Most organizations today have shifted or are in the process of shifting from product centric to customer centric. But our recent interviews with CMOs from more than 25 Fortune 500 companies show that while this is a known requirement, making the shift is not simple. Take the example shared with us from a large American apparel company – “From the highest levels of our business we know we must put the customer at the center. In reality this is a massive challenge – for data alone we’ve been collecting it in brand silos for more than 30 years.”
This isn’t just a massive data challenge. At IBM’s recent CMO CIO Leadership Exchange, we dug into the question of how to get to an understanding of each customer at an individual level and then how to build systems of engagement. Many of the CMOs and CIOs identified the overwhelming hurdles presented by management, culture and incentives as some of the most significant barriers to delivering upon a customer engagement strategy.
When these internal people challenges become overwhelming it is important to consider three points from a study by The Gallup organization which found that:
- Organizations that optimize for customer engagement outperform their competitors by 26% in gross margin and 85% in sales growth.
- Engaged customers represent an average 23% premium in share of wallet, profitability, revenue, and relationship growth over the average customer
And if you think it really is too difficult – it will cost you to wait because according to Gallup:
- Disengaged customers represent a 13% discount in those same measures.
The evidence is clear: customer engagement not only brings you more revenue and profit; without it you will actually lose ground. If you consider the fact that your competitors are already focusing on this opportunity, you stand to lose even bigger ground.