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Customer-Centric Power Shift
Consumers in every business sector are becoming increasingly intelligent about products and services as a result of the Internet. The Internet provides easy access to basic product information, price, product reviews, rating systems, and other data points that enable consumers to make more informed choices about products or services. As a result, customers are more empowered than ever before in history.
This chapter reviews the profound power shift from producers to consumers that is causing fundamental changes both from within an organization as well as through the entire value chain. It reviews the sweeping changes in areas such as organizational models, compensation, and distribution networks. At the very forefront of the discussion is a new holistic customer relationship management (CRM) mandate.
The Internet is the primary lever of change in this marketplace and brings with it a whole new set of customer values and opportunities. First and foremost is the dimension of time. Since the number of online business and intermediaries is growing exponentially, the race is on to get more of the customer's time. As businesses become increasingly competitive over customers, those that can expand their services and products to meet additional customer demands will win out over those that can't. Also, because getting more of the customer's time is a gating factor preventing rapid revenue growth, enterprises are shifting their focus from products to customers. In addition, since the Internet is proving disruptive in many markets, fierce competition is producing more cus- Figure 10-1. Multiple Points of Contact in a Multidimensional Business Environment tomer defection and turnover, requiring companies to be swift and nimble in their response. Not only are businesses fighting each other for customers' time, they are working hard to get more valuable insight into their customers in less time. The Internet both enables and fuels these highvelocity markets.
To develop a winning customer-centric strategy, you must think in multidimensional terms, or as they say in the customer relationship management field, multiple "channels." The optimum strategy determines where, how, and when the customer wants to be addressed. In a customer-centric world, companies strive to understand the customer and to come to them or at least be accessible to them on a 24-hour basis through combinations of the Internet, phone, fax, or in person. There are many ways to engage customers and to build lifelong relationships.
Savvy companies have a mandate to discover and reach customers through these touch points. (See Figure 10-1.) The Internet has showered consumer knowledge onto millions of people. It is changing impulse buyers into selective buyers and selective buyers into first-generation relationship customers. The next generation of Internet consumers will demand information concerning products and services. Companies that cannot provide this information and tailor it to the individual or partner will be left behind. While the consumer is becoming more informed, the Internet has also enabled mass customization, creating micro segments of customers. Both these trends are working together to create a very complicated sea of customers and informational needs.
According to Jeff Hammond of Rhea & Kaiser, a digital branding agency in Chicago, Interactive communication channels have enabled people to understand the power they have as individuals. Organizations, prices, products, and promotions are transparent to individuals who can share their experiences and knowledge with one another. Consumer research has consistently found that people are looking for solutions to their challenges; they are making purchase decisions differently; and they don't take at face value what faceless organizations say to them. It seems so obvious that people would want to be treated like people, not as targets or segments. But I think it's the widespread use of interactive channels that has galvanized this understanding among "consumers" and, more slowly, within the organizations that serve them. Call it "me commerce," but that's the demand of the online customer.
The combination of smarter consumers, new customer channels, and the effect of customization is forcing companies to make CRM and customer initiatives top priority. Brick-and-mortar along with new electronic business models must clearly understand that this shift is a fundamental business model shift to a customer-centric business model. The customer shift cannot be addressed by yet another one-to-one marketing campaign.