For the past several years, I've been pushing the CEOs in my audiences to spend more time with customers. That is a secret to sustainable business success.
Recently, I've had people imply that this isn't as important anymore because technology has solved this problem for them. Being somewhat of a techno-junkie, I was intrigued by this breakthrough and asked for more details. The breakthroughs turned out to be CRM and/or the Internet. Oh well, one more heartbreak from technology.
A Desk is a Dangerous Place
Just as e-commerce didn't permit companies to build a sustainable business based on a customer acquisition cost that exceeded the lifetime value of the customer, technology won't interpret the market for you. As the author John Le Carré once put it, "A desk is a dangerous place from which to view the world."
For the CEO, CRM is a valuable tool for deriving useful management reports. While many CRM systems are not set up with this in mind, it is clearly a realizable output from any well-constructed system. A properly used CRM system can provide you with substantial information about your customer and prospect base. However, in most companies, this information is reported from your company's perspective, not from the customer's perspective.
Even if you do manage to create a useful CRM system that contains information from the customer's perspective (a rarely realized feat), you still have information that has been interpreted by the person who entered it into the CRM system. That is not bad, it's just the way it is, and it makes it critical for the CEO to maintain a direct understanding of customers and the market they represent.
The purpose of talking with customers, especially at the design engineering or management level, is to understand their business and their future. From this understanding, CEOs can determine how their firms can help customers progress toward that successful future. You already know what your company can do. Interviewing customers about their businesses helps you to understand how you can provide for their future needs.
Most CEOs actually understand quite well the benefit of spending time with customers. In the early days of a company, the president/CEO spends a substantial portion of his or her time out with customers. New presidents often do the same thing. This allows them to validate and understand that they can "think like a customer," to borrow from Harvard Business School professor Rosabeth Moss Kanter.
The problem is that this "affliction" wears off, and the time these CEOs spend in the marketplace diminishes--often to zero. They find other "more important" activities to occupy their time since they now "understand the customer." The illusion of the "all-knowing" CRM system can feed this misconception.
This change in focus to spending less or no time with customers is a doubly dangerous situation. First, the presidents lose contact with the market, and second--and possibly worse--they still believe they think like a customer. The reality is that they now hope the customer thinks like them.
But wait, you say, you do spend time with customers. You visit them to facilitate major sales, and you're always available if there's an issue or complaint. Further, your CRM system alerts you to key activities with major accounts or opportunities that may need your attention or that you want to monitor.
Bravo, but that's not really what I'm talking about. Those responsibilities are sales and customer service functions and may be important in your company. I'm suggesting that the CEO not give up a critical marketing role: that of visiting customers for the sole purpose of understanding customer needs, wants and demands, and how your company can meet them.
You may say that your company is too big to spend substantial portions of time with customers. Then stay in the office and focus on whatever it is that you think is more important. If your company is like most, and you do that long enough, the company will eventually become small enough for you to go out and visit customers again. In fact, you'll probably have to in order to survive. Or your successor will do it as one of the first things a new CEO does on the job.
When Lou Gerstner took over as CEO for IBM, one of his first tasks was to get himself and his senior people back in touch with customers, something his predecessors had forgotten how to do--or decided wasn't important. Sam Walton built Wal-Mart--a $55 billion retail business--in your lifetime. He did it one store at a time, and he spent virtually every day in those stores until the day he died. Five days a week, Sam visited stores. He knew that's what generated the money. He hired others to handle the vast majority of the "internal stuff" that gets most other CEOs so bogged down they can't get out. He kept his priorities focused on the only asset that matters: customers who can buy what they want from you.
Before you say, "Sure, that's easy for a retailer, he just goes out on the floor," let me say, "Don't go there." If you want to make excuses for not visiting customers, go ahead, but it won't change the resulting damage. But, just to be fair, let's talk about Michael Dell.
Here's a "kid" who started a "mail-order" computer business from his dorm room and built it into one of the top five personal computer companies. He sells "mail order," for goodness sake. Guess what? With more than $20 billion in sales, Michael still spends a substantial portion of his time visiting customers. The real reason Dell is outrunning and outgunning the other personal computer companies has a lot to do with his larger commitment to staying in touch with the market personally.
Along with its other accomplishments, Dell has pioneered processes to reduce the cost of distributing personal computers. So? The real breakthrough came from understanding what processes could be streamlined, while adding value for the customer and simultaneously reducing costs. These ideas came from the market--not from an internal navel-staring session.
The one secret great companies share is an understanding of who buys and what they buy. You won't find those answers in your office. They only come from your personal and continuing interaction with the market.
One of your key jobs as a CEO is to understand your customers' future, and to be ahead of them to assure their success--as well as yours.