Understanding Your Customers - How the Best In Class Do It

On the heels of this long recession, organizations are taking a deep look at just how well they know their customers.  It is no easy task, but working to know your customers better can have a significant impact on your revenue streams.    

Our culture has shifted to a service culture.  Everywhere we go people are striving to please us.  Think about how many people you encounter  in a dining  experience; maybe a valet, a hostess, a wine specialist, a waiter and a server, and quite possibly, the manager or proprietor.  At times, it is almost overwhelming. 

Our experiences today compared to 50 years ago are optimal.  How did we get here?

Well, I compare this focus on the customer to initiatives made over the last century in operations and production.  Thirty years ago, companies were focused on building things better, building them faster and more efficient, and it all began with metrics.  Setting goals, measuring results and improving year after year. What we saw were significant investments in technology to create efficiencies in production and operations.

Today a similar initiative is underway on the "other side" of the business, the relationship side.  These initiatives are focused on the Customer.  Some call these initiatives Customer Experience Management (CEM) or Customer Relationship Management (CRM).  And we all know some organizations that have figured this out; I think of Disney and Southwest Airlines.  

In January, Aberdeen Group, released a study on CEM titled, "Customer Experience Management: Using the Power of Analytics to Optimize Customer Delight".  It is available for a limited time at no charge by visiting their website at Aberdeen Group. 

The report looks at how organizations are using customer data and metrics to differentiate themselves in their customers' eyes.  It identifies Best-in-Class organizations as having a retention rate of 82% and identified some common characteristics in these top performing organizations such as:

• 91% collect customer feedback
• 90% use Key Performance Indicators to measure effectiveness of customer engagement activities
• 73% standardize customer data across the organization

One key challenge discussed in the report is employee buy-in or employee engagement in the Customer Experience initiative.  The recommendation is to tie metrics to compensation through incentives and bonuses. 

Another insightful finding in this report is the metrics Best-in-Class organizations are using to measure the customer experience.  The top four identified were:

• Customer retention
• Customer satisfaction
• Response time to inquiries
• Customer lifetime value

If your organization is embarking on initiatives to improve the customer experience with your organization, I would encourage you to download this report.

As you will note, one of the primary tools for managing the customer experience is CRM technology.  Our firm has extensive experience in helping organizations use this technology.  Please contact me if you would like to discuss in more detail any ideas you may have.

Dan Holzgen

danh@ehtc.com