Are we measuring, tracking, and treating our customers with the care and services they deserve? A perspective for analytics professionals.
This article is inspired Rob Markey's article: "Are you undervaluing your customers?" published in Harvard Business Review, 2019.
The aims of corporations are well understood: to maximize profits and boost shareholder value. As a result, we are well-versed in interpreting accounting ledgers and financial statements which declare the gains and losses all in the hopes of satisfying investors that a company’s earnings are robust and in good standing.
But has this model completely missed the mark? Where do companies report on the value and growth of their key asset, the customer base?
In his HBR article, Rob Markey, reminds us that ultimately, customer value is amongst the greatest sources of a company's value.
And it’s about time companies acknowledge this in the way they do business. For example, cutting costs for maximized profits in one quarter/year such that it disturbs customer experience and loyalty is a short-term maneuver with long term consequences. Profits may lift in one interval only to revert and even diminish over time as influenced by: customer attrition; customer poaching by competitor offerings whose generous packages and optimized experiences don’t take for granted the needs of the client; and missed opportunities as potential customers defer.
So how can companies mitigate this oversight? It's time companies track customer value as they do other key assets.
While Markey discusses how auditable financial reporting measures – at the corporate level – could be introduced by firms to disclose customer base metrics in valuation criteria, I argue that we all have a responsibility to consider these numbers in everything we do, well in advance of fiscal year reporting or quarterly earnings releases. *Though I agree that all managers have a responsibility to educate investors on customer value and that reporting on customer value is a necessary development investors would be wise to anticipate in their valuations.
As the C-suite turns its eye toward customer value, analytics professionals are presented with new demands and a great opportunity
As managers and employees with responsibility over specific business lines, processes, products, and services, we are front-line to encourage the sort of customer-focus that leads to generating the best customer experiences and loyalty. We can foster this paradigm by including client-centric perspectives in our practices, analytics and decision-making on a day-to-day.
My bias in this endeavour is to prompt analytics professionals and teams to sharpen their technical aptitudes in ways in which they are prepared and able able to deliver on the type of analytics that this approach demands. And to become comfortable in doing so.
It will require creative thinking, artificial intelligence, advanced analytics, experimentation, differentiated systems/frameworks and methodologies, new and innovative technologies, thought-leadership, skills-building, tripling-down on domain knowledge, and of course business-to-customer relationship expertise (for all, not just high-level execs).
Sure, it may mean technical/analytics professionals are ever-learning and ever-honing our treasury of knowledge and skills, but generally, this excites us. I predict the benefits of this type of specialization in the domain of customer analytics to be quite lucrative as well.
At the outset, what does a focus on customer detail look like? It means harnessing customer data and solving the systems architecture to do so, defining appropriate metrics that are specific, actionable and effective, it means breaking down silos across teams so that information and objectives are shared, it includes building out customer journeys and profiles for a deep understanding of the customer, its investing in analytics and IT resources with the capacity to understand the customer, and then deliver for customer-focused improvements, products and services. In short: its re-formulating the way and “the why” we work.
Reorganizing around customer needs requires rewiring the organization and its decision-making pathways – Rob Markey
"Managing for customer value"
Markey shares four strategies that are pivotal in shaping the way we centralize our efforts around the customer and it actually starts early in the business’ operations:
- Develop robust customer-value management processes and tools
- Combine design-thinking with loyalty-earning technologies
- Organize around customer needs
- Lead for loyalty
Subset to each of these are practices, tools, technologies, and skills that are either developed, in development, or yet-to-be developed. It’s here that your creative problem-solving can really help to innovate in favour of both your company, and your own, objectives.
Rather than to aspire toward a status-quo, I encourage professionals leaning into new areas of professional development to consider how they can champion these perspectives in their skills and to contribute to the space as a community of practice!