Power to the people – the challenging evolution of customer management
From customer management to customer engagement – a shifting balance of power ‒ the challenges facing customer management solutions
Customer management strategy is currently embroiled in one of the most significant shifts of the last 30 to 40 years, which is creating substantial challenges for businesses. This shift is having a fundamental impact on the way relationships between businesses and customers are shaped and managed.
Traditionally, engagement between businesses and customers has been very much a one-sided affair. To put it simply, the rules of engagement were set by businesses, and customers were expected to comply. This has meant that businesses could define what kind of relationship they wanted to have with their customer base. Whether it was the local supermarket or shopping experience, through to package holidays and coffee chains ‒ products, services and experiences that customers received were designed by businesses for customers. This meant that customers were faced with little flexibility or direct influence when it came to the types of goods they were offered.
If we take the retail sector as an example, they were provided with a simple single-facetted question: Do I want to purchase something or not?
But what happens if the question all of a sudden becomes: How would you like to purchase it?
Over the last five years the established relationship between businesses and their customers has been fundamentally challenged and businesses are trying to come to terms with a new reality, one in which they no longer can define the relationship on their own. Customers are no longer willing to accept this linear one-dimensional relationship. They now expect products and services to be tailored to their needs, and want to engage on their terms. Take the automotive industry as an example. In the late 1990s, BMW effectively produced three models with limited engine and configuration options. Today, their product range covers over 15 different models with a vast range of configurations.
As a result, businesses need to fundamentally change their approach if they want to be truly aligned with customer expectations. In order to satisfy the expectations of customers, businesses will have to pre-empt need and embrace a world where they can’t control everything in the way they used to. This requires a deep level understanding of customers, customer behaviour and the way that customers experience a relationship.
Ultimately, this scenario creates a range of issues and brings friction into what was previously a well-established and seamless relationship. On the one hand, businesses are faced with a rapidly evolving and ever-increasing set of expectations of their customers. On the other, they also have to address a challenging technology landscape, with legacy systems and tools gaining in complexity and, more often than not, no longer capable of responding to these new customer demands. This combination creates a complex cocktail.
In order to address this, businesses have to decide what kind of relationship they want to have with their customers. And, first and foremost, they will have to address the following 5 customer challenges:
1. Immediacy – customers expect to engage without delays, holding patterns or boundaries. 9-5 no longer applies to them and, more often than not, 5.01am-8.59pm is much more relevant.
2. Autonomy – power of choice is an ever-increasing theme. Customers no longer feel obliged by length of relationship. Clearly a good relationship track-record is still important, but it no longer counts for everything.
3. Flexibility – if a customer indicates that they want to change something, rigid responses have an increasingly negative effect. Customers demand (within reason) the ability to adjust and alter relationships.
4. Individuality – customers no longer want to choose between 4,5,6 types of relationships. They want to be presented with their relationship option. This requires the ability to tailor and adjust throughout the lifespan of the relationship.
5. Transparency – honesty and openness are a cornerstone in building successful, lasting relationships. And customers expect no less. In order to establish this level of trust, companies have to engage proactively and authentically with their customers.
These are significant and complex challenges and tackling these the right way will determine not just the relationships between companies and their customers but ultimately also how successful companies are going to be in general. So, getting ahead of the curve and embracing this new power balance is a vital component for future success.
At Capita we have a broad set of tools and interventions that can help companies understand how they are currently engaging with customers and develop solutions for a deeper, more sophisticated, relationship with customers. These tools cover technology as well as behavioural and cultural aspects to deliver a multi-facetted and rounded view.