A majority of companies fail to deliver differentiated value to customers and therefore fail to maintain their loyalty. Additionally, companies routinely fail to analyze and manage their customer relationships according to specific financial criteria,leading to the ineffective execution of customer strategies.
Although respondents declare that customer strategies are more important than they were three years ago, the majority acknowledge that their employees do not have the tools or authority to resolve customer issues - a major indicator of customer commitment. “Respondents honestly admitted that they are selling commodities and that their core value proposition does not merit customer loyalty,” stated Lior Arussy, company founder and author of “Passionate & Profitable” (Wiley, 2005). “Such an admission should serve as a wake up call to every executive to reexamine their core value propositions and ability to deliver differentiated customer experiences.”
Results Highlights -
- 60% of senior executives claim they do not deserve their customers’loyalty
- 51% of respondents claim that their company does not deliver unique and beneficial products or services
- 56% agree that their company’s products or services are worth the price they charge
- 34% affirm that they have the tools and authority to serve their customers
- 75% do not know the cost of a new customer
Strategies Fail at Execution -
According to the study, 70% of companies indicate that customer strategies are more important than they were three years ago. Yet, basic execution parameters such as frequently visiting customers (34%), providing the necessary tools and authority to employees (34%), and strongly linking compensation with service quality (29%) is lacking.
It’s All in the Financials -
Overall, the study indicates a widespread ignorance regarding the economics of customer relationships. Over 75% of respondents did not know the cost of a new customer while 81% did not know the cost of a customer complaint. 50% of respondents did not know their organization’s annual retention rates. The failure to manage customer relationships on the basis of clear and pertinent financial metrics explains why companies’ strategic intentions often fail to translate into sustainable customer-centric actions. Organizations do not invest the appropriate resources and funds to establish long-term relationships because they are unable to justify them financially.
Employee Readiness to Execute Remains a Challenge -
The general trend is one of diminishing corporate investment in employees — ultimately leading to the curtailment of the employee’s ability to properly execute customer strategies.
- 29% of the respondents indicated that their compensation plan emphasizes quality of service and not just productivity
- 34% of respondents claim that their employees have the tools and authority to solve customer problems
- 30% of respondents agreed that their company invests in people more than in technology.
Companies continue to declare their commitment to customers while not fully comprehending what this commitment entails. As such, customer experiences are commoditized, employee readiness is limited, and strategy execution is deficient. The failure to create and deliver differentiated experiences leads to the failure to command premium pricing, drive preference of company or product, gain greater portion of customer budgets,and ensure the permanence of overall relationship longevity.
