consumer relationship architecture report - by customer helix

Customer Relationship Architecture

Designing a blueprint for enduring consumer relationships

April 2014

By Dave Frankland

Table of contents

3 Executive summary 7 Consumer relationship strategy — it still matters!

8 Measuring consumer relationship strategy

9 Five categories of relationship strategy 10 Non-relationship-focused firms 11 Revenue-focused firms 12 Consumer experience-focused firms 13 Consumer engagement-focused firms 14 Collaborative firms

16 Most firms aspire to a more consumer-oriented strategy 17 Yet, few firms perform well at their current strategy

20 Consumer relationship strategy permeates the entire business 23 Relationship strategies have broad impact

24 The “best strategy” is the one that’s right for you 25 Recommendations

26 Methodology

Executive summary

In an age when more and more firms say they seek to become “customer-centric”, there remains little definition about what that really means. Meanwhile, the term Customer Relationship Management

carries so much baggage and has so many interpretations that it has been rendered meaningless. However, we are big believers — evangelists, even — in all things consumer relationship-focused. We

just wish firms would approach it in a more deliberate and strategic manner.

This report builds on months of research and analysis. We interviewed practitioners from a broad range

of industries and surveyed 200 consumer-facing professionals at large firms. Through our analysis we

identify five consumer relationship strategies that we see firms pursue. We classify these as:

!   Non-relationship-focused. These firms devote little time or attention to their customers beyond making a product for them to purchase. Relationships are transactional and often disconnected.

!   Revenue-focused. These firms often focus on consumers’ lifetime value, and they emphasize cross-selling and upselling to existing customers.

!   Consumer experience-focused. Firms that pursue this strategy seek to understand their consumers throughout the consumer journey and to design more enjoyable experiences and boost customer satisfaction.

!   Consumer engagement-focused. These firms seek to deliver relevant and personalized interactions, tailored to each recipient’s preferences, likes, and sentiment.

!   Collaborative. Collaborative firms seek to do what’s right for the consumer — not just for the firm. They make strategy and business decisions with the consumer benefit in mind, and they care about how the consumer evaluates their relationship.

Consumer Relationship Architecture 3

Most firms aspire to a more consumer-focused strategy.

Overall, we found 58% of companies currently pursue a company-focused strategy versus 35% that

pursue a consumer-focused strategy and 7% that pursue a collaborative strategy. This breaks down

further as:

!   Non-relationship-focused: 31% !   Revenue-focused: 27% !   Experience-focused: 16% !   Engagement-focused: 19% !   Collaborative: 7%

A healthy dose of firms (38%) currently pursues their desired strategy. And, of those that wish they

could pursue another strategy, the vast majority (73%) would pursue a more consumer-oriented

approach. Specifically, when we analyzed the desired strategies of all respondents, we found they aspire to:

!   Non-relationship-focused: 18% !   Revenue-focused: 12.5% !   Experience-focused: 24.5% !   Engagement-focused: 28% !   Collaborative: 17%

None of these strategies is inherently better or worse than another. What’s important is to identify and

then pursue the strategy that’s right for you and your consumers. Unfortunately, we know that too few

firms can adequately describe their customer strategy, and if you can’t define it, it’s tough to pursue it

effectively.

31%

27%

16%

19%

7%

Customer Helix evaluation of respondent firms’ current strategies

Non-relationship-focused Revenue-focused

Experience-focused Engagement-focused Collaborative

18%

12.5%

24.5%

28%

17%

Customer Helix evaluation of respondent firms’ desired strategies




n = 200

n = 200

Few firms perform well at their current strategy

We ask three key questions when evaluating consumer relationship strategy: 1)

how well do firms know their consumers; 2) how well do they apply that knowledge; and 3) to whose benefit. To answer these questions we look at a

firm’s culture — driven by its executives’ priorities and the enterprise alignment as it relates to consumers. We consider the depth and breadth of data that a

company uses to understand its consumers and the technology systems that it

deploys to connect the data. And, we consider how well — and how broadly — a firm applies the intelligence that it has about itscustomers throughout the

business.

In general, most firms have plenty of room for improvement, regardless of their

respective strategy. As few as 0 – 24% of respondent firms operate at our

highest two levels — a level 4 or 5, out of 5 — for their respective strategy. To

improve, firms will need to review their strategy approach and architecture, identify barriers and gaps, and build a roadmap to execute on the best strategy

for the firm and its consumers.

This report outlines the key requirements related to culture, applied intelligence,

data, and technology that firms need to deliver on their chosen strategy. It

demonstrates how a firm’s relationship strategy permeates and impacts the entire business. For example, we found that firms that have a more consumer-

oriented strategy claim to outperform their competition not only on consumer-

focused metrics but also in achieving revenue and profitability targets. And, finally, the report provides a foundation for Customer Helix’s consulting offerings,

which deliver in-depth and in-person evaluations and roadmap offerings.

“As few as 0 – 24% of respondent firms operate at our highest two

levels … for their respective strategy.”


Customer relationship architecture

Consumer relationship strategy — it still matters!

Customer Relationship Management, or CRM, is a flawed term. For many people it refers more to a

salesforce automation tool or a customer database than consumer relationships. On the contrary, we’ve

long subscribed to the Walt Disney Company’s way of thinking. Disney’s Parks & Resorts division has a

CMR team — that is, a Customer Managed

Relationships team — recognizing that the company doesn’t “manage” the relationship with its

consumers. The consumer does.

But, just because the term is flawed, doesn’t mean that firms shouldn’t pay close attention to their

consumer relationships. For the majority of us,

business survival depends upon it. And, we believe that firms actually need to pay closer attention to

their consumer relationship strategies. They need to actively think about the type and form of relationship

that they wish to have with their consumers and to,

then, orient their business decisions, consumer interactions, and employee incentives around that

desired strategy. Unfortunately, few firms deliver to this end.

To understand how firms currently approach their

consumer relationship strategies, we recently

surveyed 200 consumer-facing professionals at

large firms. These professionals are responsible for such functions as consumer acquisition, retention,

intelligence, experience, relationships, and service. All of the respondents are manager-level or above at

firms with greater than $500 million in annual revenues, and they represent a diverse range of

consumer-oriented industry verticals.

Representatives from banking and financial services, consumer packaged goods manufacturing, retail,

and high-tech product manufacturing together made

up a little more than half of the respondents.

This report explains the various consumer

relationship strategies that we see firms adopt and,

through the associated survey [bit.ly/relationship_architecture], enables readers to

evaluate their current and desired approaches. It also provides a foundation for Customer Helix’s

consulting offerings, which deliver in-depth and in-

person evaluations and strategy roadmap offerings.

The research is a first step in a complete “consumer

relationship mapping” offering, which combines a

company’s view of its consumer relationship with the relationship perspective of its consumers. The

consumer research is currently in process and

expected in Q2 2014.

15%

25%

31%

29%

Approximately how many employees work for your company?

500 to fewer than 1,000 1,000 to fewer than 5,000

5,000 to fewer than 10,000 10,000 or more

18%

13%

13% 11%

9%

7%

7%

6% 6%

4% 3% 3%

Banking/financial services

Consumer products

Insurance Retail

High-tech products

Automotive

Health insurance

Media, entertainment, leisure Cable / telecom

Pharma / biotech

Utilities

Travel

To which industry does your company belong?


n = 200

n = 200

Measuring consumer relationship strategy

No two firms have the same relationships with their consumers.

As we considered consumer relationship strategies and the approach that different firms employ, we honed in on three

primary questions that we believe underlie every relationship, and that every firm needs to consider:

!   How well do we know our consumers?

!   How well do we apply that knowledge?

!   To whose benefit?

We then evaluated firms based on three primary categories that

relate to these questions and are central to a successful

consumer relationship approach:

!   Data and technology. This includes the depth and breadth of data that a company uses to understand its consumers and the technology systems that it deploys to manage and connect the data.

!   Applied intelligence. Once firms analyze their consumer data, this relates to how well they apply that intelligence in different ways throughout the business — whether in consumer communications, across functions, or in informing executive decisions.

!   Culture. A company’s culture is driven by its executives’ priorities, including their consumer relationship objectives, enterprise alignment, and concern for consumer expectations.


Every consumer relationship has similar basic requirements

Five categories of relationship strategy

At the highest level of analysis, we find firms to be either company-focused or consumer-focused. At a deeper level, we

identify five categories of relationship strategy and classify firms as:

!   Non-relationship-focused

!   Revenue-focused

!   Consumer experience-focused

!   Consumer engagement-focused

!   Collaborative


Non-relationship-focused firms

As the name suggests, these firms display no real concern for building

relationships with their consumers. For some, that might be because they don’t have a direct relationship with their end consumers. But, many others say that

they wish to have deep relationships with their consumers, yet their approach and activity belie their desire.

Non-relationship-focused firms devote little time or attention to their consumers

beyond making a product available for them to purchase. Their relationships are

purely transactional. These firms do leverage consumer data, although they use it primarily to inform merchandizing, branding, product, pricing, and sales

decisions rather than on consumer relationships. From a technology perspective, we found these firms far more likely to acquire point solutions at the business or

functional level, and we also found non-consumer-facing parts of the business to

have a greater share of voice over technology decisions.

Given their historical lack of direct relationships with consumers, we weren’t

surprised to find many CPG and pharmaceutical firms in our non-relationship-

focused category. However, in recent years CPG firms, in particular, have aggressively adopted digital, mobile, and social media to establish direct

connections with their consumers. And, although we did find a greater relative number of CPG and pharma firms in this category, every industry that we

evaluated had some representation here.

Senior Brand Manager, CPG company


“My customer is the grocery store or wholesale club

that sells my product to the consumer. I invest in building relationships with my customers, but not

my consumers. We survey consumers to understand what motivates them, and we pour money into building our brand and making it appealing to

consumers, but I don’t need an actual relationship with the consumer. That’s the store’s job.”

Revenue-focused firms

While remaining company-focused, revenue-focused firms do recognize that

their existing consumers may be a source of greater or other future revenue. They often focus on consumers’ lifetime value and emphasize cross-selling and

upselling to existing consumers. It’s almost a zero-sum game in which the company wins when the consumer loses.

We don’t want to give the impression that these firms are unsophisticated —

many employ relatively advanced segmentation, analytics, and communications

techniques. But, when we dug into what drives behavior and how they appear to think about relationships, the objective for these firms in their consumer

strategy and consumer interactions is focused almost exclusively on the firm’s financial reward. Not surprisingly, given their commercial focus, consumer

intelligence in these firms is oriented towards marketing, sales, and pricing

decisions. Similarly, technology decisions are oriented towards sales and marketing, and their data strategy centers on transactional and behavioral data.

Once again, every industry is represented in this category. However, we did

notice a bump in the number of insurance, banking and financial services, and health insurance firms that appeared in this category. In light of the changes

that are coursing through the health insurance industry, we have spoken with many firms that are scrambling to transform from a traditional employer-focused

model to a more consumer-focused model. These transformations don’t occur

overnight, and it’s commendable to see that many have evolved beyond the non-consumer-focused category. Some have even evolved fully to consumer-

focused strategies.

VP, Customer Development, Cable and Telecom firm


“We know a lot about our customers – in aggregate and at an individual level. We know which product clusters typically sell best in which order or what the typical cadence of product purchase is for different types of customers. And we plan our communications to leverage that insight. For example, once a particular customer type has

bought products A and B, we know that it’s 87% likely that product C will be their next purchase. We then look for the optimal time and way to present

an offer for product C to that customer.”

Consumer experience-focused firms

Experience-focused firms place a higher importance on building consumer

relationships. They seek to understand their consumers through voice-of-consumer programs and ethnography and to apply that knowledge in designing

more enjoyable experiences for consumers. This often begins with graphical or user interface design, but evolves to encompass all facets of the consumer

journey.

Consumer experience-focused firms place a premium on understanding and

improving consumer satisfaction. They seek to personalize experiences in owned media, particularly websites and mobile apps, and in stores/branches. These

firms typically leverage consumer intelligence as a major factor in brand, product, and consumer experience.

From an industry perspective, automotive, consumer electronics, and health

insurance firms “popped” here. Similar to CPG firms, many consumer electronic firms have historically struggled to establish a direct connection with their

consumers. With the explosion in the “wearables” category, the lines between

product, experience, and consumer are starting to blur. No wonder, then, that we see such emphasis on the consumer experience.

VP, Member Experience, Health Insurance company


“Quite honestly, health insurance companies never had to be great at satisfying consumers, as long as employers were happy. With so many new direct

relationship opportunities, we recognize that member experience may be our greatest

opportunity to differentiate our offering. We have evaluated every facet of the consumer journey and

are investing heavily to design the best possible experience at each step of the journey.”

Consumer engagement-focused firms

Engagement-focused firms seek to deliver relevant and personalized

interactions, tailored to each recipient’s preferences, likes, and sentiment. Frequently hailing from industries that enjoy direct relationships with consumers,

these firms deploy a disciplined test-and-learn strategy and demonstrate serious respect for consumer preferences.

These firms capture and leverage a broad range of data sources, but place a

heavy emphasis on interaction data. Most invest in a connected data

management approach, and we often see flexible and interoperable technology solutions — at least in the areas of consumer interaction. Engagement-focused

firms generally use a broad array of analytics throughout the consumer-oriented facets of their business. Consumer intelligence plays a major role in consumer

interactions, and we often see real-time use of intelligence across marketing and

interaction channels.

Retail, media, entertainment and leisure, automotive, and cable and telecom

were the standout industries in this category. Each of these has long embraced

database and direct marketing in their communications approach, but we are encouraged to see them expand their engagement efforts to encompass the

entirety of the consumer relationship.

VP, CRM, Retail firm


“Our goal is to understand our customers as

completely as they will allow. That means understanding them as a person and not just as a buyer. Only then can we interact with them in a far more relevant and personalized way. While it’s a

major commitment and investment, we are already able to show that customers reward us over time

when we tailor our efforts and demonstrate a respect for them as individuals.”

Collaborative firms

Collaborative firms seek to do what’s right for the consumer — not just for the

firm. They act in such a way that demonstrates a belief in a consumer relationship as truly symbiotic. In essence, they seek to fully understand the

consumer, to apply that intelligence to service the consumer, and to act in such a way that mutually benefits the company and the consumer.

These firms make strategy and business decisions with the consumer benefit in

mind. They care about how the consumer evaluates their relationship. They

develop and deliver personalized experiences — from products to interactions to connections. These are companies that would chafe at the idea of making money

off a consumer without delivering at least the equivalent value in return.

Collaborative firms leverage a broad range of intelligence sources, and we

usually find holistic, real-time data management practices. Similarly, we usually

expect to see flexible, interoperable, and future-looking technology solutions.

The sample size of firms that we classify as collaborative is too small to draw too

many conclusions as it relates to industry distribution, but 6 of the 15 firms were

from the banking and financial services industry. The remainder was spread out

across an array of industries. In our experience, firms that are operating under a collaborative strategy are few and far between, so we wouldn’t expect to see too

much concentration in any one area.

SVP, Entertainment company


“We have always tried to put the customer first –

it’s part of our DNA going back to our founder. But, we have a renewed effort lately towards

transparency – being open with consumers about how we can deliver greater value to them.

Sometimes, we may be giving up a little revenue, but we believe it will deliver long-term gain. But, it’s

hard to do. It cuts across every facet of the business – from product to operations to marketing to service. You can’t attempt to just do this in one

or two parts of the business.”

Non-relationship Revenue Experience Engagement Collaborative

•  Customer relationship is not the focus of company decisions

•  Emphasis on customer acquisition, retention, and lifetime value

•  Relationship focus is purely commercial

•  Emphasis on customer satisfaction

•  Build relationships based on understanding of customer journey

•  Focus on relevant offers and positive customer experience

•  Respect customer preference

•  Disciplined test-and-learn strategy

•  Exec focus on customer

•  Focus on customer perceived value

•  Concerned with mutual benefit for consumers

•  CI primarily influences merchandizing, branding, product, pricing, and sales decisions

•  CI is mainly focused on marketing, sales, and pricing decisions

•  CI is a major factor in brand, product, and customer experience

•  CI is used to personalize experiences

•  Emphasis is on owned media channels

•  General use of descriptive, predictive, and prescriptive analytics

•  CI is a major factor in customer interactions

•  Real-time use of intelligence across channels

•  Broad use of descriptive, predictive, and prescriptive analytics

•  CI is a major factor in enterprise decisions

•  Real-time use of intelligence across channels

•  Typically acquire point solutions at the business or functional level

•  Non-consumer-facing parts of the business have a greater voice over IT and data decisions

•  Data focus centers on transactional and behavioral data

•  Technology and data decisions are oriented towards sales and marketing

•  Emphasize voice-of-customer and ethnography in customer understanding

•  Limited emphasis on data integration

•  Narrow tech enablement requirements

•  Heavy emphasis on interaction data

•  Broad range of data sources

•  Connected data management approach

•  Flexible and interoperable tech solution

•  Broad range of customer intelligence sources

•  Holistic, real-time data management approach

•  Flexible, interoperable, and future-looking tech solution

A firm’s relationship strategy reflects its emphasis on key relationship elements

Data & technology

Applied intelligence

Culture

Data & technology


Culture

Data & technology


Culture


Most firms aspire to a more consumer-oriented strategy

As we analyzed our survey results, we built a model to determine which strategies different respondents currently

pursue, as well as to understand their desired strategies. Overall, we found 58% of companies currently pursue a

company-focused strategy versus 35% that pursue a consumer-focused strategy and 7% that pursue a

collaborative strategy. This breaks down further as:

!   Non-relationship-focused: 31% !   Revenue-focused: 27% !   Experience-focused: 16% !   Engagement-focused: 19% !   Collaborative: 7%

A healthy dose of firms (38%) currently pursue their desired strategy. And, of those that wish they could pursue another

strategy, the vast majority (73%) would pursue a more consumer-oriented approach. Specifically, when we

analyzed the desired strategies of all respondents, we found they aspire to:

!   Non-relationship-focused: 18% !   Revenue-focused: 12.5% !   Experience-focused: 24.5% !   Engagement-focused: 28% !   Collaborative: 17%

31%

27%

16%

19%

7%

Customer Helix evaluation of respondent firms’ current strategies



18%

12.5%

24.5%

28%

17%

Customer Helix evaluation of respondent firms’ desired strategies



Consumer Relationship Architecture 16 n = 200 n = 200

Yet few firms perform well at their

current strategy

While it may be tempting to run off and pursue

a more consumer-focused strategy, we found many respondents struggling to simply

execute on their current strategy. We created

an evaluation model to score respondents on how well they deliver against their current

strategy, and divided the respondents into five levels.1

To evaluate each strategy, we broke the

scoring criteria into three primary areas: 1)

culture; 2) analytics and applied intelligence; and 3) data and technology. The criteria we

evaluated within each of these areas varied for each respective strategy. For example, we

evaluated 13 elements in scoring revenue-

focused firms versus 97 in evaluating collaborative firms.

In general, most firms have plenty of room for

improvement, regardless of their respective strategy. As few as 0 — 24% percent of

respondent firms operate at our highest two levels — a level 4 or 5, out of 5 — for their

respective strategy. In detail, here’s what we

found:

Revenue-focused firms. We scored 45% of

revenue-focused firms at levels 1 (17%) and 2

(28%). A further third (32%) were at level 3,

20% at level 4, and only 4% at level 5. What impacted their scores? Those at the lower

levels are clearly focused on cross-selling and upselling consumers, but there’s not much

sophistication in that pursuit. In these firms,

the use of analytics and segmentation is often sporadic, and most consumers are treated in

pretty much the same way as one another. At the higher end, we found a greater emphasis

on understanding and boosting consumer

lifetime value and found communication approaches that demonstrate an

understanding that not all consumers are created equal. These firms still view their

consumers primarily as a source of future

revenue, but their approach and execution is focused on, or sometimes driven by, a

consumer’s potential value.

17%

28% 32%

20%

4%

Revenue-focused firms

1 2 3 4 5 Level


n = 54

1 We didn’t score the non-relationship-focused respondents. If they’re not focused on building relationships with consumers, it doesn’t make much sense to evaluate how well they do it.

Experience-focused firms. The firms we classified as experience-focused struggle

to get into a high gear. We graded two-thirds of these firms at levels 1 (13%) and 2

(53%), with most of the remainder at level 3 (31%). Only 3% scored a level 4 and none

reached level 5. What’s holding these firms

back? Many fail to leverage important experience-oriented tactics, ranging from

their understanding of consumer journeys

to their usage of voice-of-consumer programs, ethnography, and consumer

satisfaction programs (including Net Promoter Score). And, while we are big

believers in consumer experience as a

discipline that is focused on delivering enjoyable experiences across all aspects of

the business that serve a consumer’s need, we are also aware that many CX

professionals and programs evolved from a

user-experience heritage. As such, we also included a small number of questions

related to UI design and gave credit to those using tactics such as eye-tracking

technology and web analytics.

Engagement-focused firms. We found a comparatively high number of level 5 firms

among those that are engagement-focused — albeit at 3%. We also found the fewest

level 1 firms (0%). Not surprisingly, then, there’s a large group bunched in levels 2

(38%), 3 (51%), and 4 (8%). A lot of these

firms engage with their consumers in a plethora of channels, but far fewer execute

effective multi- or omni-channel

communications — for example, by leveraging contact strategies to tailor

communications in one channel based on an understanding of how the firm has

interacted previously, or recently, with that

same consumer in another channel. The engagement-focused firms that scored

highest personalize their interactions based on what they already know about a

consumer’s preferences, needs, and

sentiment, and see each interaction as an opportunity to learn more about them to

inform future interactions.

13%

53%

31%

3% 0%

Experience-focused firms

1 2 3 4 5 Level

0%

38%

51%

8% 3%

Engagement-focused firms

1 2 3 4 5 Level


n = 32

n = 38

Collaborative firms. We should start by saying two things. First, it’s really hard to be

genuinely collaborative. Second, only 15 firms out of the 200 (7%) even fall into this

category. With such a small number of firms, we’ll refrain from making any broad,

sweeping statements about the category.

When we scored these firms — across almost 100 criteria — we found that five of

the 14 were at level 1; five were at level 2;

and four at level 3. None scored at a level 4 or 5. In some respects, collaborative firms

demonstrate many of the best qualities of each of the other categories — they are

sophisticated in how they segment and

understand consumer value and treat different consumers differently; they focus

heavily on delivering great consumer experiences, understanding consumer

journeys, and engaging with consumers in

a highly individualized way based on their understanding of them.

But what elevates collaborative firms is their desire to be just that: collaborative.

The idea of a zero-sum game has been inverted. These firms recognize that they

win only when consumers win. And, that might mean that they occasionally take a

small, short-term revenue hit in order to

build mutually beneficial, long-term relationships. As we said, it’s hard to do.

Especially when there are shareholders to

report to, revenue goals to meet, and sometimes conflicting internal objectives

and incentives. We were actually encouraged that a relatively small number

of firms say they seek to pursue this

strategy — it’s really not for the faint of heart, and it’s better to be successful at a

chosen strategy than to pursue the one that sounds or looks good, and do so poorly.

We wonder whether we will ever find many

firms that perform as high as a level 5 when pursuing this strategy. But, we absolutely

tip our hat to those that try, aiming for mutually beneficial relationships while

maximizing consumer perceived value.

5 5

4

0 0

Collaborative firms

1 2 3 4 5 Level


n = 14

Consumer relationship strategy permeates the entire business

Understanding a firm’s consumer relationship strategy is not an academic exercise. The strategies that different firms pursue

correlate with a broad swath of behaviors and impact business success in different ways. We cross-tabbed the responses from

the firms that fell into each respective strategy to understand the similarities and differences among these firms, beyond the

narrower topic of consumer relationships.

We started by trying to understand the drivers of executive

decisions. In our survey, we asked respondents to identify what they felt were the five most significant drivers of board and

executive decisions — regardless of the firm’s marketing and corporate literature. Given the primary roles and responsibilities of

senior executives, “profit” was, not surprisingly, a top three choice

across all strategies with sufficiently large sample sizes.1 Where it got interesting, though, was in how other choices seemed to

reflect the consumer relationship strategy. Non-relationship-focused firms, for example, also emphasized revenue and return

on investment, whereas consumer engagement-focused firms

leaned more toward consumer retention and consumer experience.


Profit

Customer experience

Return on investment

Revenue

Customer satisfaction

Customer retention

Risk

Customer lifetime value

Customer acquisition

Customer perceived value

Share price

Innovation

Accuracy of data to support decisions

Confidence in ability to deliver

Corporate social responsibility

Internal politics/ relationships

Environmental impact

Non- relationship- focused

Revenue- Focused

Experience- Focused

Engagement- focused

Most cited areas of perceived executive focus

Perceived areas of executive focus

1 Due to the small sample size of collaborative firms, we have not included percentages or responses for the questions that we cross-tabbed. Where a very large number of the collaborative firms gave a specific answer, we called it out in absolute rather than percentage terms.

Strengthening brand and consumer relationships are near-universal goals


Similarly, when asked about the primary goals for consumer-facing parts of the business, “growing long-term relationships” and

“strengthening the value of our brand” were universally among the top answers. However, “boosting consumer loyalty” popped with those

pursuing a more consumer-oriented strategy, along with an emphasis on consumer satisfaction versus an emphasis, not surprisingly, on

consumer lifetime value and cross-selling and upselling to existing

consumers as primary goals for revenue-focused firms.

Grow long-term relationships

Understand consumer needs

Enhance customer service

Customer satisfaction

Strengthen brand value

Consumer acquisition

Consumer loyalty

Improve efficiency

Customer lifetime value

Enhance consumer experience

Deliver relevant communications and offers

Identify future consumer needs

Consumer perceived value

Provide tools for consumers to manage relationships

Reduce attrition

Consumer facing goals

Cross-sell / upsell

Non- relationship-focused

Revenue- focused

Engagement- focused

Experience- focused

Consumer-facing goals differ by strategy

Consumer-oriented firms deploy more open and connected technology solutions


We acquire point solutions at the business or functional level We leverage shared data capabilities across the organization We acquire enterprise solutions for the entire organization We leverage a service-oriented architecture to connect enterprise-wide solutions We deploy an “inter-enterprise” approach, connecting our internal systems with relevant external systems

As it relates to technology systems, we found company-focused firms far more likely to acquire point solutions at the business unit or functional level (49% of non-consumer-focused firms, and 47% of revenue-focused) than consumer-

engagement-focused firms that are more likely to leverage shared data capabilities across the organization, and experience-focused firms that are more likely to acquire enterprise solutions for the entire organization. Seven of the 14

collaborative firms leverage a service-oriented architecture to connect enterprise-wide solutions.

Q: Which of the following most accurately reflects your company’s current technology approach to consumer intelligence?

n = 200

To understand how consumer strategy impacts the business, we correlated each firm’s responses to questions we asked about how each firm’s

performance compares to their competition. We asked a series of questions

about how they compare across elements such as achieving profitability targets, attracting and retaining consumers, delivering innovative solutions,

and investing in new technologies. The responses proved interesting, both as

an indication of priority by firms within a given strategy, as well as when looking across the response choices at how much more likely they were to

be chosen by firms within specific strategies.

There’s a danger of falling into a “causation versus correlation” conversation

when examining these results. But, when looking at them in totality, it’s clear

that the firms that have a more consumer-oriented strategy claim to outperform their competition not only on consumer-focused metrics but also

in achieving revenue and profitability targets.

Delving deeper by strategy, we found:

!  Non-relationship-focused firms generally claim to outperform their competition most often on financial metrics: achieving profitability targets; growing profitability and margins; achieving revenue targets; and delivering shareholder value. These are all admirable achievements; however, it is notable that only one attribute, “achieve profitability targets,” was selected by more than 50% of respondents.

!  Responses from revenue-focused firms extended beyond a purely financial focus, with top responses spread across profitability targets, growing profitability and margins, and attracting new consumers combined with delivering value to consumers and satisfying consumers. Perhaps reflecting the breadth of top responses, no attribute was selected by more than 50% of respondents.

!  When we got to experience-focused firms, the pendulum swung firmly in a consumer-oriented direction. These firms highlight consumer satisfaction, delivering value to consumers, and engaging with consumers as the top areas in which they outperform their competition. Each of these three attributes, plus two others — grow profitability and margins and upsell/cross-sell to existing customers — was selected by more than 50% of respondents.

!  Engagement-focused emphasize their relative success in delivering value to consumers, consumer satisfaction, achieving revenue targets, and investing in new technologies. These four attributes plus three others — achieving profitability targets, engaging with consumers, and delivering shareholder returns — were selected by at least 50% of respondents.

!  With so few collaborative firms, we don’t have a statistically significant number of firms to separate out the most frequently referenced elements. However, at least seven of the 14 collaborative respondents believe that they outperform their competition across 11 attributes: achieving profitability targets, delivering value to consumers, satisfying consumers, growing profitability and margins, achieving revenue targets, engaging with consumers, attracting new consumers, retaining consumers, obtaining referrals or recommendations from existing consumers, achieving revenue targets, delivering shareholder returns, and delivering innovative solutions.


Relationship strategies have broad impact

The highest number of respondents within each strategy chose: •  Non-relationship-focused: achieve

profitability targets •  Revenue-focused: satisfy consumers •  Experience-focused: satisfy consumers •  Engagement-focused: deliver value to

consumers •  Collaborative: grow profitability and

margins

The “best strategy” is the one that’s right for you

Although it’s a question we’re asked frequently, we don’t suggest that one of these strategies is

inherently better than another. Instead, we believe that companies and brands should

carefully decide which strategy is right for them. The right strategy will depend on the

company’s desired relationships, their

competency and capability to enable that type of relationship, and the consumer’s

expectations. And, once they decide, they

should then align their processes, interaction technologies, investments, and employee

incentives in such a way to best execute the strategy. For a company that makes widgets

that are sold through an intermediary to invest

heavily in establishing and maintaining a collaborative relationship doesn’t make too

much sense.

But, at the same time, it’s not just about choosing a strategy. Once a firm decides which

is the best relationship strategy, it must focus on aligning and delivering against that strategy.

For example, firms that seeks a collaborative relationship will need to invest in truly

understanding their consumers, in thinking

through how to best apply that knowledge in every interaction, and how to genuinely

establish a mutually beneficial relationship —

not just one that benefits the company.


Recommendations

We have designed our research and survey to provide you with a diagnostic of your business. We’ll provide you a summary report that shows which strategy we believe you are currently pursuing, how well you are pursuing it, and

which strategy you demonstrate a desire to pursue. If you wish to leverage the diagnostic and improve your current approach, we’ll highlight barriers that appear to be holding you back and provide you the ingredients to build a

consumer relationship strategy roadmap.

If you prefer to leverage Customer Helix and Targetbase, a leading consumer engagement agency, to manage the

process, we partner to offer:


To take the survey and receive a free diagnostic — analyzed and prepared in concert with our partner, Targetbase — please go to: http://bit.ly/relationship_architecture

!   Strategy architecture reviews. We can deliver a qualitative assessment of your firm based on a variety of stakeholder interviews from within your firm, and we can also benchmark your strategy and approach against peer and competitor organizations. This provides an in-depth and independent assessment of your current and desired state, and provides practical recommendations on how best to evolve your current approach.

!   Consumer relationship mapping (coming soon). Map your approach to your consumers’ expectations. Using a proprietary data set, we can identify the types of relationships that your consumers wish to have with your firm, compared with the experience that they have today. We can then plot this against your strategy architecture to further hone in on your most appropriate approach.

!   Roadmap development. We can develop a detailed roadmap based on a gap analysis of your current and desired approach. Leveraging quantitative and qualitative assessment data, we will suggest how to evolve your culture, data and technology, and applied intelligence approaches to successfully build the most appropriate consumer relationship strategy for your firm.

!   Business case. Let’s face it: despite the buoyant stock market, budgets are still tight. We can help you develop a business case to help justify the expenditure required to evolve your consumer relationship strategy and approach.

Methodology

This research is the culmination of several months of research. We interviewed scores of consumer-facing practitioners between Q3 2013 and Q1 2014 and we surveyed 200 practitioners during Q4

2013.

The quantitative survey was managed by ResearchNow, an independent survey company, and

fielded to 200 randomly selected consumer-facing professionals that met our inclusion criteria.

Respondents are all manager-level and above, with North American or global responsibility, within companies with at least $500 million in revenues. All work within preselected, consumer-facing

industries. The survey was fielded in Q4 2013 and Q1 2014.

Exact sample sizes are provided throughout this report on a question-by-question basis, and in

some questions the results may not total 100% due to rounding.


This report is published under the notion of open research. The Creative Commons License is Attribution-Noncommercial-Share Alike 3.0 United States.

About Customer Helix

Customer Helix provides independent advice to help companies deliver value to their customers. By sharing research, opinions, and advice, we guide firms to better understand their customers, deliver superior customer experience, and boost customer perceived value.

Customer Helix also provides strategy consulting to help firms develop and improve their customer orientation.

Learn more at www.customerhelix.com

About the author

Dave Frankland is the managing partner of Customer Helix.

Most recently, he was an award-winning analyst and research director at Forrester Research, advising senior executives on customer intelligence strategy. Dave has consulted with companies – ranging from Fortune 50 businesses to international and regional organizations – on marketing and customer intelligence. His research and opinions have been featured in The New York Times, The Wall Street Journal, Bloomberg Businessweek, Harvard Business Review, Forbes, Ad Age, and CNN’s “The Situation Room.”