“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Sarah Denman, vice president of insights at 84.51°.
Every business faces disruptors of some kind. They often come in the form of technology, services or products. We all know their names: Amazon, Apple, Airbnb, Uber.
We also know businesses have more data than ever to help drive their decisions and strategies. Data scientists are one of the fastest-growing occupations, and it’s not uncommon for companies to have analysis teams with hundreds of employees dedicated to understanding their data. Companies now have sophisticated machine-learning algorithms and advanced predictive analytics techniques to help them anticipate what the future will bring.
Yet, even with all the data, experts and advanced methodologies, disruptors still appear seemingly without warning.
Disruptors cannot be avoided altogether, but there are things a company can do to prepare. One of the most effective strategies, in addition to constantly surveying the landscape, is to institute a strong customer perception measurement program. The voice of the customer can be a leading indicator to potential vulnerabilities. A disruptor can only gain traction and steal share if it meets a unique customer need that you are not currently meeting, and your customers will let you know that directly or indirectly.
The Disney brand, for example, flourished and adapted over the years despite many disruptors appearing in their various industries, partly because it understands the needs of its customers. Walt Disney once said, “You don’t build it for yourself. You know what the people want and build it for them.”
Creating an effective customer perception measurement strategy to help predict your vulnerability to a disruptor requires several key components.
Measure Against Those Customers’ Needs And Company Values
First, let’s acknowledge one thing: This is hard. Understanding customers’ needs means that meaningful and ongoing dialogue with customers must be omnipresent. This is more than open-endedly asking, “How can we improve?” or the closed-ended “Rate your satisfaction on a scale of 1-10.” And this is not just measuring basic operations in terms of whether customers found what they wanted or the bathroom was clean.
This means taking the time to engage with customers to know what is important to them, and then creating a business strategy around which needs the brand will and won’t stand for.
Part of what makes this particularly difficult is that customers’ needs change over time. The dialogue has to be ongoing. Customers will often say indirectly what their pain points are, but brands must ask the right questions and engage with them in the right way to find the answers. Doing this properly requires deliberate planning, financial and human resources and a willingness to invest for the customer.
Measure Behaviors That Matter and That You Are Willing To Change
Listening to your customers and identifying gaps in their needs is great, but those gaps must ultimately translate into behaviors that you are willing to change if they are going to be successful in fending off a disruptor. Too often companies employ overall satisfaction surveys with a statement along the lines of, “I’d really appreciate it if you would rate me as a 10 because anything lower counts against me.” In those cases, the emphasis is clearly on just hitting a target number with no actual desire to understand and improve the customer experience.
Another common mistake is to ask for measurement of something that cannot be translated into an action. Overall satisfaction scores provide good, quick context on how companies are performing, but in the absence of additional information, it’s impossible to know what the specific actions are that can be changed to improve the experience and avoid being vulnerable to a disruptor.
A strong measurement system will clearly identify what customer needs the business has chosen to stand for and measure directly against them. Overall satisfaction may be one element of the program, but it should then be followed up with specifics, such as how the company is performing against key attributes and behaviors in order to make changes to improve the overall experience score. Then, companies must be willing to take action.
Measure Health Of The Business In More Than Sales
Companies should promote a culture where they incorporate key customer measures into the view of the health of their business. Monitor customer needs and measures with the same priority as they would measure their sales or tonnage.
Disruptors can take a bit of time to gain momentum and do not appear overnight. If companies are only measuring their business health based on traditional key performance indicators, it may be too late by the time a disruptor hits the radar. If business measurement includes a lens of what customer needs a company aims to meet and how well it is meeting them, there is a better chance customers will provide the early warning that the company is vulnerable to a disruptor, which will allow enough time to formulate an action plan and prepare to defend against it.
Disruptors are a natural part of doing business. Innovation is good for customers, and competition is good for businesses to continue to grow and change. Those businesses that can effectively listen to their customers will be able to not only survive, but also thrive, and possibly become disruptors themselves.