Customer Focus Strategy

For more than twenty years the mantra in private enterprise and public enterprise has been "customer focus". The phrase appears on mission statements, vision statement and "our values" statements adorning private and public enterprise walls alike.

The phrase has been embedded in part by an exponential growth in management processes and systems based processes. The advent of systems based methods such as Enterprise Resource Planning and Customer Relationship Management have hard coded customer needs into organisations.

Quality methods such as Six Sigma and Total Quality Management have often been used to focus attention on delivering upon customer's needs. The full list of methods which in one way or another beseech the user to have a customer focus would easily fill up this entire column.

There is, however, a simple problem.

Most organisations have difficulty in defining who their customer is. Additionally, they have great difficulty in defining what it means, specifically, for their organisation to focus on the yet to be defined customer.

The implications of the problem remaining unresolved are significant. Organisations that are truly focused on customers will build their operations around the customer. To build operations around a customer has implications for the organisational leadership, performance management and processes management/technology enablement.

Organisational leadership includes strategic goals, organisational design, roles and responsibilities, supporting management processes such as corporate governance and risk management and identification and management of stakeholders.

Performance management includes resource allocation and alignment, target behaviours, performance measurement, performance appraisal and reward, training and development and physical asset management.

Process management/technology enablement includes process design, process KPIs, process accountability and responsibility, common data, common applications and the consistent use of the internet.

Getting it wrong on who is the customer and building an operation around it makes it expensive to get right when the real customer becomes apparent.

For instance, government departments may think that their customer is the Minister. If that is believed to be true, then the whole organisation of the public service would be geared to providing services to individual Ministers.

If, on the other hand government departments believe that their customers are a segment of the general public, then all their services would be geared to providing those segments with their needs at an acceptable cost on behalf of the Minister.

A simple way of understanding who customers are, is to ask the question "Who should (or does) feel the pain if our organisation/department stops work altogether"? For instance, Intel had a choice of determining that the PC manufacturer was their customer. They chose the end user as their definition of the customer.

In developing their business model, Intel made sure that if any pain was going to be felt if they were to go out of business, it was going to be the end user. PC manufacturers can come and go, but Intel was to serve the needs of the end user. It also communicates this with its "Intel Inside" campaign.

If an organisation understands who its customer is then it needs to understand what "Focus" means. Invariably, "Focus" means solving a customer's problem. But there is the rub. What is the customer's problem?

Many organisations satisfy themselves with convincing the customer of the organisation's product features. Some go as far as selling their product benefits. Very few take the time and effort to understand customer needs and virtually nil concentrate on solving the customer's problem.

A customer's problem may generate several needs, but the problem remains singular. A well published example is the story of the new CEO who took over an old, struggling company that manufactured drill bits.

The vice president of marketing, wanting to impress the new CEO, brought elaborate colour charts of the "bit market" to the first board meeting. The vice president detailed the total market for bits, the company's current market share and the potential for increasing the "bit market".

When the presentation ended, all eyes turned to the new CEO. His comment changed the mindset of the company: "Sorry, there is no market for bits ... the market is for holes." From that day forward, the employees of the company looked for better "ways to drill holes" not how to manufacture better drill bits.

Determining a customer's problem requires organisations to refine the operation they have built around their identified customer. The refinements are so that they may gather data about customer's problems and segment customers by their problems.

This has implications for data definitions, segment definitions, data collection and manipulation, product development and service offerings and customer measurement. The implications filter through to staffing levels, recruitment, staff development and training, finally all the way through to organisational design.

"Customer Focus" is not for the trivial placement in mission and vision statements. It is a strategy with wide ranging impact requiring true focus on the organisation.

WOODRIDGE

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Customer Focus Strategy