Want to follow a Customer Intimacy-based strategy? Here is how you need to execute.
Line-of-SightSM helps companies execute better by measuring and managing five critical capabilities necessary for successful execution (or KSEs): strategic understanding, leadership, balanced metrics, activities & structure, and human capital; it also assesses market discipline - the ability to execute in a way that remains true to the strategic intent. These factors are aggregated to form an overall Organizational Health index measured on a scale from 0 to 100.
Line-of-Sight led a survey of more than 100 CEOs to measure how they evaluated the execution capabilities of their organization. This survey took place in Q1 2021 when most businesses were transitioning to a post-pandemic world.
The 2020 crisis forced many businesses to rapidly adapt their strategy to a radically shifting market demand, both from consumers and from business buyers. Therefore, it was to be expected that the strategies they pivoted towards would be a majority customer-centric.
Line-of-Sight data confirms this shift: 40% of CEOs surveyed are now pursuing a customer intimacy-based strategy (the survey did not baseline pre-pandemic strategies; it can be assumed that this percentage was substantially lower then). Indeed, companies have had to be attuned to rapidly changing demand patterns to adapt all aspects of their execution: sales, customer support, marketing, product development, supply chain, and fulfillment - in addition to moving to a fully or partially remote work environment.
Now that post-pandemic economic growth is here again, should companies shift back to other types of strategies, i.e. based on operational excellence or on product innovation? The answer is no: deep customer intimacy will continue to be a key factor of resilience as the business environment remains unpredictable. McKinsey recently outlined that B2C and B2B companies should continue to maintain a deep understanding of their customer behavior because “both business-to-consumer (B2C) and business-to-business (B2B) companies expect to see meaningful shifts in the shape of future demand.” For example, online grocery shopping is likely to stay, but leisure travel (and possibly business travel), as well as education, are likely to go back to the pre-pandemic level. There is even anecdotal evidence that in-office work may return to levels close to pre-COVID.
If you are the CEO of a company whose strategy is based on customer intimacy, execution will continue to be key. In particular, McKinsey stresses the need for speed: “Over the past year, adrenaline unlocked speed. In the near future, speed will need to arrive by design”.
Line-of-Sight data shows that speed, and overall customer-centric strategies, require rigorous execution discipline: indeed, CEOs pursuing customer-centric models rate all aspects of their execution consistently high: from strategic understanding, leadership, and balanced metrics, to activities & structure and human capital. CEOs pursuing alternative strategies tend to acknowledge and tolerate gaps in their execution (for example, companies pursuing operational efficiencies tend to rate the human capital part of their execution significantly lower than any other dimension).
Below are 4 best practices that CEOs should consider implement to be better attuned to customer demand and effectively adapt to it:
1. Make your strategy clear across your organization
If goes without saying, but your employees need to all be aligned on your strategic intent. As CEO, your top role is to make it clear to all. Line-of-Sight data in unequivocal: CEOs who are unsure about their go-to-market approach rate their execution performance at mediocre to abysmal levels, 15 to 30 points lower than CEOs whose strategy is explicit.
2. Let your customers know they are valued
Walk the walk on telling your customers that their feedback and input are valued and appreciated. You can do this by appointing customer advisory boards, creating a forum for your customers to communicate, or reaching out to high-value customers and partners before product launches to get their input and ideas; selectively reach out to customers providing NPS scores to understand in depth what drove their ratings.
3. Host events with your customers centered around their needs
Since so much business is done in a virtual or touchless environment these days, with minimal in-person and phone interactions with customers on a regular basis, digital and hybrid events can go a long way towards building customer intimacy and trust and create emotionally-driven relationships that are better predictors of loyalty than customer satisfaction alone.
4. Over-invest in your human capital
There is a reason why CEOs pursuing customer intimacy-based strategies rate their execution in the area of human capital 5 points higher than their peers, with a score of 69 vs. an average of 64: employee satisfaction drives customer satisfaction and builds the long-lasting relationships that enable intimacy. It was true before the pandemic and it is even truer now, because employees need extra support to heal the mental toll from the crisis, and better economic prospects will unleash massive job-hopping in 2021 unless companies invest in employee development to prevent turnover.
In upcoming blogs, we will continue to share insights from the Line-of-SightSM CEO surveys and best practices to maintain or regain execution excellence in the post-pandemic.