Step back ten years and leaders from all walks of life, from those in business to party political leaders, were in a very different place: they were in control of their organisations and their customers. They were the ones to set the agenda with customers and constituents following swiftly behind. Fast forward to today and digital disruption has taken hold, bringing with it an avalanche of information and data. All power is with customers as they hold all the cards, while in contrast power has ebbed away from business leaders and politicians in the Customer Economy.
In today’s Customer Economy, even politics is being transformed by the power of the customer. Whatever your views on Brexit, everyone would agree that it has been a divisive issue that has transcended communities and political parties and has been fuelled by the power of the customer (i.e. the voter). This has pitted voters against the will of a traditional, some would argue outdated, Parliament and political system. Now, there is a ‘C-change’ in business and politics where the ‘C’ firmly represents the customer. Those leaders who centre their organisations around the customer from ‘customer voice’ – where digital systems can instantly relay customer attitudes, online interests and buying behaviour – through to a customer-led culture which co-creates innovative products and services with customers are the ones which will drive sustainable growth and success.
But if the benefits of prioritising the customer are so clear, why are all companies not following the example of organisations like US videoconferencing company, Zoom? The current leadership make-up of many corporate organisations represents an obstacle for growth. According to the Global Accounting Network in 2018, 51% of the FTSE 100 CEOs had a background in finance, meaning that many leaders have limited exposure to existing and prospective customers, focusing instead on the finances of the business. This theory is supported further by Peter Cheese, CEO of global professional body The Chartered Institute of Personnel and Development (CIPD), who argues that “Part of the problem is that too many businesses have lost sight of their purpose and their customers with a singular focus on financial outcomes and the financial stakeholder. Understanding all of the organisation’s stakeholders is critical, and in particular, their employees who ultimately are responsible for delivery of the value to customers.”
It is important to note that the view of what a customer is has completely changed from the traditional, siloed view of a paying customer. In order to succeed, organisations in the Customer Economy need to think holistically of a customer as an employee and partner too, blurring boundaries of the past. Employees are central to a customer-led culture. This is where leaders must nurture an army of employee advocates who put customers front and the centre of everything they do.
A good example of an organisation with a customer-led culture is the Ritz Carlton hotel chain. Its founder, Horst Schulze is the godfather of customer experience in the hospitality sector and shares an inspirational leadership story for CEOs. He famously coined the phrase for Ritz-Carlton staff to pride themselves on the mission, ‘we are ladies and gentlemen serving ladies and gentlemen’. Horst Schulze is a customer-led leader who created a C-change in fostering a guest-led culture which resulted in great service and sustainable growth. He honed in on the roles that the extended hotel team played.
For example, Horst told employees that they were empowered to make any decision up to the value of $2,000 which really shocked staff. However, his thinking was simple – it was worth spending $2000 to keep a customer. The Ritz-Carlton culture was all about creating customers for life and driving customer lifetime value.
Times are changing as businesses and CEOs realise that traditional priorities such as shareholders, quarterly profits and corporate structure just aren’t sustainable in the new Customer Economy. In August 2019, The Business Roundtable, made up of CEOs from nearly 200 major US businesses including Apple, Amazon and Bank of America, issued a statement committing to a more customer-centric focus. In this statement, they redefined the ‘purpose of a corporation’ as investing in employees and delivering value to customers, rather than serving shareholders and maximising profit, underlining the new customer-centric direction in which the business world is moving. This is a significant shift in a more customer-led attitude from this influential group of global organisations.
The rest of this editorial will be published at a later date.