Cracking the Customer Code

Updated: Jun 10 2014, 08:21am hrs
The adage Customer is the king is now more true than ever. The abundance of information available at just a click through the digital technology, has incredibly transformed the way we communicate with each other, how we shop, how we share all types of experiences with family and friends. Because of this radical shift, delivering memorable customer experience and managing relationships is more important than ever for any organisation. The experience that the company gives them across services and touch-points can create powerful relationships that drive profitability. Understanding the complex customer behaviour and the true dynamics of a customer relationship therefore is the key ingredient for creating a memorable customer experience.

Customer Code

At the heart of every customer relationship lies a unique code. It identifies and matches up what customers expect from a company and what makes them prefer that particular company. At TNS, this is called Customer Code.

Mostly, successful companies have similar approaches to performances and generally are not differentiated much in product or service delivery or quality. The decisive criterion is the preference by the customers in making choices or a judgment about particular company. Successful companies know the difference between performing well and winning customers preference to stay with them.

Some companies can attain immediate preference but failing to showcase performance hampers their future in the market. We have seen several examples of such bubbles created by companies in the world and in India too. This is true for non-commercial organisations also. A new political party in India burnt its fingers by focusing only on developing preference and neglecting performance.

Analysing this gap between performance and preference in quantifiable terms can help a company to measure the strength of their customer relationships vis-a-vis competition and further help keep a track of this gap across markets, segments, etc.

To ensure both immediate and long-term success, a company needs to optimise its performance and preference. These two indicators together tell us the actual strength of relationship between the company and its customers. At TNS, we call it TRI*M Index. Successful companies have lower gaps between performance and preference and thus have these two indicators and the TRI*M Index in close proximity. Best ones have the lowest gap in their market and thus exhibit highest level of authenticity. So, mind the gap!

When we talk about cracking customer codes and assessing the strength of relationships, there is a second dimension we need to take into account, and that is customer behaviour in the light of individual context.

Individual contexts have great influence on customer behaviour

Each customer is different and possesses unique individual context. Customers differ in the way they are attracted by competitors, as per their life stages, their digital behaviour, their circle of influence, the types of products they use, their values and attitudes and much more. And in some cases this individual context can actually have a huge impact on customer behaviour.

Generally, the individual context impacts after the relationship had been for some time. Every relationship starts with a honeymoon phaseregardless of whether this is a personal or a business relationship. After a while the novelty wears off and while overall performance is still evaluated positively, preference declines with changed individual context. The timing depends on the intensity of the individual context. Upgrading the car frequently with changed affordability and social stature, despite being perfectly happy with the performance of the existing car, is a common phenomenon in India, more so in bigger cities.

Now, this suggests that after being with a company for a while, customers tend to get itchy feet, they might be open for other alternatives or perhaps already actively looking around. Insights like this can help companies to target specific customer segmentsat the right time in their customer life-cycle.

Every customer have unique motivation to stay back and there is generally a long list of such needs and wants, and to make it more difficult for the company, sometimes these are contrary to each other. This wide variety of things to modify or improve makes it complex for a company to decide what to act upon (and what not), given the limited time, budget and resources everybody operates within. Sometimes, conventional wisdom indicates what to act upon, but that fails miserably to highlight convincingly what can be given a blind eye, for how long and at the cost of what.

Many companies believe that strong customer relationships come from investing in every touch-point, every aspect of the relationship. They try to excel in everything they do, often without realising that they end up excelling on nothing. For optimum utilisation of resources, distinction needs to be drawn between the invest everywhere model and the invest in the right areas model. Right areas are defined as specific areas that important customers truly care about and expect. Understanding this leads to what we call an optimal customer experiencesomething that makes greatest impact on customer relationship while creating loyal and profitable customers, cost effectively.

Companies needs to know which areas need further investment or need to just maintain current level of investment or need to build on certain aspects as they really drive the relationship or even (re)consider some areas that currently take lot of time and resources but hardly contribute to customer relationship. This knowledge helps in cracking the code of the customer as a group, developing on the individual customer codes. It necessitates letting go some less-impactful product or service elements to be able to go full throttle behind those which matter the most.

Summing it up, there are three points that give an edge to a companys strategy:

*Know how to crack the customer code:

Analyse the strength of the customer relationships based on two metricsthe company performance and customer preference. And mind the gap!

*Know that context matters and do not look at customer relationships in isolation:

The competitive context in which customers make decisions is crucial in assessing the risk for the business. And treating customers as individuals and being aware of the relevance of changes in their life situation can make a real difference to the business.

Know that best (for the customer) is not always right (for the company):

Invest in the right areas, consciously let go some areas and make an impact not only through the products and services, but by focusing on giving memorable experience.

The author is executive director, stakeholder management, TNS India

Parijat Chakraborty