Risk professionals aren’t prepared for the age of the customer. Empowered consumers and changing market dynamics are upending longstanding business models and lines of operation, but risk professionals largely stand pat, and continue to neglect risks related to their organizations’ most critical asset – company reputation. Yesterday we published a report on "Brand Resilience" that will hopefully help you change that legacy risk mentality.
Corporate Reputation Is Increasingly Valuable…
Companies today rely on their reputation to generate greater portions of their revenue, attract new customers, and retain existing ones. This is why we see:
What’s the top imperative at your company? If it’s not a transformation to make the company more customer-focused, you’re making a mistake. Technology and economic forces have changed the world so much that an obsession with winning, serving, and retaining customers is the only possible response.
We’re in an era of persistent economic imbalances defined by erratic economic growth, deflationary fears, an oversupply of labor, and surplus capital hunting returns in a sea of record-low interest rates. This abundance of capital and labor means that the path from good idea to customer-ready product has never been easier, and seamless access to all of the off-the-shelf components needed for a startup fuels the rise of weightless companies, which further intensify competition.
Chastened by a weak economy, presented with copious options, and empowered with technology, consumers have more market muscle than ever before. The information advantage tips to consumers with ratings and review sites. They claim pricing power by showrooming. And the only location that matters is the mobile phone in their hand from which they can buy anything from anyone and have it delivered anywhere.
This customer-driven change is remaking every industry. Cable and satellite operators lost almost 400,000 video subscribers in 2013 and 2014 as customers dropped them for the likes of Netflix. Lending Club, an alternative to commercial banks, has facilitated more than $6 billion in peer-to-peer loans. Now that most B2B buyers would rather buy from a website than a salesperson, we estimate that 1 million B2B sales jobs will disappear in the coming years.
We all know that empowered customers expect brands to deliver contextually relevant experiences based on their individual preferences for content, timing, location, and channel(s). How do customer insights (CI) professionals decide the appropriate course of action – not just for a single customer, but for all customers? How do they then execute on those decisions and measure the impact? Systems of engagement like Real-Time Interaction Management (RTIM) provide answers.
Forrester defines RTIM as: Enterprise marketing technology that delivers contextually relevant experiences, value, and utility at the appropriate moment in the customer life cycle via preferred customer touchpoints. In my latest brief “Demystifying Real-Time Interaction Management,” I explore evolving RTIM requirements.
A version of this post originally appeared on AdAge.
It's harder than ever to earn your customers' loyalty. They are "always on," have instant access to myriad choices, and can easily find the cheapest prices from any supplier. Many companies think they've solved this with a loyalty program, but the competition is stiff there, too. On average, consumers belong to eight loyalty programs -- the majority of which are ruled by points, discounts and financial rewards. And let's face it: These transactional benefits are more about increasing frequency and spend than influencing emotional loyalty and devotion to a company.
The bad news? Traditional approaches to loyalty don't cut it anymore.
The good news? I'm not going to tell you to scrap your loyalty program. But, in my new report on customer loyalty, I am going to tell you to reframe how you think about your program. It should be treated as one of several tools -- alongside customer experience, brand and customer service -- that helps foster customer loyalty wherever customers interact.
Be A Loyalty Company, Not Just A Company With A Loyalty Program
Truly great loyalty strategies create a meaningful exchange of value between the company and the customer. This exchange encourages customers to share all kinds of profile, preference and behavioral data. And the insights derived from that customer knowledge have broad applications for all customer-facing strategies, and should radiate out across the enterprise to do the following:
CMOs historically focused narrowly on marketing and promotion. That’s not enough in the age of the customer. The CMO of 2015 must own the most important driver of business success -- the customer experience -- and represent the customer’s perspective in corporate strategy. Andy Childs at Paychex is a great example -- he owns not only traditional marketing but strategic planning and M&A.
Earlier today, we published a report that dissects global risk perceptions of business and technology management leaders. One of the most eye-popping observations from our analysis is how customer obsession dramatically alters the risk mindset of business decision-makers.
Out of seven strategic initiatives -- including “grow revenues,” “reduce costs,” and “better comply with regulations,” -- “improve the experience of our customers” is the most frequently cited priority for business and IT decision-makers over the next 12 months. When you compare those “customer-obsessed” decision-makers (i.e. those who believe customer experience is a critical priority) versus others who view customer experience as a lower priority, drastic differences appear in how they view, prioritize, and manage risk.
Customer obsession has the following effects on business decision-makers’ risk perceptions:
Risk concerns heighten dramatically across several risk types – especially reputational risk. Reputational risk concern more than doubles for customer-obsessed decision-makers, and other risks also see significant increases, including corporate social responsibility (CSR) and sustainability risk, regulatory and compliance risk, and talent and human capital risk.
Rapidly evolving customer expectations continue to drive changes across all facets of business. Consumers and business customers increasingly expect real-time access to status, service, and product information. Rapidly changing consumer expectations ripple throughout the supply chain, shortening product cycles and requiring more agile manufacturing capabilities.
Forrester believes that 2015 will serve as an inflection point where companies that successfully harness digital technology to advantageously serve customers will create clear competitive separation from those that do not. CEOs will shift more investment funds to creating digitally connected products and solutions. Products like connected cars, connected running shoes, or connected aircraft turbines are creating new value propositions that tie these products closer to the customer engagement life cycle and help create new business models. Data as a product or service will create new revenue and customer value streams. For example, sensor-embedded tractors already generate data that power John Deere’s FarmSight service. And as industrial players like General Electric, Philips, Robert Bosch, and ABB learn to act more like software companies by creating value through software, their underlying business models will change rapidly.
As businesses pursue digital transformation, their CIOs will reset their priorities accordingly. Together with my colleagues Bobby Cameron, Nigel Fenwick, and Jennifer Belissent, we brought together the top predictions for CIOs in 2015. In particular, we predict that CIOs will:
For as long as there have been children and travel, frustrated parents have been subjected to repeatedly hearing a simple, “Are we there yet?” In their innocence, children seem to understand that all journeys should lead to a final destination; with those journeys never reaching their destination quick enough.
In 2015, Forrester believes CMOs will step forward and take responsibility for turning the enterprise toward the customer, evolving their role into the engine that fuels customer-centric company growth. It’s time for CMOs to cultivate the trust, respect, and collaboration across the entire C-suite and use that influence to ask for the right to not only hold but also turn the keys to the customer.
My colleagues, James L. McQuivey, Moira Dorsey, Laura Ramos, Sarah Sikowitz, Tracy Stokes, and I therefore studied the landscape and expect CMOs to seize this new opportunity to both shape their personal success and accelerate the growth of their organizations in 2015. In particular, we predict that: