Every company wants to get close to its customers, but wishing doesn't make it so.
New research identifies four stages of customer focus
and maps the organizational changes necessary to navigate from one stage to the next.
The Quest for
by Rahjay Gulati and James B. Oldroyd
For Continental Airlines, the joumey began when the company was emerging from bankruptcy and needed to know more about the profitability of its individual customers. One ofthe first things it uncovered was a service mess that was costing the airline millions of dollars every year. Continental took a systematic look at how passengers were treated when a plane was significantly delayed, when they ...view middle of the document...
The joumey can be arduous, it takes a long time-years, not months-but there are rewards all along the way. And for those organizations that have gone the distance, the payoff is remarkable.
The Quest for Customer Focus
another. The representative answering the phone would have no way of knowing that the same request had just been filled. It was only when the company began to look at customer information in a more holistic fashion-gathering, consolidating, and analyzing all of its customer interaction information in a single pool-that it was able to correct such inefficiencies. Now everyone who is delayed for, say, nine hours gets the same compensation, and when a gate agent hands a passenger a fiight voucher, that transaction is refiected immediately in the customer information database. The passenger will be denied a second voucher even if he gets to a phone within a few seconds. For Royal Bank of Canada (RBC), the quest for customer focus began when the company discovered that it
that demonstrably cared about them, valued their business, and recognized them as the same individuals no matter what part ofthe bank they did business with. Based on this insight, RBC set a goal to systematically manage all of its customers at every one of the millions of points at which they came in contact with the h a n k - a prospect that was daunting, to say the least. To its credit, over the last nine years RBC has leamed how to reorient the focus of its entire organization away from products and distribution and toward the real needs of its customers. The results are telling. Dividends swelled from 68 cents per share (in Canadian dollars) in 1996 to $1.72 per share in 2003, driven by a 20% increase in high-value customers and a 13% rise in average customer profitability between 1997 and 2001. Between 2000 and 2004, the
Getting close to customers is
not so much a problem the IT or marketing department needs to solve as
a journey the whole organization needs to make.
knew much less about the needs of its customers than it thought. RBC is Canada's largest financial institution, with more than 12 million personal, business, and public-sector clients and offices in some 30 countries worldwide. In 1996, like most financial institutions at the time, RBC had been investing heavily in making banking as convenient as possible, on the assumption that this would attract new customers and increase loyalty. It extended banking hours. It built new branches and installed more ATMs. It added online access, it created insurance, investment, and other new services. But to the company's surprise, a survey of more than 2,000 current and potential customers revealed that people didn't choose a bank on the basis of how convenient it was. RBC scored very well on that measure. But, as the survey clearly showed, that was merely table stakes. Instead, what customers wanted was a bank Ranjay Gulati (r-gulati@ke(hgg.northwestern.edu) is the Michael L Nemmers...