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Customer Acquisition and Retention

Why Customer
Centricity Matters
Sustaining high performance
through uncertain times
Customer
Centricity
A Strategy for Any Market

As organizations around the world categories. In emerging markets, In tough times, the strong grow
confront new economic realities, greater consumer spending power stronger. The organizations that will
many find organizing an effective has drawn the attention of providers perform the best through this period
response in this highly complex, searching for fresh growth, spurring and beyond will be those that maintain
highly uncertain environment to be further cross-border competition. a strong customer-centric focus
uniquely challenging. while dealing with the complexity,
Now, a volatile economy has added uncertainty and risk that cloud the
Their sense of heightened uncertainty uncertainty to the mix. In the shadow business landscape. This means knowing
and risk reflects a business landscape of a possible long-term recession the sources of risk and opportunity
already in a state of transformation and diminished consumer confidence, within the global customer base. It
before the current economic cycle. predicting future demand and buyer means finding new routes to reaching
Increasingly open markets and trade behavior has grown exceptionally customers—increasingly, through
liberation have dispersed economic difficult. channels that customers control.
power and triggered unprecedented And it means focusing less on driving
levels of competition. Heightened Despite all the complexity and customer transactions for short-term
competition has accelerated the uncertainty, however, executives know gain, and more on fostering trust-based
pace of commoditization, curtailing they must act. For some, the most relationships over the long term.
advantages based on innovation, urgent priority is to reduce the cost
availability or functionality. of sales and service—ideally without By maintaining a customer-centric
damaging profitable relationships. approach to managing in uncertain
The rapid advance of communication Others are more aggressive, and times, enterprises will plan and act
technology and electronic commerce are already targeting new customer with greater confidence, compete
has eroded customer loyalty by creating segments and territories for growth. with more intensity, and respond more
more convenient access to product Both camps recognize the consequences readily to changing market conditions.
information, purchase options and of choosing the wrong priorities—none
services. In mature economies, market wish to miss an opportunity; none wish
saturation has slowed growth in many to overlook a threat.

Customer Acquisition and Retention 3


Why a New Environment … Customer experiences. If the global Restoring balance. Whether an
consumer population is more complex, organization mounts an aggressive or
Customer centricity has always been satisfying their expectations is even defensive response, is already in the
a principal focus of high-performance more so. In a recent Accenture survey midst of restructuring or still awaiting
businesses. Now, however, it’s of consumers around the world, impact, maintaining a customer-
a prerequisite for virtually any one-third of our respondents indicated centric focus is, we believe, essential.
commercial enterprise that seeks to their service expectations are higher Most organizations, we found, honor
preserve customer relationships or today than they were one year ago. the concept in theory. However, we
acquire new ones. Even more dramatic, 52 percent of also found that many remain focused
respondents reported higher service on optimizing customer transactions
Two factors make customer centricity expectations today compared with five rather than the customer experience,
essential to sustaining performance in years ago.2 and on short-term returns at the
uncertain times. First, customers are expense of long-term relationship
more diverse, with specialized needs Increasingly, buyers tend to categorize benefits. This myopic focus has,
and preferences—understanding them providers as “distinctive” or “everyone over time, failed to serve the
requires more study and precision. else”. Earning a place in the distinctive customer’s broader financial, social or
Second, customer expectations are category is challenging and keeping environmental needs, and will fail to
rising while their sense of loyalty is it is even more so. Our research has meet the best interests of the business
falling—satisfying their requirements found a poor customer experience in the times to come.
demands more focus and consistency. to be the most common reason
for customer flight today—cited by Ultimately, focusing less on the
Customer expectations. Companies customers even more often than transaction and more on the
everywhere serve a more complex finding a better price somewhere end-to-end experience is good
customer base: more diverse else.3 Even when customers view for business too. Over time, more
geographically, more varied overall service quality as good, they power has shifted from providers to
demographically, and dotted with are quick to leave when their specific consumers. Now, providers have the
entirely new buyer segments. In expectations go overlooked. In opportunity to claim a new position of
mature economies, the consumer industries where costs of switching strength by fulfilling their responsibility
population is aging, with large continue falling, even the strongest to customers and to society as a whole.
numbers of baby boomers heading corporate brands are vulnerable. In a time of extreme “consumerism,”
toward retirement. At the same time, organizations must be willing to
a new generation of consumers raised
Calls for a New Mindset balance out their own “corporatism”
on technology is coming of age, and a to preserve and create value for
more mobile workforce is transporting To the dual challenges of a more themselves and employees, their
buyer values and behaviors across complex customer population shareholders and customers.
geographic regions. and more demanding customer
expectations, a third challenge has Few people enjoy being sold to, and
Whereas mature markets are in both the consumer and business-
been added, with new economic
increasingly saturated, the citizens to-business environments, customers
concerns further complicating an
of the world’s emerging markets— increasingly expect to be treated as
already complex scenario. Beyond
expected to account for more partners in a trusted relationship.
the immediate impact on consumer
than half of global consumption by Organizations that tap into this basic
confidence and purchase behaviors,
2025—hold rich growth potential for human attribute stand to benefit
major policy change and regulatory
both local and foreign providers.1 enormously, by differentiating
reform will transform industries,
These consumers, however, are often themselves, building customer loyalty
having impacts that will ripple
in remote, hard-to-reach locations, and defending relationships during what
throughout many others.
and may regard foreign brands with may prove to be an extended period of
uncertainty or even suspicion— Some businesses are already making doubt, uncertainty and skepticism.
reaching them and winning their dramatic cost reductions. Others,
business will require new insights into however, are focusing on the potential
their distinct needs and behaviors, and to grow both market share and share
new routes to market. 1 Estimate adjusted for purchase power
of wallet. In either case, the call to differences.
action is loud and few can ignore it. 2 High Performance in the Age of Customer
Centricity, customer satisfaction research,
Accenture, 2008.
3 High Performance in the Age of Customer
Centricity, customer satisfaction research,
Accenture, 2008.

4 Why Customer Centricity Matters


Customer Acquisition and Retention 5
The redistribution of economic power and Figure 1: Global Shift in Consumer Purchase Power
rising consumer expectations are reshaping
B6 2005 G6 2005
the commercial landscape.
2025 2025

Figure 1: CAGR CAGR


6.1% 2.3%
EIU; Accenture analysis. Purchasing power parity adjusts for differences
between countries in the price of a standard basket of goods and services.
24,799
Figure 2:
High Performance in the Age of Customer Centricity, Accenture, 2008. 20,565

13,106

7,579

88 economies 88 economies

B6: ‘Big Six’ = Brazil, China, India, Mexico, Russia and South Korea
G6: France, Germany, Italy, Japan, United Kingdom and United States
CAGR = Compound Annual Growth Rate

Figure 2: Global Rise in Consumer Expectations

Global Overall By Country [Higher (net)]

Average Movement: 2007/2008


75%
2007 12% 56% 27% 6% 3.25 China**
68%
Compared to India* 67%
12 months ago
2008* 13% 56% 26% 5% 3.41 Brazil 48%
44%
UK 27%
25%
Canada 21%
24%
Germany* 23%
France** 34%
22%
Australia** 31%
22%
US** 23%
18%

China 93%
2007 20% 28% 34% 19% 3.44 89%
Compared to India* 85%
5 years ago
48%
2008* 22% 26% 34% 18% 3.20 Brazil** 76%
49%
UK 48%
Scale: 1 5
Canada 45%
Much/slightly lower 44%
Germany* 51%
The same 59%
France**
48%
Slightly higher
Australia** 54%
41%
Much higher
44%
US**
* Includes India and Germany 35%

2007 2008

*Not included in 2007


**Where shift of Higher (Much + Slightly Higher)
between 2007 & 2008 is > 5%

6 Why Customer Centricity Matters


Withstanding the Storm Preserve trust. Consumers attach a and, at times, competing agendas
high level of importance on a provider’s that shape corporate decision making:
Executives have many choices to make credibility—knowing it will perform company stewardship, employee
now. Past slowdowns suggest what as promised and that their business satisfaction, shareholder value and
pitfalls to avoid: failure to balance matters to the company. In one survey customer satisfaction. Create visibility
corporate objectives with customer Accenture conducted, 45 percent of and ownership for key metrics at the
needs; overreliance on internal consumers indicated they continue C-suite level, to speed and monitor
viewpoints about what matters to buying from companies because they progress and, when necessary, mediate
customers; neglecting to create a have learned to trust their products. conflicting priorities.
culture of customer advocacy. Such Such trust is invaluable and easily
missteps can have a lasting negative lost—for example, when a company Acquisition and Retention:
impact on the customer franchise. solicits feedback from consumers and Customer-Centric Essentials
What positive actions can we learn seemingly fails to act on it, or when it
from the past? indiscriminately reduces service levels. How do high-performance businesses
In fact, 30 percent of respondents said create lasting customer relationships?
Spend where it counts. Costs tend loss of credibility plays a strong or very How do they successfully target and
to take center stage when growth strong role in their decisions to leave win new customers? How much change
slows. Experience suggests that providers.5 is enough? The key is focus: on hard
companies that cut budgets across facts, on management fundamentals
the board see minimal return from Keep sight of growth. Rather than and, importantly, the best customers
their remaining investment. Streamline simply riding out the storm, use the and most likely prospects.
costs where necessary, and give need for change to spur innovative
equal importance to optimizing what thinking. Periods of market upheaval The most successful organizations
is spent. Consolidate the marketing are often the best times to gain share. have expanded the traditional focus
budgets that large organizations tend Reduced funding means companies on customer relationship management
to disperse across multiple groups, will have fewer resources to match one to encompass customer experience
to reduce redundancy and increase another’s products. Over time, fewer management. They have an outside-in
impact. Before investing in new loyalty companies will be left to compete perspective (what do customers
programs, make sure they are directed profitably for the same market space. really think?). They are innovative
at the customers who are most likely The ability to predict, prepare and act and experimental in their channel
to stay. Rather than reducing service on these opportunities will separate strategies (how do customers want
levels or moving service operations to companies that suffer from the current to be reached?). They deliver an
low-cost locations, try increasing the economic situation from those that end-to-end experience that reflects
use of lower-cost self-service channels prosper during it. a holistic, multidimensional view of
by customer segments predisposed to the customer rather than internal
prefer this option. Create accountability. A cultural bias systems and organizational complexity
towards the customer only happens (they see their business through the
Stay relevant. Pricing is another by design. Establish corporate- customer’s eyes).
first-response area that requires level structures for performance
careful analysis to get right. Buyer measurement, oversight and Here’s how successful organizations
values change when economic accountability, directly linked to translate customer centricity theory
conditions change, and customers how well the customer experience into practice.
have other values besides low price. is managed. Create incentives that
Some may even question the value • Knowing the customer. They
encourage all employees to cultivate a
of lower-priced goods, or wait to see have the facts they need to
positive customer experience. Identify
if prices go even lower. Accenture succeed, gleaned through customer
a customer centricity champion or
research suggests that, even in times segmentation and deep analysis, and
“chief customer officer" to advocate
of limited credit and scarce capital, they have a differentiating ability to
for end-to-end customer focus, and
demonstrating a commitment to translate these insights into profitable
assess the impact of new initiatives,
delivering a highly relevant, high- decisions about product, bundling,
policies or processes on the customer
quality customer experience can be pricing, campaign design, etc.
experience before they are enacted.
a powerful factor in retaining as well
as attracting customers—for some Maintain balance. Whether the
customers, more influential even focus is on organic growth, customer
4 High Performance in the Age of Customer
than price.4 retention or cost containment, Centricity, customer satisfaction research,
manage the response using a balanced Accenture, 2008.
scorecard that reflects the multiple 5 The Curse of the Disloyal Customer, Customer
loyalty research, Accenture, 2006.

Customer Acquisition and Retention 7


• Reaching the customer. Through priority to understand the intentions • They recognize that developing deep
channel innovation, solution-centric and preferences of target customers, insights into the customer may be a
selling and effective partnering, they creating a strong foundation for marketing-led activity, but using these
are able to reach the right customers evaluating the options. insights is a task to be shared by the
at the right times in the right places, entire organization. They use customer
and engage in a two-way exchange • High-performance businesses insights to full advantage both by
of information. They maximize identify market opportunities and applying them forward into customer-
marketing investment to reach the right competitive risks through actionable facing operations, and backward into
customers, with the right messages for customer segmentation and predictive supply chain and finance operations.
the right products in the right channels. analysis. They know their customers
along multiple dimensions—what Knowledge Is power. Recently, a client
• Delivering the customer experience. they value, how they behave, what approached us about a persistent
They deliver consistent and highly motivates them—and in a geographic issue they were having with subscriber
relevant customer experiences context—local needs, regional churn. The company knew an issue
that fulfill the brand promise and differences—and use this knowledge existed, and they had difficulty
create trust and loyalty, and keep as the basis for actionable, reliable identifying its source. Our analysis
customers at the center of strategic decision making. revealed a previously undetected
decision making, process design and subscriber group: current customers
management, organizational design • They make the investment necessary who had already decided to leave
and talent management. to ensure market and business and were simply waiting out their
intelligence is accurate, accessible contracts to avoid penalties. Churn in
Knowing the Customer and in a usable format. They also this segment was highest because the
Whether the goal is streamlining costs, experiment with new technologies for company typically contacted them at
launching a new loyalty program or capturing real-time buyer behavior, the point their contracts expired—after
targeting new markets, knowing the to optimize marketing messages and they had already decided to switch.
customer is step one. Make it a first incentives in real time. Knowing this group existed—and

8 Why Customer Centricity Matters


knowing when to reach them and importantly because these insights market economy will share some
how—helped the client cut churn in provide the critical platform for characteristics with affluent consumers
half, and improve the response rate to making subsequent decisions about in other markets, but will also have
retention campaigns by 500 percent. how to reach buyers and how to serve distinct needs. A consumer who just
and interact with them. began earning a disposable income will
Clearly, when it comes to customers, have different needs than a consumer
overlooking their needs and intentions Think global, act local. Whether they in the same geographic market who is
may in fact hurt you, particularly when develop it through their own market now approaching retirement age.
economic conditions change. In a weak research or acquire it through local
economy, buyers still must buy. And third-parties, organizations planning A deep understanding of these
so, they adopt different purchasing for growth must have a global view of segment differences will help define
habits based on changing attitudes: the consumer, with deep insight into customer experiences geared for
about the value of their personal time; geographic nuances. Nokia, for example, growth. A fast-food chain, for
the recreational activities that matter has employees spend a week with example, trying to enter the Chinese
most; their concerns about diet and customers in rural Kenya to observe market will know that Chinese
exercise; etc. how they use phones—and Nokia enjoys consumers prefer chicken to beef—and
a leading market share in Africa.6 it will tailor menus accordingly, or
Smart companies will act now to work to educate customers about
reconnect with customers, understand Consumer behaviors reflect the unique the high-quality beef products it
how customers are responding to economic and social environments of uses, or even target younger, more
current market conditions, and shape their geographic locations. For example, individualistic consumers in urban
their offers and services accordingly. consumers in mature economies tend to areas, who may want to set themselves
The smartest companies do the same be more sensitive to the quality of the apart from older customers in their
when times are good. Developing end-to-end consumer experience. In choice of restaurants.
deep, accurate real-time insight into contrast, emerging-market consumers
prospects and customers is absolutely tend to focus more on product features
essential at all times—certainly to than the customer experience. A newly 6 Clayton M. Christensen, Stephen Wunker
support “marketing” needs and more affluent consumer in an emerging- and Hari Nair, “Innovation vs. Poverty,” Forbes,
October 13, 2008.

Customer Aquisition and Retention 99


Where Does Your Organization Stand?
Organizations respond to new risks stand today, based on your historical
and opportunities with different performance, unique circumstances
methods and at different speeds—from and global position. Companies must
tactical projects within business units quickly and clearly judge their position
to cross-enterprise transformation. from these perspectives and then act
Making good decisions about where to accordingly. How customer centric is
head, how to get there and how fast your organization?
to move rests on knowing where you

Retention and Cost Management Acquisition and Growth


Containing and managing customer costs Expanding business with current customers

• What are the incentives to reduce front-office costs impacting your • What evidence do you see of changes in customer attitudes and
front office activities? How would these reductions affect the customer behaviors?
experience? • How are your customers’ requirements for service and support changing?
• Who is responsible for the acquisition and retention budget at your • How quickly can you change products, services, and pricing to meet their
organization? How are investments in both areas coordinated? needs?
• What statistics do you have linking “customer performance” to • How do your customers participate in the innovation process?
financial performance? How do you use these metrics to manage your
business? • What do you know about how customers perceive the value of your
offering?
• What information would help you better analyze and manage customer
costs and return on investment?
• What constrains you from obtaining or using this information?

Retaining current customers Expanding into new markets and customer segments

• Who are your most profitable customers, and how are you managing • Have you taken a fresh look at your growth strategy? How will it
these relationships? change going forward?
• What new needs do these customers have? How are they likely to • Have you analyzed markets and segments for new growth potential?
change their buying behavior? • How do these opportunities relate to any loss of revenue or profit you
• Do you know what drives loyalty within these segments? may experience due to economic conditions?
• What will the impact be if these customers decline in value or leave? • Do you analyze customers who leave and use this analysis when
• Are you willing to invest in these relationships today at lower profit, targeting new customers?
to keep them in the long run? • What are the key challenges to spurring growth in your more mature
markets?

10 Why Customer Centricity Matters


Reaching the Customer: Growth in Expanding connectivity and channel Bringing a more fact-based,
the New World Economy proliferation have also taught analytically-rigorous perspective to
customers to expect multichannel sales operations is perhaps the best
Knowing the customer is the
sales and service experiences, and step an organization can take, when
foundation of customer centricity.
efforts to satisfy this expectation it comes to reaching the customer.
Translating customer segmentation
have led to escalating costs, incon- One approach is to focus on areas
and analysis into strategies and
sistent service levels, turf wars and with highest urgency or potential
tactics for reaching them is the
numerous other operational and value, and expand if the effort
next step—one that is increasingly
technological issues. succeeds. This approach is pragmatic,
challenging, due to a highly dynamic
focused and poses less risk; however,
business environment, and greater Traditionally, companies dealt with the implementation path may take
channel and product complexity. such challenges by calculating the longer to produce a significant
option promising the highest return—a advantage. Another option is to define
• High-performance businesses plan
factor of channel capability, power a long-term vision and roadmap for
and manage selling activities using a
and costs. While this is still necessary, broadening use of analytics. This
more fact-based, analytically rigorous
organizations must also factor in how approach tends to be more logical and
approach than the average company,
customers themselves prefer to be provides a strong foundation for the
using these more scientific means to
reached—including both direct and future, while also requiring a clearer
create and calibrate channel and partner
indirect channels and also channels strategic intent and a stronger, longer
strategies, manage partner incentives
of influence beyond the company’s commitment.
and optimize the cost of sales.
control, such as user blogs, consumer
advocacy sites and other channels for Reaching in multiple directions.
• They also analyze the behaviors of
“social commerce.” Ultimately, delivering a truly customer-
the direct sales force; and provide
centric experience means reaching
tools, training, incentives and
Good reach needs a strong grasp. down and across the channel network
other methods to align more of the
There are many possible “best” to align the efforts of distributors,
workforce to high-performance
combinations of channels. The key is retailers and agents, and to influence
behaviors, and speed the transition
getting the approach to these decisions all the interactions occurring in the
from product-focused to solution-
“right”. Reach strategies often rest network: purchase, complementary
focused sales.
with sales divisions, which are focused service and product offers, exposure
on driving sales and improving sales to other advertising, educational
• High-performance businesses are
productivity at the expense of building content, etc.
more innovative and forward-thinking
relationships. More executives in
with their channel strategies—exploring,
the organization must grasp the big Wal-Mart illustrated this point
for example the use of Web 2.0 and
picture while also understanding the when it announced it would soon
social commerce to create two-way
details of the channel and serving as an require suppliers to be audience for
dialogues that turn buyers into brand
advocate for the consumer. As a result, compliance with specific social and
evangelists, inviting customers to
decisions become strategic rather than environmental criteria, to address the
participate in branding and product
tactical and fragmented across multiple heightened environmental concerns
innovation.
functions, avoiding the cost of an equally of the retailer’s customers. This
• To deliver an end-to-end customer- fragmented customer experience. arrangement signals a policy move
centric experience, leading organi- away from intermittent transactions
Many organizations agree that with many suppliers toward
zations consider the entire channel
analytics are important—to areas longer-term arrangements with fewer
network—distributors, retailers and
other than sales. The typical suppliers. Wal-Mart expects it can
agents—and seek to align or influence
organization has relied too much on use its buying power to keep prices
all network activities that impact the
well-connected sales agents to deliver low while monitoring suppliers more
relationship lifecycle.
revenue, and too little on facts and closely. By 2012, the company says,
Rethinking Reach. Increased predictive analysis. As a result, many it will require suppliers to source
competition and market saturation organizations are struggling now 95 percent of their production from
have turned many companies to find to see past their blind spots: which factories with the highest ratings in
new sources of growth, such as small- prospects in the database are the audits of environmental and social
to-medium enterprises or emerging- best targets for a new campaign? practices.7
market consumers. These opportunities What type of channel partner has the
are often highly fragmented as well as best track record with a particular
unfamiliar, and require new channel segment? How should I prioritize my
and partner strategies reach. time between the customers in the 7 Stephanie Rosenbloom, “Wal-Mart to Toughen
sales pipeline? Standards,” New York Times, October 22, 2008.

Customer Acquisition and Retention 11


Knowing the Customer: Managing Loyalty

As brands become increasingly


commoditized and competition grows
more intense, customer loyalty has
all but vanished. In this environment,
understanding the factors that drive
loyalty, and managing these factors
successfully, is critical to staying
relevant, competitive and profitable. The
key is to take a scientific and end-to-end
approach to loyalty management, that
takes into account every form of loyalty
and which encompasses the entire
relationship lifecycle.

What Every Organization Should Know About Customer Loyalty

Know where loyalty begins Know what to look for

The factors that create and influence customer loyalty begin to take Most companies know a lot about their customers, and comparatively little
effect even before a customer becomes a customer. The relationship a about the factors influencing acquisition and retention. Achieving high
customer develops with the brand during the acquisition stage strongly performance in customer retention means aligning activities throughout
influences customer value and retention. the relationship lifecycle—including acquisition—and using econometric and
return-on-investment analytics to study and maximize conversion rates and
other customer behaviors across channels and throughout the lifecycle.

Know every kind of loyalty Know what to measure

Loyalty is not necessarily an emotional connection to the brand. True Companies often measure the wrong things when trying to measure
brand evangelists—or even potential evangelists—are at best rare and customer profitability and loyalty—loyalty indicators are far more
possibly non-existent. Companies need to recognize, develop and involved than customer satisfaction scores. Establishing and managing
manage more than one kind of customer loyalty: conditional, emotional cross-functional key performance indicators throughout the customer
and passive—using more than one kind of strategy. lifecycle helps prevent the loss of current and potential customer value.

Know how the value chain affects loyalty Know how to manage complexity

Third-party channels and routes to market also affect customer Products, service bundles, channels—these and many other factors have
loyalty—and can destroy unless they are managed effectively. Analysis grown exponentially more complex in recent years, making customer
and decisions concerning such factors as offers, sales incentives, pricing, loyalty more complex to manage well. Providers must retain the ability
service delivery—all dimensions of the customer experience—should to react quickly to changing customer needs and market conditions
include all the trading partners who contribute to the customer experience.

12 Why Customer Centricity Matters


Reach strategies must also include two only distant rewards. However, while • High-performance businesses
directions: pushing messages toward decisions about reach are more complex, understand the full cost of serving the
customers while simultaneously pulling and more crucial to get right, companies customers they have, acquiring those
information from them. Consumers have a renewed opportunity in this they want, and the lifetime value of
can now control the conversation market to differentiate themselves and these relationships, and align their
in unique, even extraordinary ways. shape demand, while better serving investment in retention and acquisition
Innovative companies reach out to the interests of their customers. Those accordingly.
customers for feedback, using digital willing to review and optimize their
marketing and social commerce strategies by taking a customer-centric The experience economy. When
channels to capture valuable approach will reap considerable rewards. marketers use the phrase “customer
information about consumer attitudes experience," it is more than semantics.
Managing the Customer Experience
and preferences, while detecting early We are in an “experience economy”
product or service issues that will Around the world, consumer today—customers want more than a
demand a quick response. expectations are rising quickly, and product or service; they buy a total
their perceptions are defined through experience: consideration, purchase,
Social network marketing is especially an increasingly complex set of use and service. Companies that
useful in forming relationships with interactions. Moreover, new consumer master experience delivery have an
hard-to-reach customers. Burger King, populations are emerging with distinct advantage. Our research into the
for example, relies on a core audience needs and preferences of their own. characteristics of high performance
of loyal customers who eat fast food And competition for the customer’s has shown that a positive customer
frequently—largely, the elusive 18 attention and business can now come experience accounts for 33 percent of
to 34-year-old male demographic. from virtually any region of the world. a company’s ability to achieve strong
Notoriously difficult to reach through customer loyalty.10
traditional media, these customers do In this increasingly complex, multi-
interact heavily via text message and polar, hyper-competitive environment, Over the last decade, companies
social networking sites.8 the ability to deliver a satisfying have implemented more and more
experience may be a company’s best varied interaction channels and the
These new channels tap into the real source of sustainable competitive customer experience typically spans
passions and concerns of consumers advantage. Yet few companies are multiple touchpoints. With so many
and enable happy customers to serve distinguishing themselves for service points of contact to manage, the cost
as product advocates. According to quality. Our most recent customer of customer contact is exploding—
its senior vice president and general satisfaction survey also found the globally, corporations invest billions
manager for BestBuy.com, Best Buy is highest level of switching due to a annually in managing customer
exploring whether to post information poor customer experience—67 percent contact. Yet despite their investment,
about which products are most of all respondents—than in any prior customer satisfaction remains low: in a
frequently returned and which require year we have conducted this survey.9 recent Accenture survey, for instance,
the most repairs. So much transparency more than half of the respondents said
may well alienate the brands it sells. • High-performance businesses providers meet their expectations only
On the other hand, consumers are create customer loyalty by delivering sometimes, rarely or never.
already sharing similar information a customer experience differentiated
with each other online. An effective (highly relevant) to the needs and The same customer loyalty survey
reach strategy takes advantage of the intentions of specific customer also found that nearly 60 percent of
situation—for example, by taking into segments and consistent with the consumers would switch providers to
account the degree of direct feedback promise of the brand. get better or more reliable service; 34
afforded by a direct or indirect channel percent have switched because of a
when evaluating new or existing • They design experiences that reflect negative experience; and 39 percent
channel strategies. a deep understanding of what satisfies continue patronizing a provider
and frustrates specific customer due to a positive feeling about the
In short, companies must work to segments, and consider multiple
achieve the right balance of many customer values—timeliness, reliability
variables in their reach strategies. and convenience as well as price—
8 “Scaling the Tower of Babel: Harnessing the
Although a necessary response to rather than focusing on one element, Promise of Personal Media,” Accenture Journal of
market upheavals, reconfiguring such as price, at the expense of the Customer Centricity, November, 2008.
others. They execute these experiences 9 High Performance in the Age of Customer
channel and partner strategies can
Centricity, customer satisfaction research, Ac-
appear daunting, and seem to promise consistently across customer channels centure, 2008.
and touchpoints. 10 High-performance marketing and customer
management research, Accenture, 2005.

Customer Acquisition and Retention 13


overall experience.11 Conversely, our experience. In two surveyed markets— Trust at the Center
research on customer satisfaction France and Germany—price carried
has consistently found that a poor more weight as a factor motivating It is hard to predict for now how all
customer experience is the most consumers to leave, and in Brazil, more the factors affecting the business
common reason why customers leave consumers left as a result of being environment will play out. What does
providers—cited by 68 percent of frustrated by corporate bureaucracy. seem certain, however, is that many
the participants in our most recent companies have an opportunity—
consumer survey. More eye-opening still, when asked perhaps even an imperative—to give
about their reasons for choosing a new their customers a new experience,
Balancing value and price. In the provider, 66 percent chose customer better aligned with their changing
same survey, a poor customer service—only marginally fewer than lifestyles needs, financial goals and
experience was the most common the 68 percent who selected their new social and environmental concerns.
reason for leaving, identified by 68 providers based on price. In China,
percent. Presented with other possible Canada and India, customer service A customer-centric organization will
reasons, 45 percent blamed service ranked higher than price when it came stay very close to customers during
representatives lacking knowledge; to the choice of new providers, and in these uncertain times. They will
40 percent pointed to company the United States, customer service maintain a clear view of what their
bureaucracy; 39 percent cited the and price carried equal weight. customers expect and what kind
lack of customized solutions; and of experience they are giving their
38 percent pointed to service delays In times of economic uncertainty, customers. They will work to ensure
or outages. companies may turn to price-cutting as these two dimensions align at those
a strategy for retaining customers who key moments of truth when customers
Interestingly, only 53 percent globally are increasingly price-sensitive. When decide to stay or leave. We believe the
reported leaving because they found it comes to customer loyalty, however,
a better price elsewhere—significantly providers would do well to remember
fewer than the 68 percent who the powerful role played by a satisfying,
left because of a poor customer customer-centric experience. 11 The Curse of the Disloyal Customer, Customer loyalty
research, Accenture, 2006.

14 Why Customer Centricity Matters


Reaching New Customers: Growth in the New World Economy
With mature markets growing more At the same time, a collaborative customers is essential in designing the
competitive and saturated, companies network of strong regional players reach strategy—offering development
are struggling to grow revenues is needed to reach, connect with and pricing, channel mix, local
within the customer base. In contrast, and do business with local buyers—a partnering, operating style, etc. For
consumers in emerging economies distributor with local knowledge of the example, “small ticket size” or monthly
such as India and China have bigger various regions, the customary business payments on high-value products have
disposable incomes and an increased practices and competitive pricing can proven effective. And localized, high-
propensity to spend. Tapping this speed distribution and growth. intensity promos, rather than sustained
growth opportunity, however, involves national advertising, have proven more
navigating huge geographic areas Success often depends on reaching effective when it comes to reaching
and large populations, studying out to lower-income customers, which the low-income customer.12
differing economic and infrastructure means selling to unsophisticated
capacities, and, in some cases, buyers in geographically dispersed 12 Kevin Bandy, “Recipe for Growing Sales in
Emerging Electronics and High-Tech Markets,”
understanding dramatic differences in locations. Understanding the
EDN, August, 2008
cultures and customs. differentiating characteristics of these

Customers in these markets tend to


prefer dealing with providers directly
rather than indirectly through partners.

Figure 3: Emerging consumer segments offering new growth opportunity

Europe
Healthy Hedgers
North America Digital Ringmasters
China and Asia
Cause Connectors Technocrats
Young Royals
Householders Front Runners
Patriots
Home CIOs Deal Seekers
Aging Aspirationals
Multi-Channel Textperts Urban Authentics
Deal Seekers
Front Runners Life Managers
Family Enrichers
Emerging Africa and India
Argo-Entrant Accelerators
Entrepreneurial Advancers
Life Managers
Engaged Organizers
Brazil
Rough Diamonds
Front Runners
Fresh Starters
Eco-Entrant Accelerators
Digital Ringmasters
Moment Maximizers

Customer Acquisition and Retention 15


Delivering the Customer Experience: Satisfaction and Profitability
Investing equally in every customer— Determine service levels across the
whether to gain or retain their channel portfolio according to the
business—is seldom effective or customer needs and profitability
even necessary. High-performance defined by the new strategy. Typically,
businesses know what it costs to this will involve handling most service
serve the customers they have, what transactions through self-service
it will cost to acquire those they or guided-service channels, while
desire, and the lifetime value of these reserving costlier support options
relationships. for the more valuable customers
and transaction types. Remember
that emphasizing self-service still
means emphasizing good service:
personalized, efficient and consistent.

Balancing value and cost to service


Insight into customer histories and contact
preferences is essential to reengineering the
customer experience and maximizing the value
of each interaction.

Re-Direct Pay Attention

Encourage to use low-cost channels Focus high-touch service, high-cost resources

Pay Less Make Every Moment Count

Minimize cost to serve Find opportunities to cross-sell and up-sell


within interactions

16 Why Customer Centricity Matters


Customer Acquisition and Retention 17
most successful organizations will be Best Buy has espoused a similar view— water to people who could refill their
those that make it their first priority to to give customers reasons beyond own containers. Despite the economy,
help customers achieve their long-term price to choose their business. The the company continues to push
aspirations—as opposed to simply company realized that in some ways it forward on its sustainability initiatives.
convincing them to buy more things at was already playing a trusted advisor According to the Wal-Mart executive,
any consequence. role—customers were coming to Best “There’s been no better time to apply
Buy's website to research potential sustainability than when times are
Consider, for example, how National purchases, and sometimes this was tough. It is absolutely in line with the
Grid, the second-largest utility in their only intention. Rather than making everyday low price philosophy.”14
the United States, is expanding the it more difficult to research on their
traditional role of a power company by website, Best Buy decided to revamp it An organization that is customer-
serving as a trusted energy advisor to to support what visitors were using the centric offers highly relevant customer
its customers. "We want to become a site to accomplish. experiences, designed to capitalize
'navigator brand,' helping customers on well-understood opportunities for
understand their energy choices and Traditionally, the goal of corporate profitable growth and tailored to the
how they can take action on climate buyers is to drive sales in their preferences and intentions of target
change, while we deliver a superior category—and according to the senior customer segments. At the heart of
customer experience," says one director of strategy and sustainability at these efforts is trust. An offering can
executive responsible for strategy and retail giant Wal-Mart, the company is be commoditized. Even an experience
marketing at the company. This move working to find the line between sales can be commoditized. A trusted
reflects the company’s commitment to and profit and responsible behavior relationship, however, will always
customers—yet it’s also a strategy for in the broadest sense. The company’s remain a unique differentiator.
dealing with skyrocketing energy prices bottled water buyer, he says, has
and growing environmental concerns.13 been encouraging suppliers to use
less plastic in their bottles, and selling
13 “Becoming A Trusted Advisor,” Accenture
Journal of Customer Centricity, Accenture,
October, 2008.
14 Marc Gunther, “Talking Sustainability with
Wal-Mart,” maxgunther.com, October 13, 2008.

18 Why Customer Centricity Matters


To discuss how Accenture can help About Accenture CRM About Accenture
your organization on the journey to
high performance, please contact us Accenture’s Customer Relationship Accenture is a global management
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acquisition and retention in uncertain performance by transforming their Combining unparalleled experience,
times, visit accenture.com/centricity marketing, sales and customer service comprehensive capabilities across
functions to support accelerated all industries and business functions,
growth, increased profitability and and extensive research on the world’s
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home page is www.accenture.com.

Customer Acquisition and Retention 19


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