From 11/4/10 edition of The Wise Marketer:
The consumer world is changing, and customers are more difficult to reach, satisfy and retain now than ever before, according to Shyam Shah of Oracle Corporation. There are number of factors driving this change:
1. Shifting behavior
The proliferation of web-based and new generation interactive channels (such as mobile and social media) has led to a dramatic shift in the ways in which customers research and buy products, and even how they interact with each other. To build brand loyalty and retain customers, companies must focus on delivering great online and cross-channel customer experiences.
2. Increasing competition
Competition is growing and becoming more global in nature. But, perhaps most importantly, the increase in competition has not been accompanied by an increase in demand. To keep their best customers loyal, companies now need to deliver superior value propositions and build up genuine competitive advantages.
3. Growing complexity
An explosion of new products, brands, and channels, coupled with dynamically changing customer preferences and compressed product life cycles, is increasing the complexity of doing business. To devise effective business strategies, organisations must develop a clear understanding of their target customer segments, as well as their value and profitability.
4. Discerning customers
Customers are becoming more demanding, better informed and increasingly empowered. Traditional marketing is no longer working, and customers want richer and more relevant dialogues with the companies they deal with. They want their preferences to be respected and their loyalty to be rewarded. Under these conditions, so-called ‘pray and spray’ communications are destroying both relationships and brand value.
Amid these challenging circumstances, how can an organisation differentiate itself? With the best product? No, because products can be duplicated. With the lowest price? No, because discounts can be matched and promotions can be copied. With satisfied customers? No, because satisfaction isn’t the same as loyalty.
A number of studies have indicated that majority of the customers who defect are either ‘satisfied’ or ‘very satisfied’ with their former suppliers. So, while customer satisfaction is clearly important, true loyalty is what is absolutely essential. This is because loyal customers:
• Buy more and more often than other customers;
• Enhance profitability and cost less to service;
• Provide an invaluable referral system (i.e. they share, recommend and advocate).
In order to drive true customer loyalty, you need to understand customer’s perspective, and know what they want – which usually includes statements such as:
• Treat me as though my business is important to you;
• Reward my loyalty and recognize me for who I am;
• Respect my preferences and the information that I share with you;
• Make it easy to do business with you, anywhere, at any time;
• Be relevant to my needs and circumstances;
• Help me realise my needs and dreams;
• Save me time and money;
• Connect me with people like me.
What can your firm do to be more customer-centric?