CUSTOMER SERVICE

4 Ways You're Letting Your Customers Walk Away

A new study says 90 percent of companies fail to adapt to their customers' new ways of doing business. Here's what they're doing wrong.
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An old saying in business--the customer is always right--is generally misunderstood. It's not that everything a customer says and wants is the way a business should conduct itself. You'll always find some people who are unreasonable, antagonistic, or a general waste of time. But they are the exceptions.

The reason most customers are right is not some arbitrary standard. Because they spend their money, they'll look for companies that do business the way they want. Simple, right? In theory, yes. In practice, it takes far more than a pleasing manner and a smile. In fact, chances are that you are missing important clues and opportunities to keep your customers close, according to a new study from analyst and research firm Ovum.

According to the organization, 90 percent of companies fail to adapt to their customers' new ways of doing business. The average score over a number of key attributes was low enough to say that companies were "insufficiently connected to their customers and do not have the insight or discipline to enable them to sense and respond in ways that will ensure their relevance to their customers." That puts these organizations in danger of becoming "irrelevant" and the customers looking for another brand that might better understand and serve them.

Many companies use software systems like CRM applications to try and follow what their customers do and uncover underlying patterns of customer behavior through data analysis. But they miss being able to adapt to customers' changing behaviors and ways of doing business for a number of reasons:

  • Slow decision cycles: Even if a company can deduce what customers want and how their behavior is changing, by the time the business takes action, it is too late. Management is following customers through a maze at such a distance that the customers will already have turned in another direction while out of site.
  • Managers encourage other priorities: Employees do not feel an impetus to maintain and advance that connection to the customer. It would be easy to blame the employees, but some business experience suggests that managers often fail to properly design compensation and incentives to ensure this behavior. In other words, people at the top say customers are important but they likely encourage other activity instead.
  • The data isn't helping: Operational and channel silos parcel data out, effectively treating customers like some sort of composite. Data about one part might belong to sales. Another area of behavioral data could be held by operations or marketing or accounting or customer service. The more indirect the sales channel, the more data held by other parties.
  • A "serendipitous attitude toward innovation": If something smart happens to come up, that's great. But not enough time, money, or other resources are focused on deliberately finding better ways of doing business that will match the directions customers are taking.

Although there are basic things a company can do, none are easy. There is no quick solution by, say, installing software. All the issues that Ovum points out are ones of culture, attitude, ego, and personal habit.

That could explain why 90 percent of the companies they examined were losing the race. To buck the trend means to change the way people in the company work and how the processes in the organization operate. That's a tough type of change to undertake.

Last updated: Oct 28, 2013

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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