The scramble is now on to cater for the consumer's ever-changing demands. But an entire company culture obsessed with their customer has to start at the top
Offering good customer service has never been harder. Consumers are more demanding than ever, and attracting and holding their attention is tougher as competition increases in almost every industry.
Organisations realise it’s a way they can differentiate themselves and get a competitive edge
Not surprisingly, customer experience has risen up the corporate agenda over the last five years and the pressure to get it right is intense.
“Customers are saying ‘we have more alternatives now, they are easier to find and switch to, so you need to up your game,’” says Professor Andrew Stephen, an associate dean of research at Saïd Business School, University of Oxford. “Firms that don’t respond will see customers leave them for other brands.”
Why customer experience is the CMO’s duty
Typically, the job of improving customer experience falls to a firm’s chief marketing officer, who is responsible for building and maintaining customer relationships.
They must work hand in hand with the chief executive, and digital and data teams, but they are “conducting the orchestra”, says Professor Stephen.
The biggest challenge they face is changing the culture of their organisation, which can be tough without a strong top-down approach.
Good customer experience must be embedded in a company’s DNA, says Dr Andreas Eisingerich, professor of marketing, at London’s Imperial College Business School, but that is much easier if you do it from the start,
“It’s about messaging: telling the employees this is who we are. It’s also about empowering management to make the changes necessary,” he says.
Customer lessons to be learnt from big tech companies
To achieve this, CMOs must first have a granular understanding of customers’ needs, which are changing fast in the digital age.
Large tech firms, such as Netflix, Instagram and Amazon, have reinvented what good customer service looks like, offering consumers a more personalised and user-friendly service.
They also have unparalleled access to customer data, giving them an intimate picture of their users or customers and how to please them. Everyone else is now racing to catch up, says Professor Stephen.
“Customer experience was always important in services businesses, but now it’s championed in product-led ones like telecoms firms, cosmetics giants and utilities firms,” he says.
“Organisations realise it’s a way they can differentiate themselves and get a competitive edge.”
Brands must embrace transparency and personality
CMOs must also remember that brands are increasingly seen as personalities to consumers, and therefore must act in an authentic and ethical way.
The internet has made it easier for customers to shop around, while social media has given customers a megaphone with which to complain about poor customer service.
Bad news can go viral on platforms such as Twitter, hammering a firm’s reputation and damaging consumer trust.
Professor Eisingerich says: “We’re all grown ups and if a firm makes a mistake it has to be upfront and take responsibility. Consumers are less willing to tolerate corporate wrongdoing and cover-ups.
“Firms also need to avoid irritating customer contact: pop-up ads, junk mail, requests for feedback. Firms that still do that are destroying the customer experience.”
He points to Google, which he says was initially an engineering-focused, product-based organisation, that tended to view the customer as “some distant animal”.“People became really frustrated by the way it handled their data and there were scandals. But recently Google has started to think about privacy and more ethical ways to advertise,” says Professor Eisingerich.
How L’Oréal encouraged customers to share data
Despite the concerns about privacy, many firms, particularly more product-led ones, will have to work out how to obtain more data from their customers if they are to be competitive. The key is doing it without alienating customers, but it is possible, says Professor Stephen, who gives the example of cosmetics giant L’Oréal.
“They were very retail-focused historically and didn’t know much about their customer. They put their cosmetics on the shelf at Boots and that was it,” he says.
“But a few years ago, the competition was rising and they realised they had to up their game, so they began to create experiences.”
Professor Stephen says L’Oréal has since introduced a range of beauty apps that use augmented reality, enabling consumers to try out different make-up and hair products online to see how they will look. It’s also boosted its ecommerce function and now employs about 3,000 digital specialists worldwide compared with 300 in 2014.
“It’s about keeping the customer engaged and shifting from a transactional to an experiential relationship,” he says.
When the CMO is focussed on customers, business wins
While knowing your customer is clearly vital, there is a danger you can become a slave to their changing needs, warns Professor Eisingerich. This can mean firms place too much importance on decisions that appease consumers’ short-term needs, while avoiding more radical choices, which could make a bigger difference in the long term.
He gives the example of the late Steve Jobs, former boss of Apple, who had a knack for guessing what customers wanted before they realised it themselves.
“We always listen to the crying baby, we are always fire fighting. But it is not always the vocal customers who are the most important,” says Professor Eisingerich.
Despite the importance of CMOs, an academic study published last year found that marketing still takes a back seat at board level and this is hurting growth.
It looked at the biographies of almost 65,000 board members at publicly listed US firms between 2012 and 2017, and found only 2.6 per cent had any marketing experience.
However, firms with at least one experienced marketer on the board saw revenue increases of 5.78 percentage points in the period, compared with firms with no marketers on the board.
“The evidence shows that when boards either have marketers or a CMO focused on customers, they tend to do better. CEOs are starting to realise this and invest in it,” Professor Stephen concludes.