Customer needs are evolving more rapidly than ever, spurred by global competition and new waves of self-service technology and mobility solutions, among other drivers. Keeping pace with changing customer needs is critical in this competitive growth economy to establish unique market positions, but how much is enough?
Whatever the market or industry, companies that combine products and services with unique customer interactions can produce differentiated customer experiences. These experiences form the basis for a front strategy that helps them to defend against imitators and extend themselves to capture niche positions.
CRM today demands that front strategies align with the changing environment, yet also align with the business back strategy. Multiple dimensions deserve consideration throughout the process of aligning the back and front strategies--specifically, cost to serve, level of customer experience differentiation, and exclusivity of brand image. Using the brand promise as a guide, companies must create a customer treatment blueprint. Done right, the blueprint can help integrate a firm's front and back strategies to create an integrated, cost-effective road map that serves the customer best.
We created an adaptation to consider both front and back positions using Michael Porter's cost, differentiated, and niche strategy model as a standard for back strategy. For instance, if the front strategy is geared toward creating an exclusive brand, extreme customer focus is required and a company must place emphasis on CRM investments to better identify and serve target customers. Also, if a company employs a low-cost front and a low-cost back strategy, CRM investments must be focused on self-service. Customers frequenting these businesses are less influenced by unique customer experiences and are more likely to come back if the price is right.
Other businesses profit by selling trendy, innovative products and maintain that edge to ring up sales. These companies may choose to pare back their CRM investments because most of their customers have a natural propensity to have the latest and greatest gadget. In this instance the back strategy is the key to controlling costs to optimize profits.
A front strategy can be used to strengthen the value proposition of the back strategy by creating market differentiation. Such differentiation is critical when the back strategy is under attack from competitors, or is in transition as the business environment changes. Then companies need to think about implementation. When paired with an overall strategy based on a sound assessment of the business's industry position and distinctive capabilities, a carefully developed front strategy can help the company find a competitive advantage.
Proper deployment of people and technology to keep costs low, achieve focus, or differentiate customer interactions is central to success. With so much technological change, the need to have a strategic understanding of customer interactions is greater than ever.
Woody Driggs is managing partner of the Customer Relationship Management practice at Accenture. His email address is CRM.Woody.Driggs@accenture.com.