Three Keys to Customer Obsession

All companies should be obsessed with their customers, but only 15 percent actually are, according to Forrester Research vice president and principal analyst Shar VanBoskirk.

Customer obsession is a good idea, but no one knows how to achieve it, VanBoskirk says. This isn’t because executives disagree with the idea of putting the customer at the center of business decisions. “The problem is that leaders don’t know how to operationalize customer obsession at their firms,” VanBoskirk explains. “Who should do what? How long should it take? What might it cost?”

In the report “How to Build Your Company’s Customer Obsession Strategy,” VanBoskirk says that companies should base their customer obsession efforts on their expected returns. In examining customer obsession investments, different companies should focus on different efforts, such as customer loyalty programs, employee education, or improving customer satisfaction, to receive the best returns.

She adds that customer obsession needs to be a long-term strategy, not just a short, reactionary move to reverse short-term negative key performance indicators.

Forrester sees three common expressions of customer obsession —“Count on us” (reliability), “At your service” (service), and “On your side” (advocacy)—depending on the company’s strengths and what its customers value, VanBoskirk says. “You don’t have to offer Zappos-like customer service to be customer-obsessed. In fact, indiscriminately scaling customer service can cost millions and work against a brand’s purpose.”

VanBoskirk outlines a few examples of the goals leading companies have for relying on customer obsession:

• Mercedez-Bensz USA initiated its customer obsession plan to defend its market leadership.

• Ritz-Carlton used customer obsession to distinguish itself from the competition.

• Bank of Montreal used it as part of its rebuilding strategy following the last financial crisis.

• Delta Dental uses customer obsession to defend its market position against start-up healthcare insurers.

The size and nature of companies’ customer obsession commitments should depend on the returns they will drive, VanBoskirk reiterates. For example, Caterpillar Financial modeled the effects of improved customer loyalty on revenue over five years to size its customer experience (CX) transformation before launch. Crowe invested in satisfying its existing customers after learning that they buy more and cost less. Mercedes-Benz USA invested in dealer education because a 10 percent improvement in dealer staff engagement lifted per-dealership sales by $376,000.

VanBoskirk also recommends looking at what other companies in the same industry are doing for clues to what might work in a particular company’s circumstances. In addition to the earlier examples:

• Technology firm CenturyLink has successfully leveraged its voice-of-the-customer program for 15 years to learn how to best boost revenues and keep shareholders happy.

• Nordstrom empowered its employees to create a culture of service—a staple of the company for more than a century.

• AARP relies on customer advocacy, creating a consumer experience commitment to standardize its promise to members and consumers and get employee and leadership input to develop long-term advocacy plans.

Just telling everyone to be nicer to customers won’t necessarily bring about the desired results, according to VanBoskirk. In some cases, a business model pivot, product redesign, or new channel partners might be exactly what companies need to do to create value for customers.

Whatever a company’s expression of customer obsession might be, the company should establish a blueprint for it, defining existing resources, priorities, and constraints to know which operational changes to make, VanBoskirk says.

“The trick here is to determine what manifestation of obsession you need to have in order to best create value for your customer, then parse that vision into practical building blocks,” VanBoskirk says. “Then use those building blocks to set operational goals for the different functions at your firm.”