How important is customer centricity?
How can companies leverage measurement to become more customer centric? What role is technology playing? What role should it play?
These are just some of the questions that we grappled with at a recent round table panel discussion in Toronto. All of our participants at the roundtable, which was sponsored by Software AG, agreed that customer centricity directly and deeply affects the bottom line.
Others went further. For them, a clear and measurable understanding of the customer was an essential strategy to deal with massive shifts in their business model. Technology might not be a “silver bullet” but it was clearly a essential part of how businesses need to address this issue.
Our participants from the retail sector seemed hardest hit, or perhaps most aware. Predictably, retailers were concerned with issues like disintermediation and hyper competition from on-line and other sources. Today’s consumers have a lot of choices and they know it. But retailers are also feeling the impact of technology in another way – as it affects their product lines.
We heard issues throughout the spectrum. We heard the example of the issues facing camera equipment retailers as they confront the “game changing” smart-phone cameras. We heard from an example of a businesses who at one time might have been regarded as having a “captive audience” noted that they felt they might also seeing the impact of the smart phone. Where once people might shop or buy a book as they wait or travel – now they have a pocket full of entertainment or work to keep them occupied. Not only is technology disrupting how they do business, part of their competition is coming from consumer technology itself – particularly smart phones.
This one-two punch was clearly having a major impact on round table participants regardless of industry or size. As one of the participants from a major bank reminded us, “banking is retail – and it’s incredibly competitive.” Yet each of our participants seemed up for the challenge.
They felt that there was a solution and it lay in understanding their customers and adapting corporate behaviour to present new offerings or to make their offerings more engaging.
Their creativity was inspiring. While specifics of conversations at these round tables are confidential, I can tell you that two participants from the group came up with a great idea for a synergistic mutual offering during our discussion. Our panelists clearly felt if they could get the right information at the right time and leverage it to develop these compelling offerings they would indeed have a fighting chance in a hyper-competitive and disruption prone market place.
The role of technology
On another related issue, there was near unanimity. While external technology was part of their challenge, their internal use of technology was lacking. IT was seen more often a barrier than an asset.
The litany was depressingly familiar. Some of the participants expressed a real impatience with the ability of IT departments to really understand their needs and help them. There was impatience with business systems that are “fixed in the next version” and the “back and forth battle” with IT.
But was IT the only issue? One participant from a government agency remarked that it had excellent front line staff, but any attempts to measure or reward exceptional behaviour were blocked by project managers. A leading retailer expressed a similar frustration only with their ability to measure and assess their internal targets. “We have KPI’s but we don’t measure them very well,” he said. “Even when we do measure things, how do we know what’s appropriate?”
Can a bank learn?
It’s no surprise to anyone in the industry that Canadian banks are leaders in terms of online and “real time analytics”. Our discussion reflected this. Many of the banks have been pushing the envelope in this area. “Real time analytics” is at least in part a product of advances in in memory storage that give companies the ability to do vast computations in memory and in real time.
Analysis that once took days to run is now completed in times like a half an hour or even less. Speed is invaluable in dealing with issues that need real time assessment. Banks have been leading the charge with fraud and loss prevention. Many of us have had the experience of receiving a call only hours after we’ve made a series of unusual or large purchases. ‘
But it doesn’t end there. Banks are taking this beyond loss and fraud prevention and into the world of customer experience metrics. Despite how we might feel as consumers, Banks are not only adept at measuring, but are also responsive to the measurement of the customer experience. One major bank did a revamp of their web presence recently based on the customer experience feedback. When anomalous or surprising measurements are detected – particularly in customer experience metrics – banks were likely to push hard on “root cause analysis” to turn measurement into action.
Master Data Management
The inclusion of new and diverse data sources from private partners to public cloud and merging that for analysis is the promise of the new real time analytics. With this new breadth and depth, there is, not surprisingly a new model of how we look at how we gather, store an process data. Master Data Management (MDM) is essentially a “data warehouse that takes in data from other customers, partners and a variety of sources. Once again the idea of the right API’s is a critical component. But it goes beyond that to a new design for this “virtual data warehouse.”
Business to Business
Master Data Management is essential in retail or “Business to Consumer” (B2C). It’s also an incredibly powerful lever in Business to Business (B2B) was well. We heard a great example of how a computer board manufacturer was able to respond to massive orders in less than 3 hours because of the ability to monitor their – and their suppliers’ warehouse stocks in real time. As anyone who knows the razor thin margins of the tech industry will attest, this could be a large advantage for pricing and winning large orders that can be make the difference between profit and loss.
Can IT address the challenges?
If customer centricity is the new challenge of business – and if metrics and measurement are the new tools of the trade — one thing is certain. IT has no choice but to embrace, understand and deliver on this promise.
The increasing power of marketing – the new “CMO” combined with forces like consumerization and cloud almost guarantee that IT departments that can’t deliver will be pushed aside, ignored, or made irrelevant. Even with great relationships at the corporate level, even with cooperation of the CMO/CIO, the need is too great, and the risks of being left behind are too compelling for anything –even IT – to get in the way.
Cloud providers are lining up with offerings and where there is a vacuum, they will rush to fill it. Even though there are pitfalls for those who dive in without IT’s help, the siren’s call of client centricity and the need for the measurement that supports it is simply, if our roundtable is to be believed – too compelling.
(Jim Love is the CIO of IT World Canada)
