Many marketing organizations are playing a strategic role in helping to transform their companies from being operations- or product-centric to becoming more customer-centric.
To have an impact on acquisition, retention, and growth, marketers are articulating, developing, and implementing customer-centric marketing strategies that have an impact on the customer buying journey and experience.
If you have a similar goal for 2015, you and your marketing team will need to gather internal insights, capture customer input, and conduct research to help you select the most appropriate strategies. That process takes time and resources, but once it is completed you will be able to identify trends and customer requirements, and you'll also know how they stack up against your company's competitive strengths, opportunities, weaknesses, and threats.
The purpose of that work is to paint a persuasive picture of how your company would be different from what it is today and what programs and skills you need to implement the strategies.
Formulating customer-centric strategies is a key step in the transformation. But that step can be easily derailed without strong leadership commitment, a solid change management plan, and appropriate performance management. So, buy-in from all the major stakeholders is essential to success. Only thereafter can change management and implementation really begin.
Metrics and Change Management
The change management process often requires a company to revisit its positioning platform, brand strategy, customer segmentation and targeting priorities, online-offline channel integration, pricing, the product road map, and many other items.
Metrics are a key part of the change management process. People tend to manage what is measured, and they tend to adopt behaviors that are being measured and rewarded.
To ensure the customer-centric vision takes root, you need to establish clear metrics that are linked to the company's strategic, operational, and financial goals. Those metrics will help with determining priorities and shifting the orientation of the company toward a more customer-centered business model. Ideally, the marketing team will work with the executive team to establish the metrics.
Once the metrics are selected, it is a good idea to go back and use historical performance numbers to create a pro forma to help validate the metrics before they are fully deployed. In some instances, new tools, processes, and systems may need to be developed or purchased to support both the change and the performance management.
Five Metrics Categories
The metrics you choose should fit the business model and strategy you create. In working with companies on this journey, we have found that organizations need at least one metric from each of the following five categories:
1. New-business metrics
These are metrics related to acquiring new customers and to closing new deals related to the customer targets defined in the strategy. Some common metrics in this category include new customer acquisition, net new deals, attach rates, upgrades, market share, and revenue. Remember, it's not about the number of new customers or deals, it's about measuring whether the strategy is working and producing the desired outcome.
2. Competitive metrics
These metrics provide some level of insight into how well your customer-centric strategy is working compared with your competitors'. Metrics to consider in this category include rate of customer acquisition, market share, and growth rate comparisons by industry/vertical, by geography, etc. Win/loss metrics fall into this category as well. Again, you are selecting the metrics that will best enable you to decide how well the strategy is working and what adjustments are needed.
3. Customer-value metrics
These metrics provide information about whether the value of the customers designated in the strategy are growing. Loyalty, referral rates, retention and churn rates, rate of profitable customer growth, and lifetime value are all examples of metrics that fall into this category.
4. Market-value index
The MVI is an actual index that compares the market's perception of how well your company is performing versus competitors across critical purchasing criteria and other value attributes to that of competitors. You may need several MVIs if you have several customer-centric strategies that take you into different markets.
5. Product innovation and adoption
These metrics provide data points to help assess whether the company's innovation engine is on track with customer needs and wants. The key focus here isn't on "selling products" but on whether the products the company is betting on are supporting and enabling the customer-centric strategies and propelling customer growth. Metrics often used in this category include rate of product adoption, time to market, and revenue for new products.
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Selecting the metrics that best fit your business model and strategy is one of the key steps in creating a customer-centric company. To have a successful transition, you must have strong leadership commitment as well as buy-in from all stakeholders.
(For a case study of how the transformation of a company from product-centric to customer-centric improved its impact and alignment, see case study No. 36—Winton Global Homes. Registration required.)
