The difference between Gartner and Meta Group is a good example. Gartner was focused on research, whereas Meta Group tried to distinguish itself by listening and working closely to their customers needs. And it was successful in doing so. Gartner then acquired Meta Group in April 2005 for $162 Million in an all cash deal. Meta Group's revenues were $122 million when the deal happened, so I don't know if it's that impressive.
Now every organization says 'Customer is King/Queen', 'Customers come first' and so on. The real test of a Customer Economic Model would be to see if the inputs given by the customer are absorbed and strategy and products are reshaped based on this.
All other organizations just masquerade good customer service or support as being Customer based.
This particular model is very interesting to me. I've been fascinated on how to create 'killer' products or solutions that competition doesn't provide and customers can barely vocalize their needs.
What are the characteristics of the Organization/Person in this model?
- Customers focused strategy
- Customer Relationships
Top and Middle management believe there are important 'revelations' that customers can bring to the table. Again, this is not about Customer Service. This is about treating customers as 'business partners' and viewing them as an inherent input into strategy.
For service oriented businesses, this might be very natural. However, it becomes easy to 'templatize' a service and forget about the customer as a business partner. Getting constant feedback and acting on it is an important aspect for service oriented businesses. If it's a single person offering a service, it might mean changing personalities, changing interactions or hiring people with complementary traits.
Customer service is an important aspect of the Customer Economic Model. Trust needs to be established and relationships need to be built that can be leveraged in periods of difficulty or when competition kicks in.
The customers must be able to trust that you would make their lives easier. Access to top management is typically a good way to foster this. Sometimes this can be counter productive, but we're shooting for building long term relationships.
This can become an 'Intangible Asset' for an Organization. I barely remember the HBR (Harvard Business Review) article on Intangible Assets. I'll try digging for it.
What are the risks involved?
- Segment oblivious
- The Customer is WRONG
- Time frame
When you talk to one customer, you're getting to know what she wants. How do you scale in breadth and depth based on what one particular customers want?
You can't. You have to talk to many customers and talk to customers in different segments. Identifying feedback from different segments is an important step to counter this risk. Segment definition is in itself a tedious exercise and prone to mistakes.
Many times customers try to 'solve' problems and project a 'solution' onto their need. And explain everything from a 'solution' perspective. Now there are some very smart people who can do that. But the majority of the customers don't know the solution domain as much as the vendor or provider does. It is important to restrict the feedback from customers to the needs domain. It might be too early to come up with a solution to a problem when receiving customer feedback or inputs. Separating the problem from the solution is an effort in itself, but an important aspect of understanding the problem.
Time frames are very important in any economic model. The 'window of opportunity' is especially critical to this economic model. It so happens that organizational 'priorities' take over and the customer is left to bite the dust. However, lasting relationships are not forged and can actually be hurt if the customer's feedback is ignored. It is important to give the customer feedback on the status of their feedback.
Execution plays an important role in dealing with time frames.
In my next post, I will review a book 'Blue Ocean Strategy' by W. Chan Kim and Renee Mauborgne. I read an HBR article on Blue Ocean Strategy and decided to buy the book. It is very interesting and hopefully I can do justice in my review.
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