A recent McKinsey survey shows, that in 2020 more than 75% of B2B buyers preferred to buy online. Only 20% of buyers want to have regular face to face meetings, when we are back to a new normal. This is another obvious indicator, that change is everywhere.
This brings me to an observation I made recently. Plenty of companies are questioning running projects and hesitating to start new ones before having some questions answered.
- How are we going to measure and what are the right Key Performance Indicators?
- Can customer loyalty be measured?
- How are the indicators changing in the light of culture, industry and segment?
- How shall we bring the organization aligned for the sake of customer loyalty?
- Who on this planet shall drive all this and what mandate is needed?
Let me take you on a provoking journey
The interesting with all the obvious questions is, that not one can be solved with digitalization, IT, tools or wishful thinking. They all are essential part of the company’s DNA, defining how your customer perceives you and how loyal your customer will be.
In a time, when personal contacts are minimised and obviously doomed to stay on a low level, companies need to finally walk the talk when it comes to customer centricity. I haven’t read a strategy lately where customer centricity isn’t at least positioned as key to the company success. But what happened so far? Besides massive projects in eCommerce, Customer Relation, Marketing, Data and so on, silos keep existing, and customers often haven’t been moved any closer to the core of business.
Processes are the same as introduced 20 years ago, colliding with new technologies and hoping these will fix the gaps. Companies keep being busy with own internal challenges and yes, having processes working reliable and steady isn’t easy at all. And yet, Business Cases are calculated with bold assumptions, aiming on massive workforce reduction and improved efficiency, as this would be the only, the major benefit digitalization brings. “Never change a running system!” is what you hear often, or “You better do not touch that process!”
It takes some moments to realize, that technology is not the silver bullet to solve what old processes and a reluctant mindset cause. But re-designing a complete process usually is not part of a single project, isn’t it? “Re-designing backend processes is nothing a single customer facing project can effort”, they say. “Not the whole process is needed to be re-designed, but the relevant parts”, I reply – step by step.
Customer facing projects these days should not be measured by costs and efficiency only. In fact, they never should have. The voice of the customer is louder than ever and when customers, years back, where able to talk about a bad experience to a hand full of people only, today they reach easily hundreds if not thousands. B2B customers won’t put their bad experiences on Social Media, at least I haven’t read such posts, but they talk and tell. Networks are growing fast and information flows like beverages on a good party. The chemical industry is already a huge network where people know each other across companies.
But how to capture what customers think and what moves them? How to understand what their challenges are and why your company is being more and more replaced by others, after 40+ years of successful business, without even noticing? Even if you’d have the best tools working and implemented, you still need persons with the mandate of driving customer loyalty. These very persons should be part of the pain a customer suffers, a lawyer of your customer. The questions stated at the beginning would be answered by this people. It needs to be evaluated where such resources would be located. Certainly, there are many more things to consider.
Why not getting started?
Well, measuring loyalty is quite like discussing the global warming. There are the ones saying that there is no global warming and there are others, saying we are in the middle of it. The truth is, there is not the one, academic proven way of measuring customer loyalty. Customers are complex, individual and driven by different challenges. Clustering them into an industry or putting them in relation to products and catalogues only, does not do justice to the cause. That is why asking “Do you have loyal customers?” is answered very often with yes, without having any proof. People had a good meeting, your customer is fan of your quotation process, loves the way how your company handles complaints. But does this makes a loyal customer?
One thing you need to accept, is that your one size fits all strategy might not be the best lever to transform your customers into loyal ones. It is good for you, and it looks good in your budget monitoring, for sure. Customer centricity, to build loyal customers, requires more than in-house sugar-coating.
I am calling for a new role, the Customer Loyalty Punk. A role equipped with the mandate to generate loyal customers, cherishing them and to relentless ask how projects will impact the measurable loyalty of customers. Literally every project – because the only reason you can pay these projects, is because you have a customer paying for your services and products. This role is a unicorn, worth more than you pay. Knowledge in Product Management, Customer Service, Planning, Logistics, Controlling, IT and Business Management makes this role a precious asset for every company, reporting to top senior management only.
Such a view on projects easily changes purpose. The problem you are solving for your customer becomes more relevant than the question, how to reduce manpower and operating costs. Not saying, that it becomes obsolete. And the calculation is pretty simple. Bottom line targets find a natural end. There is a point in time, you can’t go any further. Top line growth is endless, you can always do better, generate more loyal customers who are willing to increase the wallet share with your company and to develop rather smaller customer to such ones, fitting to your predator-prey system.
What is loyalty?
Customer loyalty is demonstrated by repeat purchases of a product even when the customer has choices of competing alternatives. Having competing alternatives is important in this context. If your customer has no alternatives because you are the only one who produces in such a quality and quantity, loyalty might not be the term to use, but dependency.
Now, since one has a clear understanding on the challenge ahead, it is easy to derive measurable targets with real business impact. This is the moment when business capabilities meet technical capabilities and processes. Not out of the blue, but with clear purpose and connected to the company’s and to the customer’s strategy.
To make it clear: Customer Loyalty ≠ Customer Satisfaction
Customer satisfaction measures the moment in the here and now, while customer loyalty looks into the future, aiming for repetitive interactions, even if there is a sea of alternatives.
All of a sudden, discussions around features and functions find an end as the customer and its challenges are on the table. No spreadsheet wallpapers with endless requests in line items, but a new way to collaborate with your supplier, who most likely will become a strategic supplier, a strong and fundamental ally.
Imagine, you would share your objectives with your strategic supplier and its role would be not to deliver what you ask in spreadsheets, but to be an active part on your path to solve those challenges.
Speaking of challenges, there are plenty. Times are over, when your biggest problem was implementing forecasting and calculating business rules in your web shop. Tomorrow’s customers have a bigger challenge to solve – sustainability.
Not only governments and Non-Government Organizations are making lots of pressure, but customers are also. They are being drifted by their customers and at the end of the value chain, there is a consumer like you and me, and we are making choices for a better, more sustainable future.
Having the CO2 footprint available, buying mass balanced products or having certainty that certificates are fulfilled and that circularity of products is given and proved, is the new challenge you have to consider in your eCommerce strategy. This requires a new thinking in solving challenges and connecting new systems. All of a sudden you will have Blockchain technology in your project and there is no way around in talking to experts about topics, you never heard before. Customers want to mix a product with 30% bio mass and 20% of recycled chemicals. This has a tremendous impact on your backend processes, which might not be even running in your core processes. Today you might offer contracts based on quantity and pre-negotiated prices for a better, long-term planning. Tomorrow your customer will ask you for sustainability metrics and your footprint to have this communicated in their value chain, proving to their customers that they take sustainability serious. If you ain’t ready to support this, you might be the lame duck you never wanted to be. Price stays relevant but will get a new competition. And yes, it might be that sustainability is another reason, your customers don’t want to see you in person, but consume your amazing digital services.
With this in mind, how can someone still say that solving backend topics is not of its concern when defining a new eCommerce strategy? Stop thinking in technical migration projects, focussing on what was needed in the past and what might be needed in future. Be creative, go out there and understand the challenges of your customers, and you will start adding value to their life. Create profiles of persons, who will be needed to deliver the promise. Try to put a smile on the face of your customer so that they leave your service with a thrill of anticipation for the next time. Always make your work personal, define it with the best of you. Take responsibility, face the music others caused and think in business growth, satisfaction and loyalty as your currency. The rest is a cakewalk.
“You don’t earn loyalty in a day. You earn loyalty day- by- day.” – Jeffrey Gitomer