The Keys to Customer Obsession

Customer-obsessed companies, defined as those that consistently put customers at the center of their leadership, strategy, and operations, outperform peers in profit growth (33 percent higher), revenue growth (28 percent faster), employee engagement (44 percent better), and customer retention (43 percent better), Forrester Research notes in a new report.

“The emphasis is on ‘consistently.’ Customer obsession for these companies is an ongoing effort with potential for near-and longer-term wins in which the customer and the company reap the benefits,” the report says.

Companies should look for continuous improvements in their customer obsession efforts rather than waiting to move forward until all conditions are perfect or near-perfect, Forrester advises. “Customer obsession is a journey, not a stopping point. Companies see benefits when they plan for near- and longer-term impact and keep improving, regardless of where they started.”

Commitment to customer obsession is essential, Forrester advises. “The growth mindset can be so strong that some companies meeting the criteria for [being] customer obsessed don’t even recognize it and certainly don’t rest on it.”

Forrester in the report outlines a number of qualities shared by companies that could be considered customer-obsessed. They include the following:

• They take calculated risks. More than one-fourth (26 percent) of those not classified as customer-obsessed don’t have a process for taking calculated risks.
• They establish an innovation structure that enables them to identify and pursue creative ideas and then act on them.
• They are flexible, enabling employees to use their best judgment rather than following rigid, inflexible rules, even though doing so could result in missing out on short-term opportunities or a negative impact that would be small compared to the potential opportunity. Rigidity can crush creative thinking, Forrester explains.
• They understand customer needs and intentions better than competitors, using journey maps, customer research, voice-of-the-customer (VOC) programs, and other means to uncover these elements.
• They involve customers in designing new products and services. Forrester points out that co-creation and design thinking can help uncover unmet customer needs that typically don’t surface from surveys or customer interviews alone.
• They democratize customer insights throughout the organization. They don’t simply gather insights. They use those insights at the right time, in the right context, to help drive strategic planning and tactical decisions.
• They know how to interpret data and how to use data in making decisions, letting the data guide them rather than hunches.
• They acknowledge strengths and weaknesses.
• They are adaptive and collaborative rather than having a my-way-or-the-highway philosophy.
• They recognize the folly of isolation, recognizing they can’t operate in a vacuum and carefully monitoring outside disruptors that could transform their respective industries.

Despite all the talk about customer obsession over the past few years, though, still only 27 percent of companies meet Forrester’s standards for being customer-obsessed.

Those that are customer-obsessed have the following advantages:

• They outperform their peers in key business metrics.
• They can improve their reputations
• They have high employee engagement.

There are several keys to that, according to the research firm, which also found that at more than 90 percent of customer-obsessed organizations, senior executives deliberately fund, plan, and execute cross-functional initiatives, and more than 95 percent enable employees to use their best judgment instead of following predetermined rules.

For companies that have yet to excel at customer obsession, Forrester recommends the following:

• Be willing to invest.
• Accept change.
• Use the right tools.
• Lead with courage and humility.
• Eliminate silos.

Customer obsession should be seen as an investment, not an expense, the research firm says. “Executives at customer-obsessed companies understand that delivering value to their customers directly enhances their business value and strategically allocate funds to minimize impact.”