Customer Relationship Economics

There’s a lot buzz & interest around customer-centricity and CRM but according to a survey done by Strativity Group, many executives in companies really don’t understand the economics behind customer relationships leading to poor understanding, appreciation and execution. Take a look at some findings:

  • Over 75% of respondents did not know the cost of a new customer while 81% did not know the cost of a customer complaint.
  • 50% of respondents did not know their organization’s annual retention rates.
  • 60% of senior executives claim they do not deserve their customers’ loyalty.
  • 51% of respondents claim that their company does not deliver unique and beneficial products or services
  • 56% agree that their company’s products or services are worth the price they charge.
  • 34% affirm that they have the tools and authority to serve their customers.

Strategies fail due to poor execution!

  • Basic execution parameters such as frequently visiting customers (34%), providing
    the necessary tools and authority to employees (34%), and strongly linking
    compensation with service quality (29%) is lacking.

Employee readiness to execute remains a challenge!

  • 29% of the respondents indicated that their compensation plan emphasizes quality of service and not just productivity.
  • 34% of respondents claim that their employees have the tools and authority to solve customer problems.
  • 30% of respondents agreed that their company invests in people more than in technology.

Yet, according to the study, 70% of companies indicate that customer strategies are more important than they were three years ago.

I guess the challenge is to not only to have a customer strategic plan in place but it is also important to align people, processes and right metrics to make it a success.

1 Comment

  1. Alignment is the Holy Grail. No wonder so few companies can achieve it. It is elusive because it is not tangible. In the many years we have been working with clients we have found again and again that alignment is the problem/answer. So how does one help? Do another study? Help the current CMO/CCO/… achieve a career goal? Or transform the organization? Largely it depends on what they really want to achieve.

    Like

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