Focussing on the customer - Economist Intelligence Unit

Transcription

Conquering convergence:
Focussing on the customer
A briefing paper from the Economist Intelligence Unit
sponsored by Oracle
Preface
Conquering convergence: Focussing on the customer
is an Economist Intelligence Unit briefing paper,
sponsored by Oracle. The Economist Intelligence
Unit executed the survey, conducted the analysis and
wrote the report. The findings and views expressed in
the report do not necessarily reflect the views of the
sponsor.
Research for the report was conducted in July 2007.
The Economist Intelligence Unit surveyed 164
executives worldwide using an online questionnaire.
To supplement the survey results, we also conducted
in-depth interviews with senior executives familiar
with the subject. The author of the report was Jeanette
Borzo and the editor was Winter Wright. Richard
Zoehrer was responsible for layout and design.
February 2008
Meeting the challenges
T
here is nothing new about the
need for companies in the IT,
telecommunications, media and entertainment
industries to focus on their customers. Indeed, the
notion of “customer centricity” has been around
for ages. But several trends in these industries are
causing companies to focus on customer preferences
and patterns as never before. “Everyone is talking
about customer centricity and analytics now,”
confirms Eric Kintz, vice-president of global marketing
strategy and excellence at Hewlett-Packard Co.
Does your company have a strategy for staying focused
on its customers?
Yes 92%
No 8%
New research produced by the Economist
Intelligence Unit and sponsored by Oracle
surveyed companies in the so-called ICE industries:
information, communications and entertainment (the
ICE designation includes telecoms, broadcasting and
publishing). The research shows that nearly all firms
surveyed in North America, Europe and Asia already
have customer-centricity strategies in place and more
than two-thirds plan to increase their customercentric efforts even further.
What’s the reason? In part, two other trends are
driving this renewed customer focus: the rise of usergenerated content, and the ongoing convergence of
products, companies and customer groups. Thanks
to the rapid rise of the Internet, for example, today’s
consumers can easily “talk back” to companies
Who took the survey
In July 2007 the Economist Intelligence Unit conducted an online survey of 164 executives worldwide to determine how they approached
the task of developing and maintaining a customer focus strategy in
an environment of technological convergence. Of the respondents
to our survey, 42% were senior executives (board-level or C-level),
and 58% were directors, business unit heads, and other managers.
Worldwide, 24% of respondents were based in North America, 21%
in Western Europe, 38% in the Asia-Pacific region, and 17% from
Latin America, eastern Europe, the Middle East, and Africa. More than
half of the respondents (53%) worked at organisations with annual
revenues of more than US$500m, while half came from organisations
with revenues below that amount. In addition to the survey, qualitative interviews were conducted with senior executives familiar with
the topic of achieving customer focus.
If so, how successful do you feel this strategy has been
over the past 2-3 years?
Highly successful 14%
Successful 43%
Somewhat successful 35%
We don’t have formal
customer-focus goals 6%
Don’t know 3%
© The Economist Intelligence Unit 2008
3
through user-generated content in blogs, homegrown commercials and personal videos. A single
customer voice can reshape a company’s place in the
market (as in the case of Jeff Jarvis’s Buzz Machine
blog, which inspired Dell Computer to spend an extra
US$100m to improve its customer service). “The rules
of engagement have changed,” notes Ilkka Raiskinen,
senior vice-president for multimedia experiences
at Nokia. “Even an individual complaint can have a
global impact.”
even find the right tools. A full 46% of companies
say that they have trouble identifying the best
emerging technologies to use in achieving
customer-centricity goals. One problem may be a
technology glut: companies are often inundated
with the market’s many new products, along with
new versions of software tools that they already
own. “There are many and they are changing all the
time,” notes Mr Raiskinen.
“We are spending more and more time
to understand the customer better. It’s
becoming a very competitive market.”
Peter Skarzynski, senior VP strategy, Samsung
This rising consumer power, in turn, is pushing
convergence. “People don’t want to carry too many
devices, and want to have constant access,” adds Mr
Raiskinen. “Consumer pull is the key.” As a result,
the ICE industries are trying to serve consumers’
needs across a range of areas including technology,
communications, news and entertainment. It is a
challenge that confounds even the most tech-savvy
companies attempting to keep focused on their
customers: less than 15% of survey respondents rate
their customer-focus strategies as highly successful.
Much of the trouble stems from insufficient
technology. One-quarter of companies surveyed say
that the technology they use to gather customer
feedback is inadequate for their needs. Many admit
to confronting obstacles such as incomplete and
inaccurate customer data. And while companies
may want better technology to address these
shortcomings, they often find it challenging to
4
Increasingly customer-focused
While customers have always been king, today
they sit more solidly on their thrones than ever.
Companies recognise this and are trying to keep
pace. While 92% of companies surveyed say they
already have a customer-focus strategy, nearly 70%
plan to increase their customer focus.
“Customer centricity is becoming more
important now,” confirms Peter Skarzynski,
senior vice-president for strategy at Samsung
Telecommunications America. “We are spending
more and more time to understand the customer
better. It’s becoming a very competitive market.”
Indeed, competition to achieve customer centricity
has become so fierce that nearly three-quarters of
businesses are working with external partners such
as business consultants, PR firms and advertising
agencies to develop a customer-focus strategy.
Even so, challenges abound. Many companies rely
on technology to measure their customer focus but
are dissatisfied with the results. In our survey, 46%
of companies say they use customer relationship
management (CRM) software for measuring customer
focus, whereas 22% use analytics software for
the same purpose. Yet only 6% believe that such
technology is excellent.
More specifically, incomplete customer data
plagues 41% of industry firms, while a lack of clarity
about exactly what customer data to measure
troubles 32%. Even companies that get all the
data they want often have difficulty interpreting
that data, observes Mr Raiskinen of Nokia. He adds
that such data must also be collected and analysed
quickly. For example, a company dealing with
shifting customer preferences may be unable to
wait for the results of an analyst’s three-month field
study before taking action.
Only one-quarter of survey respondents agree or
strongly agree that their companies have developed
predictive customer-buying models. Perhaps even more
surprisingly, only about one-quarter (26%) agree or
strongly agree that they can produce great analytics
about customers to enable real-time up-selling or
cross-selling. The goal, of course, is to use technology
not only to gather data, but also better to manage,
analyse and act on that data. “One of the key challenges
of being customer-centric is how to integrate all
your sources of customer data into one view of the
customer,” says Mr Kintz of HP. “You have to have the
right technology infrastructure.” Mr Skarzynski of
Samsung adds: “We are trying to create as many touch
points as possible and then integrate all that data.”
The challenge is significant. For 29% of
companies, customer preferences are so fragmented
“One of the key challenges of being
customer-centric is how to integrate all
your sources of customer data into one
view of the customer.”
Eric Kintz, VP global marketing strategy, Hewlett-Packard
that firms consider them too difficult to track
accurately. Inaccurate customer data plagues more
than one-quarter of companies (27%). According
to Mr Kintz, data quality is another challenge: “You
have to have clean data to feed the data warehouse.”
Finding mathematicians and statisticians who can
crunch the numbers effectively presents yet another
task: “You have to have the right skills internally.”
Less than one-third of companies (32%) agree or
strongly agree that they have a 360-degree customer
view comprising customer purchase and contact
histories, preferences and demographics. And only
39% agree or strongly agree that they have a clear
scorecard for measuring customer focus.
Please rate your level of agreement with the following statements about your company.
(Rate on a scale of 1 to 5 where 1 = Strongly agree and 5 = Strongly disagree)
We have actionable insights into customer needs/preferences
15%
19%
7% 2 2
54%
We have a clear understanding of customer needs and preferences across the entire life cycle
of our products/services
56%
15%
10% 1 2
49%
24%
We give customers many integrated channels through which to interact with us
42%
19%
22%
14% 2 2
My company has a clear scorecard for measuring its customer focus
4
9%
7% 2
29%
17%
36%
My company has a 360-degree view of customers, including purchase/contact history,
preferences and demographics
9%
28% 4% 3
24%
33%
My company has developed predictive customer buying models
21%
31%
14% 4
25%
4%
My company can produce great analytics about customers, enabling us to up-sell or cross-sell in real time
19%
29%
13% 3
30%
7%
1 Strongly agree
2
3
4
5 Strongly disagree
6 Don’t know
5
Today’s phones double as TVs, PDAs function as cameras and music players make
fashion statements. Companies believe
that customer demand for an expanded
product or service line is the key external
driver of such crossover trends.
Converging challenges
Convergence further heightens the impact of these
data challenges. Retaining a sharp focus on customers
while customer groups, companies, devices and
platforms are converging and transforming is like
changing the tyres on a moving car. “Just when you
believe you know what your consumers want, you
can bet you are behind,” says Mr Raiskinen. After
all, today phones double as TVs, PDAs function as
cameras and music players make fashion statements.
Companies believe that customer demand for an
expanded product or service line is the key external
driver of such crossover trends.
6
Will convergence ultimately help companies or
hurt them? Many firms are not yet sure. They view it
as a double-edged sword offering both opportunity
and risk. For example, they cite convergence as
both the greatest threat to—and second-greatest
opportunity for—increasing their revenue and/or
margins. Forty-four percent of companies see
convergence as a way to become more customercentric, yet more than one-third (34%) say that
convergence threatens their ability to do so.
Firms seem to see convergence as a binary,
win-lose opportunity with no grey area inbetween.
Whether they win or lose depends on whether they
can identify consumer trends and then deliver
converged devices and services that suit customer
preferences. “People aren’t going to walk around
with seven different devices,” points out Mr
Skarzynski of Samsung. But there is an equal and
opposite danger: that of losing customers by offering
devices or services that fail to meet customer needs.
Putting user-generated content to work
To avoid that trap, many firms are looking closely
at user-generated content for clues as to what
consumers find most interesting. HP partnered
with Personiva, a San Francisco firm, to let
customers personalise and post customised HP
ads (for its campaign, ‘The Computer is Personal
What are the main threats/negatives your company
associates with the convergence of the telecoms, IT, and
media/entertainment industries? (Select all that apply)
Threats to our revenues and/or margins
38%
Challenges to becoming customer-centric
34%
Hindrance to using our resources to expand into new areas
23%
Threat of being acquired by or merged with another entity
13%
Other, please specify
9%
Don’t know
19%
Again’) on their blogs, YouTube, or anywhere
else they wanted. Most companies in our survey
recognise the potential impact of these emerging
technologies on the bottom line. More than
two-thirds of respondents say that emerging
technologies offer an opportunity to increase
revenue, margins or both. Thirty-nine percent are
using emerging technologies to achieve customerfocus goals. As consumers create more content on
Seven secrets for successful centricity
n Focus on results “Don’t do customer
While customer input is critical,
centricity just because it’s the latest fad,”
not all of it will translate directly into
advises Eric Kintz, vice-president of global
sustainable product strategies. As Henry
marketing strategy and excellence at
Ford was putting the finishing touches on
Hewlett-Packard Co. “Carefully tie this to
his Model T, for example, some consumers
business results.”
were surely asking the transportation market
for faster horses, speculates Ilkka Raiskinen,
n Connect with centricity Making the
senior vice-president for multimedia experi-
connection between customer-focus and
ences at Nokia. “It is challenging to translate
bottom-line results can be challenging,
consumer preferences for the future into
however, meaning that tenacity is required.
something concrete,” he says, adding that using
analyses and acts on the data the tool collects.
“It’s somewhat tedious work, without a
customer input successfully is a matter of
“If people are not actively using the [technol-
silver bullet,” says Mr Kintz. “It needs to be
“finding the balance”.
ogy] tools, it does not help that much,” notes
pieced together. It requires a lot of detailed
Mr Raiskinen of Nokia. “How you use that
n Hit the front lines Customer focus is a
data across functions is more important than
company-wide mandate. “Think about how
fancy tools.You should have a passion to take
n Listen up If the customer really is king,
you inspire your employees to really drive
in the message from the consumer.”
than you need to hear what your sovereign is
customer centricity,” suggests Mr Kintz, add-
saying. “A lot of marketers create their own
ing that even if only once or occasionally, by
n Try something new There are lots of
hype and then wind up believing it,” says Peter
“putting employees in front of the customer,
new tools out there for connecting with cus-
Skarzynski, senior vice-president for strategy
you can have them see how each employee
tomers—why not try one? “Blogging is a great
at Samsung Telecommunications America. “But
can make a difference. Nothing replaces a
way to better engage the customer,” confirms
you have to listen to the consumer. Keep your
‘face-to-face’ with the customer.”
Mr Kintz, who writes HP’s most successful
statistical work.”
ears open always. Continue to listen.”
n But don’t believe everything you hear
blog, Marketing Excellence, with about 10,000
n Put your data to work The best
readers each month. “Emerging technologies
technology tool is worthless unless your staff
have been great for us.”
n
7
“It doesn’t matter how fast you run.
The competition is running as well. You
can never stop. It’s an ongoing race.”
What are the main opportunities/positives your company
associates with the convergence of the telecoms, IT,
and media/entertainment industries? (Select all that apply)
Increases our ability to expand into new areas
56%
Opportunity to increase our revenues and/or margins
55%
Increases our ability to become customer-centric
Ilkka Raiskinen, senior VP multimedia, Nokia
44%
Opportunity to acquire/merge with another entity
20%
4%
Don’t know
10%
How important is user-generated content to your company’s
ability to become more customer-centric?
Critical 10%
Very important 26%
Important 29%
Somewhat important 22%
Unimportant 9%
Don’t know/
Not applicable 5%
the go, user-generated content can represent an
opportunity for firms that sell mobile devices.
But user-generated content brings its own
challenges. For example, it can be difficult for
companies to ease their grip on corporate-controlled
branding and enter an unknown world where
customers create brand messages. Other challenges
abound: getting users to submit content plagues
43% of companies, while making the content
commercially profitable troubles nearly as many
(42%). Competition is bothersome too, with 32% of
firms saying they have trouble differentiating their
service enough to obtain more interesting usergenerated contributions than competitors.
Concentric solutions
Without doubt, these trends require a shift in how
firms interact with customers. But solutions exist for
8
many challenges, and enterprising firms may even
harness the power of these trends to overcome the
very obstacles they create.
For example, many see user-generated content as
playing an important role in helping companies to
become more customer-centric. Nearly two-thirds of
our survey respondents say user-generated content
is important or critical to their ability to become
more customer-centric. “Emerging technologies
have been great for us, especially considering the
shift in branding that we have made,” responds
Mr Kintz of HP. A case in point is HP’s heightened
focus on the gaming market after it acquired Voodoo
Computers, a PC game-maker, in 2006.
Companies also believe that getting a single view
of the customer and then organising the company
around that single view is a key to success. When
asked to choose one action that would make their
company more customer-centric, the greatest
number of companies (30%) said creating a central
customer view across product and division lines; 28%
chose organising the company around customer,
rather than product, lines.
Technology, of course, plays a key role in how
companies generate that complete view. Nearly
one-half of the companies surveyed chose direct
customer feedback from call centres, websites and
other channels. Forty-three percent cited CRM
software, while 41% employed customer surveys.
But respondents mentioned other tools such as focus
groups and analytics software, saying those tools
were important for clarifying who their customers
are and what they want. “The more touch points
you have with consumers, the better,” reckons Mr
Raiskinen of Nokia.
Even when armed with the best technology,
companies should recognise the depth of the
challenge before them. Only through continuous
upgrading and redefining of their systems can they
hope to achieve customer centricity in an age of
convergence. “It doesn’t matter how fast you run,”
says Mr Raiskinen. “The competition is running as
well. You can never stop. It is an ongoing race.”
What does your company consider most important for
getting a complete view of its customers?
(Select up to three responses)
Direct customer feedback from call centers, Web sites, and other channels
49%
Customer relationship management software
43%
Customer surveys (online or by phone, SMS, or post)
41%
Focus groups
29%
Analytics software
22%
Feedback gathered at customer conferences
19%
Customer-generated content
18%
Open architecture permitting data exchange among disparate applications
13%
Self-service applications for updating customer data, such as personal URLs
10%
1%
Don’t know
5%
9
Appendix: survey results
Appendix: Survey results
In July 2007, the Economist Intelligence Unit conducted a global online survey of 164 executives. Please note
that not all answers add up to 100% because of rounding or because respondents were able to provide multiple
answers to some questions.
Does your company have a strategy for staying focused
on its customers?
Yes 92%
No 8%
If so, how successful do you feel this strategy has been
over the past 2-3 years?
Highly successful 14%
Successful 43%
Somewhat successful 35%
We don’t have formal
customer-focus goals 6%
Don’t know 3%
Which statement best describes your company?
We plan to maintain our
investment in customer-centric
efforts 26%
We plan to increase our
customer-centric efforts 69%
We plan to reduce our
customer-centric efforts 1%
Don’t know 4%
Who is your company’s main external partner in developing
a customer-focus strategy?
Marketing or business
consultancy 29%
PR agency 10%
Telecom and/or
media partner 8%
IT vendor 7%
Ad agency 6%
Other, please specify 12%
Don’t know/Not applicable 27%
10
Which of the following tools does your company use to measure
its customer focus? (Select all that apply)
Please rate your level of agreement with the following statements about your company.
Market research
We have actionable insights into customer needs/preferences
15%
19%
7% 2 2
54%
We have a clear understanding of customer needs and preferences across the entire life cycle
of our products/services
56%
15%
10% 1 2
49%
24%
We give customers many integrated channels through which to interact with us
42%
19%
22%
14% 2 2
My company has a clear scorecard for measuring its customer focus
4
9%
7% 2
29%
17%
36%
My company has a 360-degree view of customers, including purchase/contact history,
preferences and demographics
9%
28% 4% 3
24%
33%
My company has developed predictive customer buying models
21%
31%
14% 4
25%
4%
My company can produce great analytics about customers, enabling us to up-sell or cross-sell in real time
19%
29%
13% 3
30%
7%
59%
Win/loss analysis
49%
46%
Analytics software
22%
9%
Not applicable/Don’t know
12%
What are the main obstacles preventing your company from
being as customer-centric as it would like? (Select up to three)
1 Strongly agree
2
3
4
5 Strongly disagree
6 Don’t know
Incomplete customer data
41%
Lack of clarity about what customer data should be measured
32%
Customer preferences too fragmented to track accurately
What are the main threats/negatives your company
associates with the convergence of the telecoms, IT, and
media/entertainment industries? (Select all that apply)
29%
Inaccurate customer data
27%
Customer preferences change too quickly
Threats to our revenues and/or margins
22%
38%
Growing competition is diverting resources from customer focus
Challenges to becoming customer-centric
19%
34%
Legacy IT systems can’t adapt to changes/IT switching costs too high
Hindrance to using our resources to expand into new areas
18%
23%
Proponents at our firm have not created a compelling case for change
Threat of being acquired by or merged with another entity
15%
13%
A merger or acquisition is distracting us from customer focus
12%
9%
Our executives do not promote a customer-focused approach
Don’t know
9%
19%
7%
Don’t know
4%
11
What are the main opportunities/positives your company
associates with the convergence of the telecoms, IT,
and media/entertainment industries? (Select all that apply)
What is the main external force causing convergence
at your company?
Customer demand for an expanded
product or service line 35%
Increases our ability to expand into new areas
56%
Opportunity to increase our revenues and/or margins
55%
Increases our ability to become customer-centric
44%
Opportunity to acquire/merge with another entity
20%
4%
Don’t know
10%
A corporate strategy requiring us
to better monetise our
existing customer base 19%
Increased competition from
companies outside our
primary business sector 16%
A need to reduce
overhead costs 12%
A merger or acquisition involving
our company 11%
Don’t know 6%
What single primary action do you think your organisation
would need to take to become more customer-centric in an
environment of convergence?
How would you rate the technology your company uses to
gather customer feedback on its products and services?
Excellent 6%
Create a central view of the customer
across product and division lines 30%
Organise the company along
customer lines rather
than product lines 28%
Compete in new
industry sectors 13%
Update our information systems
to accommodate converged
products and services 11%
Understand the strengths and
weaknesses of new competitors 10%
Consider a merger or acquisition 2%
Don’t know 4%
12
Good 27%
Adequate for
our needs 38%
Inadequate for
our needs 25%
We don’t use
technology to
gather customer
feedback 5%
How important is user-generated content to your company’s
ability to become more customer-centric?
What does your company consider most important for
getting a complete view of its customers?
(Select up to three responses)
Critical 10%
Direct customer feedback from call centers, Web sites, and other channels
49%
Very important 26%
Important 29%
43%
Customer surveys (online or by phone, SMS, or post)
Somewhat important 22%
41%
Unimportant 9%
Focus groups
29%
Don’t know/
Not applicable 5%
Analytics software
22%
Feedback gathered at customer conferences
19%
Customer-generated content
18%
Open architecture permitting data exchange among disparate applications
13%
Self-service applications for updating customer data, such as personal URLs
10%
1%
Don’t know
5%
Please rate your level of agreement with the following statements regarding
emerging technologies at your company.
Our executives write or contribute to a company blog to complement our marketing/branding strategies
8%
25% 4
15%
28%
20%
My company has a system to leverage user-generated content
6%
13% 4
29%
27%
23%
My company has a system to leverage on-line social networks
26%
3%
16% 3
22%
30%
My company uses emerging technologies to achieve customer-focus goals
5%
9%4 3
34%
17%
33%
My company wants to use emerging technologies to achieve customer-focus goals,
but has trouble identifying the best technologies to use
7%
15% 7% 3
39%
29%
My company sees emerging technologies as an opportunity to increase revenues/margins
44%
21% 6% 2 2
24%
1 Strongly agree
2
3
4
5 Strongly disagree
6 Don’t know
13
What are your company’s key challenges regarding
user-generated content? (Select up to three responses)
Getting users to submit content
43%
Making the content commercially profitable
42%
Differentiating our service so we get more interesting content than competitors
32%
Screening out inappropriate content
27%
Finding the resources to support user-generated content
22%
Ensuring content works across multiple platforms
In which region are you personally located?
Asia-Pacific 38%
North America 24%
Western Europe 21%
Eastern Europe 7%
Latin America 6%
Middle East
and Africa 4%
21%
Mitigating the creation of damaging or negative content
12%
Establishing procedures to pay users for content
11%
2%
Don’t know/Not applicable
9%
5%
What is your primary industry?
Information technology 44%
Telecommunications 15%
Media 12%
Entertainment 5%
Publishing 2%
Broadcasting 1%
Networking enabler 1%
Other 22%
14
What are your organisation's global annual revenues in US dollars?
US$500m or less 47%
US$500m-$1bn 11%
US$1bn-$5bn 18%
US$5bn-$10bn 6%
US$10bn or more 19%
Which of the following best describes your title?
What are your main functional roles? (Select up to three functions)
Board member
General management
40%
4%
Strategy and business development
CEO/president/managing director
40%
23%
IT
CFO/treasurer/comptroller
30%
2%
Marketing and sales
CIO/technology director
23%
6%
Operations and production
Other C-level executive
16%
7%
Finance
SVP/VP/director
13%
10%
Customer service
Head of business unit
12%
10%
Information and research
Head of department
11%
10%
R&D
Manager
10%
21%
Risk
Other
7%
7%
Human resources
6%
Legal
3%
Supply-chain management
3%
Procurement
2%
Other
1%
While every effort has been taken to verify
the accuracy of this information, neither The
Economist Intelligence Unit Ltd. nor the sponsor
of this report can accept any responsibility
or liability for reliance by any person on this
report or any of the information, opinions or
conclusions set out in the report.
15
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Focussing on the customer - Economist Intelligence Unit

Transcription

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