understand the business reasons for focusing on this survey. From their responses, it was clear that the survey was quite visible and highly relied on by the major players in his industry. It was also clear that he and his team had been very embarrassed when a customer confronted their CEO about the survey results—even though that particular customer hadn’t responded to the survey. Finally, they knew that some of their key competitors were getting great publicity, and, they assumed, market leverage by having a formal customer focus or customer experience (CE) campaign or process.

We persisted with our questioning. What is your business reason for doing this? What business results do you expect to gain from it? Their answers continued to focus on perceptions, reputation, bragging rights, and other anecdotal or subjective reasons. They even used the term competitive advantage but weren’t able to describe what that looked like for them or how it related to the survey. Finally, we pushed the issue by saying: “So if we are able to get your ratings up in the industry-wide satisfaction survey, but your revenues or profits or market share actually go down, will you be happy?” They ultimately got our point. Customer focus has to be grounded in or explicitly linked to your business or growth strategy goals. Happy customers or better ratings aren’t the end game we’re after. What we’re after is a happiness or better ratings that drive customer actions—actions that have an economic benefit for us (revenue growth, market share growth, margin improvement, etc.).

Addressing the Priority Predicament

One other essential reason why any customer focus effort must be tied to your strategy is something we call, for lack of a better term, the priority predicament. Michael Dell, the founder and CEO of the personal computer giant Dell Inc., once told a group of his managers that one of the hardest parts of strategic planning isn’t choosing the things you’ll do, it’s choosing the things you won’t do. Organizations are usually pretty good at coming up with new initiatives and new priorities. But they aren’t particularly good at killing off initiatives that aren’t progressing as planned or aren’t as important as they once were. The net result is that priorities continue to accumulate to the point where there’s so many that to call any of them a priority would be a serious misnomer.

When it comes to introducing a customer focus initiative or process, the natural reaction is for people to see it as a new priority—a layer of work that is being added on to their already full plates. “I already have my own job keeping me busy 80 hours a week, and now you’re asking me to spend time on this customer program?” You can hear it echoing through the halls right now—in your own organization—can’t you? The point is, customer focus can’t be an added layer of work; instead, it must be an inherent part of everyone’s already existing work. It can’t be something we do in addition to our normal job. It must be our normal job. It must be part of our normal job that we do better, or do differently, to enhance its impact on the customer’s experience. Getting to that point depends on culture to a large extent, a topic we’ll talk about in our Level III discussions. The other part of it is that people must be able to clearly see the customer–strategy connection so they view customer focus not as a new priority, but as a process for aligning and achieving already existing business priorities.

Here is an exercise (see Figure 2.1) we often use when helping management teams better understand this connection. The left column lists 20 common reasons (factors) for having a formal or structured customer focus. The middle column has participants check those economic outcomes impacted by the 20 common reasons. (The items listed in each of these two columns are the ones we use most frequently, but they can be changed to better suit the unique goals or challenges of a given company). And the last column asks them to rank how important each of the 20 reasons is to the organization’s strategy or business goals. (Similarly, any number of different ranking scales can be used.) Access the Customer Strategy Connection online at www.ANTICIPATEtheExperience.com/strategy or scan the QR code.

Scan for printable copy

Figure 2.1 Customer–Strategy Connection Exercise

Sometimes we use it as a questionnaire for managers or leaders to complete and compare results with one another. Other times, we use it as a discussion guide and facilitate a rigorous group conversation about it. There are no right or wrong answers per se. The understanding comes more from the related dialogue and debate. Whether or not the participants agree on every factor doesn’t matter. By the time the discussion is over, most participants will see or appreciate the connection between the customer focus and the company’s business goals.

Note: Periodically, we’ll add a Column IV to the above worksheet, which we label as Strategic Initiatives, or we’ll replace Strategy Importance in Column III with Strategic Initiatives. We also provide the participants with a list of the company’s current strategic initiatives—each one designated by a unique identifier tag or code. Then we ask participants to identify which Strategic Initiatives are directly impacted by each factor in Column I.

The Customer–Strategy Connection Exercise can be very revealing and very important in your early efforts to help people understand the business drivers behind your customer focus. It forces people to think more deeply about the tangible impact of an initiative they might otherwise consider to be soft, intangible, or unnecessary. This is a common and significant perception gap in many organizations, and it most likely exists in yours although it might not feel that way to you just yet. But in the many surveys, assessments, and focus groups we conduct in various companies, it’s clear that the vast majority of managers and employees don’t know anything about the following:

The average cost of a customer complaint

The average revenue of a lost customer

The top five reasons why customers defect

The average sales costs of acquiring a new customer

The average annual revenue and/or profit per customer

The lifetime value of an average customer

The company’s win–loss ratio on new prospect bids and proposals

The top five reasons behind those wins and losses

Can your managers or employees answer the above questions for your organization? Do they care about those questions or answers? Without this basic grounding in the customer-driven income and expense variables, it can be difficult getting people to see the economic, more tangible aspects of focusing on the customer.

Differentiating Customer Behavior, Satisfaction, and Loyalty