That type of thinking is a common knee-jerk approach most decision-makers often make in the early stages of an economic recovery. Ultimately, however, it's a misguided methodology.
The best advice for the C-suite is to avoid the mistakes of the past and shift away from product-centric, short-term financial strategies to a longer-term, customer-focused approach. As consumer spending ticks up, CEOs should be evaluating customer behaviors and attitudes to help them develop a more comprehensive understanding of what customers want from their company and then tailor products to meet their needs. Such a customer-centric strategy, which has paid enormous dividends to companies such as Apple during the recent recession, can go a long way towards helping CEOs achieve longer-term goals and generate sustainable revenues for their businesses.
Granted, CEOs for publicly-traded companies have to retain some level of short-term strategic focus as they're compelled to help their companies meet their quarterly earnings targets. It's an inescapable component of how the global economic system is structured. Nonetheless, there are ample opportunities for corporate leaders to demonstrate the strength of their company's performance and share price value to Wall St. analysts by drawing upon customer-centric measures such as Return on Customer (ROC), customer retention rates, upsell and cross-sell conversion rates, and the like.
Building stronger relationships by leveraging the customer base is the only sustainable, organic growth competitive strategy. Ironically, this is reflected in both AT&T and Verizon's first quarter announcements made last week. Although both companies saw an increase in subscription rates (AT&T announced 1.9 million net new subscribers; Verizon added net 1.3 million new wireless subscribers), their contract subscriber rates fell. According to InformationWeek, AT&T signed 512,000 contract customers, which is 43 percent lower than Q1 2009. Similarly, Verizon Wireless sold only 423,000 new contract customers. It's time that these companies turn to their customer base to come up with answers that will address analysts concerns regarding the sustainability of growth in coming quarters.
Putting existing customers first
In recent years business leaders have placed too much emphasis on acquiring new customers and not enough focus on retaining existing customers and strengthening those relationships to help maximize long-term revenue opportunities. Focusing on retention means that CEOs need to truly listen to customer feedback through all channels, including social media, website, and contact center interactions. Additionally, business leaders should use advanced analytics to surface the hidden gems of customer insight from the traces customers leave at all touchpoints. Top executives should also strive to make themselves more accessible to customers through online discussion groups, town hall-type meetings, and other forums. Meeting and interacting with customers helps CEOs put a face on a company and personalize its image.
A good starting point for devising customer-centric strategies is to envision what the ideal customer profile will look like 10 years from now. This profile can be composed of multiple micro-groups, but not too many. By composing the ideal future customer, business leaders will be much better positioned to listen, understand needs of their target group, and determine the types of products and services their companies should be developing. In turn, these actions will help decision-makers create a roadmap for the company's future success.
Of course, any company that strives to develop tighter relationships with its customers also needs to engage its employees and treat them just as they'd treat their customers. We'll explore these issues and approaches in more detail in my next blog.
About the Author: Orkun Oguz is a managing partner of Peppers & Rogers Group.
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