Leadership In The Age Of The Customer

Leading through change requires that right mix of imagination, inspiration, and gritty execution. And we are in a world of change. Empowered customers and the constant and rapid wave of digital innovation are changing market fundamentals. Leaders are now challenged to respond.

I had the pleasure of hosting a discussion with James McQuivey, Carl Doty, and Sam Stern to talk leadership in the age of the customer. Our conversation covered a range of topics from having the wisdom to see the market for what it is versus how we would like the market to act to putting in motion strategic and operational change that is necessary, new, and risky. Here are the five takeaways:

  1. The customer is in motion. Customers rapidly adopt — and rapidly abandon — technologies, services, and brands. That is wonderful and scary thing. It creates new possibilities. But it also redefines the norms for churn where a decision to shift spend is made by a single experience — good or bad. This dynamic can represent a major threat to growth if companies need to absorb 10%+ churn. 
  2. Loyalty is an emotion, not a transaction. Two factors are impacting brand loyalty: the number of choices customers have and their high expectations. The challenge is that most loyalty programs are anchored in discounts, points, and deals — cheap currency. But these are not drivers of long-term emotional affinity. They are triggers of repeat transactions . . . in a market that is increasingly driven by emotion, experience, and exclusivity.            
  3. Compete experience by experience, individual by individual, and moment to moment. The nature of competition has changed. Companies used to compete based on market share or customer acquisition. The competition has gone micro, as customers can churn on a single poor experience as barriers to exit decline. Winning or losing in this era will happen in an instant.
  4. Move from control to an empowered frontline. The accumulation of dynamic customers, eroding loyalties, and experience-level competition is that true individualized services will rapidly move from a pipe dream to a market norm. This will have the greatest organizational impact on the frontline teams and will require both analytic insights and the ability to drive real-time decisions from those insights.  
  5. Rise to the leadership challenge. The rhetoric of being customer-centric well outpaces the reality. It is indeed the power of words that can give the illusion of action. But the reality of empowered, impatient customers and digital threats won’t go away because of a great speech; they are two dominant drivers that describe markets. The word that matters most is action. 

We discussed the three types of actions that are making the most difference for those companies that are thriving in the age of the customer:

  1. Be a role model. There is a reason that “actions speak louder than words” is still a well-worn adage, especially in change management circles. If leaders avoid the very actions for which they are arguing, people will sense that it is too hard, flavor-of-the-day, or negotiable. Leader-role models are fuel; they create energy and a powerful sense of “doability” and inevitability. They become the new cultural norm.
  2. Remove relic barriers. We are moving from a business design organized by functional silos that were optimized for efficiency and control to a business design organized around customer journeys and optimized to experiences. That means that business rules, policies, incentives, and other organizational norms are now in the way. Leaders need to both actively remove barriers they can see and empower teams to do the same. 
  3. Outfit and empower the frontline. Superior personalized experiences place the greatest pressure on frontline teams, whether they are in the store, on the phone, or around enabling digital engagement. In many cases, frontline teams were governed by efficiency (keep the call short) and policy (say these words). They now need to be outfitted with insights and empowered to make real-time calls that bias customer experience over compliance. This should not create the wild west of giveaways, but simply recognize that at the individual-customer level, the exact response or remedy needs to place the customer ahead of policy.

Customers and digital innovation are changing market fundamentals; it is now up to executives to lead the important and difficult changes to strategy and operations. It will challenge their ability to accept and engage a new market reality — to envision a new way of doing business and inspire teams and people to change. Most importantly, this is an opportunity for leaders to be a role model in the often gritty and dirty world of execution.  

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