Article

Follow customers not fads

Steve Skinner

In this age of seemingly simple and falsely encouraging business fads, the key is figuring out what works for your customers and your company. A well-planned approach will lead to a powerful customer franchise.

What do the items on the following list have in common: aggressive M&A, CRM, self-service, business process outsourcing?

A. They are all fundamental new ways to think about your business.

B. They are all embarrassing fads that attract lemmings and fools.

Answer: Both. More on that later.

First, let's examine the architecture of a business fad. According to a 2002 Harvard Business Review study, business and management fads "erupt on the scene, enjoy a period of prominence, and then are supplanted." Among the characteristics of business fads: They're simple, prescriptive, falsely encouraging and easy to duplicate.

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I'd like to add to that list of characteristics. Fads invite rationalization instead of a demand for rigorous thinking and analysis. They lure companies into rushing adoption instead of patiently developing and executing a strategy. If fads have goals and metrics attached, they are often unreasonably high. Solid strategies have a chance to grow and succeed in a company; fads are set up to fail. Strategies are a touchstone for growth; fads are events marked by regret.

But fads are sooooo tempting. After all, everybody's following them. And following is so much more fun than thinking and planning. But just like the student who studies by looking at old tests, fads only work if the new set of questions matches the old.

When considering new ideas, I like to use one guiding principle: There is no value to the company if there is no value to the customer. While this is a pretty simple principle, it is violated all the time. Whether you're making an acquisition or installing a new IT system, there must be value to the customer for it to pay off for the company. The best approach is not to blindly adopt a new idea, nor immediately dismiss it. Ask yourself a few questions: What are the needs of my highest potential customers? Could the idea help me better meet those needs? How should I best adapt the idea to meet the specific circumstances of my customers and my business? Let's take a look at some current fads and then at examples of companies that have developed guiding principles prior to adopting a strategy.

Mergers and Acquisitions: Acquisition (let's face it, there are no true mergers) is a tactic dominated by blind focus. A mantra of "growth at any cost" leads to growing the top line of a company without regard for how the newly combined enterprise will serve its customers. Of course, mergers aren't always bad. FedEx acquired RPS in 1998. RPS added a strong ground network to complement FedEx's powerful air network, allowing FedEx to meet a much broader range of its customers' needs and compete with UPS. The company's more recent acquisition of Kinko's follows the same logic. FedEx is a company that has tremendous insight into its customer base, and drives its operations around that insight.

Customer Relationship Management: CRM has become a fad, unfortunately. I suppose there was just too much money in software and integration for it to turn out any other way. Just think about the words, "Customer Relationship Management." How could that not be a good thing if a company really practiced it? The fact is that many companies have figured out how to get customer strategy to work for their customers, and for their companies. But the term CRM has become so tainted by business-fad junkies and software vendors that we rarely use the term anymore here at Peppers & Rogers Group.

Self-Service: New technologies in voice self-service applications allow contact centers to replace human beings at a rapid rate. Honda now reports that more than 85% of the pre-purchase research by its customers is done through self-service applications. Why? Self-service allows customers to remain anonymous. No pushy salesperson in a plaid tie hassling you when you're online. And the Web is not only more accurate, it's also less troublesome. This can add value to the customer equation, presenting a more satisfying and valuable customer experience for a wider array of situations. If it doesn't—if your company is simply following the fad, rather than implementing a coherent strategy—then you may just leave your customer out in the cold.

Outsourcing: This may be the best example of a bona fide business fad that we have right now. Savings enabled by inexpensive bandwidth and low-cost, English-speaking labor can be compelling. Companies are rationalizing the outsourcing of many functions, especially IT functions and customer contact centers. But companies should take a holistic, customer-centric perspective when implementing offshore capabilities to obtain the desired value. Even good companies can make mistakes here if they don't keep customer value and experience at the center of their decisions. New ideas are bound to become failures and fads when blindly adopted by managers. But usually, there is at least a kernel of value within most new concepts that manage to gain a following. Let your customers lead you toward "true north." The key is figuring out what works for your customers and your company. Don't take the easy way out. A reasoned, well-planned approach will lead to a powerful customer franchise.

Copyright © 2005 Carlson Marketing Group, Inc. All rights reserved.

Peppers & Rogers Group is a Carlson Marketing Group Company.


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