How do you know whether or not making acquisitions is a smart decision? Here are three success factors to consider:

• Know the risk of the customer base you are buying. The due diligence process is critical. This includes predicting the future loyalty and growth of the customer base, in addition to understanding historical trends.
• Find the hot-spots. An acquirer doesn’t have to know every single area that needs improvement within the target company, but having indicators of weaknesses or hot-spots will give a clear indication of whether or not that company is a good fit.
• Use customer input in determining the integration strategy. Voice of the Customer feedback can help the acquirer to understand the strengths and weaknesses of the target firm; comparing this to a similar analysis of the acquiring company can identify leverage points that will increase the probability that the acquisition will be accretive in an accelerated fashion.

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We have coined a phrase around our company:

Be Customer Intelligent

For years we have studied customer relationships and now, probably more than ever, customer continue to change. They are more demanding and they expect you to know them and deliver products and services in a manner tailored to their wants and needs. More options are available. Switching is easier. Companies you never saw as competitors may now be your biggest threat. 

Companies must rise to the challenge. They must know each of their customer's next moves. They will need to be sophisticated at monitoring what their customers are saying and doing, and they must have a big appetite for using customer insights to make better decisions. 

So what does it mean to be customer intelligent?

My colleagues and I came up with a list of ten things. In fact, we even set up a website and printed  cool posters of them! You can order free copies here. 

It means ...

You can never know too much about your customers. 

You know your customers' business objectives -- you are informed.

You listen intently to your customers in many different ways.

Big data about your customers is a big deal. 

You know your customers well enough to predict their next move.

You take action on customer insights -- right now!

Your company is completely aligned with customer needs. 

You understand your customers through the supply chain. 

You use insights to personalize your customers' experiences. 

Your success depends on the success of your customers. 

Patrick Gibbons
Principal/SVP
Walker

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As January comes to a close, I thought it might be beneficial to pause for a moment and provide some thoughts on what trends we see emerging in the science of customer listening. Over the next several blogs, I will comment on a key trend and discuss the implications for customer strategists. Before delving into our first prediction, we need to discuss what we saw in 2012 from a customer loyalty perspective.

Loyalty in 2012: More of the Same

Source: Walker calculations based on data from http://finance.yahoo.com

It may go without saying that 2012 was a volatile year – the chart above shows the progression of a $100 investment on 1/3/2012 in each of the major stock indices – the Dow 30, S&P 500 and the NASDAQ Composite. The values are not as important as the shape of the curves – it demonstrates that 2012 had many ups and downs in the market. There are a number of reasons for this – the broader global economy, geopolitical unrest, the year-end drama related to the fiscal cliff, and so on. In this period of volatility, the impact on customer loyalty is not surprising – among Walker’s client base, the percentage of customers who are Truly Loyal was flat between 2011 and 2012; on a quarterly basis, we saw more variance in the loyalty scores with a drop in the last quarter of the year.  This is not isolated to Walker; many of the other industry benchmarks suggest that customer sentiment was flat at best in 2012 (and some have not yet published Q4 results).

Source: Walker Benchmark Database, B2B-Oriented Programs

Is Loyalty Dead (or Even Achievable)?

Despite some claims that customer loyalty is dead (or dying), I would offer that loyalty is still achievable – however, the bar is higher. The underlying reason for this relates to the divergence of expectations vs. reality – that is, as the economy has tightened, funds have become more scarce; this scarcity means that buyers are more selective in how they use their funds. This results in customers not only being more price-sensitive, but they also have heightened expectations on what they will receive. At the same time, providers have been forced to scale back on resources (as a result of constrained growth and/or uncertainty in the market), which ultimately means that they are ill-equipped to deliver on these expectations. This creates a “perfect storm” of dissatisfaction, which means that customer loyalty is harder to achieve.

So, this brings me to my first prediction/forecast for the coming year:

Quarterly loyalty scores will remain volatile as long as there is excessive uncertainty in the markets and/or the economy continues to be challenged.

What can we do about this? I would offer the following strategies for consideration:

1. Review your workflows to ensure an “outside-in” perspective – Conducting a review of the experience that your customers have with your organization can be quite revealing. Conducting a customer journey mapping exercise can help to highlight where gaps exist and can assist you in re-tooling processes to ensure an optimal customer experience. This is particularly critical among companies that have recently merged with or acquired another company.
    
2. Communicate – both externally and internally – During periods of economic turbulence, it is better to over-communicate. From a customer perspective, seek to gain an understanding of not only their expectations, but also what drives those expectations. Understand how their business works and how your products and services can help them to achieve their goals.
   
   From an internal perspective, reinforce the role that customer centricity plays in your strategy; on the front line, managers should spend time with their direct reports to identify how to integrate customer perspective into their day-to-day operations. Above all else, though, leaders must walk the talk – leading by example communicates better (and louder) than words.
    
3. Control what you can control – Much (if not most) of the volatility in the markets are outside our control; it is tempting, then, to throw our hands up and surrender – that is, just let the chips fall where they will.

Rather than take a sit-and-wait approach, we would recommend that you identify (from the steps noted above) what aspects you do control – for example, you control how your organization approaches the customer experience, you control how you choose to innovate, and you control how you respond to competitive threats. Focusing on what you control – and then acting on it – can be much more empowering that waiting for the winds of change to blow in your favor.

Even though customer loyalty is more difficult to achieve in these economic times, those firms who successfully crack the code will find that they have one of the few sources of long-term sustainable competitive advantage in their strategic arsenal. I would argue that the payoff is worth the effort necessary to realize customer loyalty.

Over the next few blogs, we will review the other factors that I am forecasting will be the trends and themes that customer strategists should be thinking about in the coming year. In the meantime, I would be eager to hear your thoughts – what are the themes and trends that you are tracking?

Mark A. Ratekin
Senior Vice President, Consulting Services
Walker Information

One critical aspect of validation is about proving the business impact. It involves tracking action plans that were prompted from the Voice of Customer (VoC) program through to completion and ultimately to a quantifiable ROI. Start by making sure your program is aligned and supports the business strategy. Then work to combine the customer feedback with other authoritative data sources (such as financial and/or operational) to quantify the impact it is having on your business strategy.

Validation can be one of the most challenging essential elements, but it is one of the most important.

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World-class action is defined as:

• Having a central repository of intelligence to support the decision-making process at any level of the organization to drive change.
• Keeping action plans updated regularly and consistently tracked through to completion; ultimately showing a business impact.
• Customers and/or partners acknowledge they have received follow-up after providing feedback and are aware of planned changes or improvements.

Internet marketing can be a minefield. There's no official textbook on proper strategy or tactics. It's up to business owners, and the marketing and search engine optimization (SEO) professionals they might hire, to figure out what works and what doesn't.

Since becoming an SEO consultant several years ago, I've stumbled over many of these proverbial mines, and so have the clients I've worked with. Not every mistake is a terrible one, though some should have been avoided. [Read More...]

Gathering information is an integral first step in solving difficult business challenges, and how you ask questions in your survey is a key component.  The following are characteristics of a good scale:

• It is comprised of exhaustive and mutually exclusive categories - That is, the scale should represent all possible opinions a respondent may wish to express.
• It should be easily interpretable and understandable. The scale should be easily administered and it should be easy for respondents to use.
• It should produce variation in responses across respondents. Actionable data requires that there be variation in responses.

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Below are five tips for building a great account-level contact list:

1. Get the account team engaged in the process. Without their involvement the results might not be considered valid or valuable.
2. Let the customer participate too. Having someone from the customer organization add, modify, and delete contacts helps secure their buy-in.
3. Identify a good starting point. A CRM system is a good starting point. Another great starting point is the contact list from a previous survey wave or another initiative.
4. Make the process as easy as possible. Use a simple Web form to collect customer information from account managers.
5. Provide clear and simple instructions. Create a quick start guide.

I recently conducted a radio interview with LocalJobNetwork.com radio on the state of employee loyalty.  One of the things I liked about the discussion was we got into the role of both the employer and employee in having a loyal workforce.  Far too often the emphasis is on what the organization should be doing to foster employee loyalty but employees have a role in it too.  I think too often employees can have the type of attitude where nothing the organization does is ever good enough, Senior Leaders are clueless, and there is no future for them at the company.  Now, there are a lot of companies where these are all true, but I think in a lot of companies the Senior Leaders aren't entirely clueless and companies may try to do the right thing, it may not be perfect but there is an effort to try to take care of the employees, even in some small ways.  So click here listen to this radio interview and let me know your thoughts on employee loyalty being a two-way street.