In this age of the customer, the only sustainable competitive advantage is knowledge of and engagement with customers.”
– Forrester Research
This is ‘The Age of the Customer’
Over the past decade, a perfect storm of technology and business model disruption has fundamentally changed the business landscape. Digital accelerating technologies led to digitization and integration of value chains, digitization of product and service offerings, and gave rise to digital business models and digital ecosystems. One of the defining features of the digital era, is the unprecedented choice, access, and control that the customer has on how and when a product or service is consumed. Forrester defines this as ‘The Age of the Customer’ in which:
“ consumers are in control of their interactions with businesses, and expect ready access to content that is personally relevant in the context of what they are doing and accessible anytime, anywhere, and in the format and on the device of their choosing”
In such a dynamic and disruptive business environment, where customer expectations are continuously evolving, it is a challenge for businesses to not only definecustomer intimacy, but also to continuously deliver amazing customer experiences. In this blog, I propose to explore how customer intimacy, one of the cornerstone value disciplines, has dramatically transformed in the digital era.
Digital era demands excellence across all value disciplines
Back in the early 90’s when the value-discipline theory (value creation strategy) was first introduced, it proposed that any enterprise which aspires to be a market leader must create a competitive differentiator, by excelling in one of the generic value disciplines, namely: Product Leadership, Customer Intimacy, and Operational Excellence, while meeting industry standards in other disciplines. As opposed to conventional market segmentation strategies, value-discipline model provides a context for enterprises to define their vision, align their strategy with customer needs, and their own core competencies and organizational culture. The proponents of this theory argued that:
“ an enterprise cannot excel in all three value disciplines,as the basic enterprise culture, structures, people, facilities, processes and business models that lead to excellence in any one value discipline are incompatible with achieving excellence in the others”
The digital era has upended this notion and challenged the conventional wisdom by proving that it is possible to excel in all value disciplines. A fabulous mix of technology as well as business-model innovation, laser-sharp focus on delivering amazing customer experiences, and sustained operational excellence are the cornerstones for the success of digital unicorns such as Amazon, Google, facebook, Netflix and other such businesses. I strongly believe that excellence across all value disciplines is a necessary pre-condition for market leadership in the digital age (refer my earlier blogs on Growth strategies for software product companies, and Product leadership demands a mix of Innovation Strategies).
Customers expect amazing digital experiences
The traditional strategy for customer intimacy focused on tailoring and shaping products and services to fit a fine definition of a customer, domain, or market. But, in the digital era this has become far more complex with the need to support anytime, anywhere access on multiple devices, as well as the challenge of a product or service being part of multiple business models serving multiple domains. Even more importantly, with the digitization of value chains, as well as product and service offerings, customers expect amazing digital experiences on all fronts.
360° strategy for driving customer intimacy
I strongly believe that driving customer intimacy in the digital era is all about consistently delivering amazing digital experiences, and given the complexity of the digital ecosystem, there is no single, magic bullet that will help you achieve this goal. What is needed is a holistic, 360°approach to drive customer intimacy, and some of the key strategies that will help you excel in this value discipline are briefly described below:
Continuous alignment with customer needs: In a dynamic business landscape, where customer needs are continuously changing and evolving, one must (continuously) probe, challenge, and ascertain:
|What features should my product/service support?|
|What are the advantages and business benefits to my customer?|
|What are the unique and competitive differentiators of my product/service?|
|What is the business value delivered to my customer?|
|Which markets/domains am I serving? New or cannibalized markets|
A relentless focus on meeting customer needs, extending to developing a fine-grained understanding of the customer domain, and insights into their future and evolving needs will help you stay ahead of the curve, and succeed in a competitive landscape.
Engage with prospects and convert into customers: Very often, understanding your customer needs starts from the prospecting stage itself. Customer intimacy in the digital era calls for a sophisticated approach to:
|Identifying target markets|
|Defining ideal customer profile|
|Understanding what kind of ‘value’ message will resonate with prospects|
|How you engage with prospects|
|Converting prospects into customers|
The process in which discovery of your product/service is enabled, defining the multiple touch points and digital experience delivered in converting a prospect into a customer, must be part of a comprehensive prospect engagement strategy. In a connected landscape, where the customer has unprecedented access to information, prospect engagement must be a crucial component of the overall strategy to drive customer intimacy.
Fine-grained customer segmentation: Perhaps, at the heart of customer intimacy is developing the ability to offer extremely customized solutions to serve the precise needs of a given customer or segment. One must develop a very fine-grained understanding and insights of various customer categories and their specific needs, in order to offer customized solutions. The ability to hyper-personalize a product/service offering for a customer or a narrow-segment of customers is crucial for driving customer satisfaction, loyalty, and stickiness.
Measure continuous business value: As outlined earlier, defining the business value delivered is a crucial part of aligning your product/service with the customer needs. In the digital era, with continuously evolving customer needs and fast-changing business landscape, it has become ever more important to evaluate and continuously measure the business objectives fulfilled (business value) in terms of: return on investment (ROI), cost savings, revenues, etc.
Engage and measure customer satisfaction: Multiple social and digital technologies have made it possible to continuously engage, monitor, and measure customer satisfaction through a variety of channels. Closing the feedback loop through omni-channel customer engagement is a crucial component of a holistic customer intimacy strategy, and should be the basis for continuous refinement and improvement of products and services.
Develop and sustain evangelists and influencers: It is basic human nature to explore, share, and learn from the experiences of others, which is the primary driver behind the explosive growth of social media. A favourable product or service recommendation in the right channel can do wonders in terms of strengthening the brand. Don’t be shy in seeking out satisfied customers to give testimonials and serve as referrals for prospects. Develop and execute a sensible Influencer strategy to identify, nurture, and support individuals or customers who can be your brand-ambassadors, and serve as evangelists and influencers.
Customer intimacy continues to be one of the important avenues for value creation, and is a key cornerstone strategy to help businesses achieve product excellence. It is important to redefine what customer intimacy means in the digital era, and pursue a holistic, 360° strategy to achieve excellence in this crucial value discipline.