Leadership, Culture Change And The Age of The Customer

On April Fool's Day in 1993, IBM stunned its employees, the tech community and the business world with the announcement that their new CEO was going to be Louis V. Gerstner, an industry outsider with not one day's worth of technology experience. And it wasn't a joke. Gerstner, though, did have impressive credentials. He was a McKinsey alum who led RJR Nabisco and American Express to impressive market and financial comebacks. Gerstner was a turn-around specialist, a term not frequently used much anymore. IBM was losing its place as a market leader, and careening dangerously close to insolvency. It posted an $8B loss that year. Oracle's Larry Ellison referred to IBM as "irrelevant."  A plan was underway to break the company into pieces. Chaos. Despite being a non-techie, IBM's Board pursued Gerstner aggressively. Why? They wanted Gerstner to make the bold and brash decisions required to exact real change and tangible results. They also wanted a fresh perspective on resolving the challenges Big Blue was facing. 

Upon taking over, Gerstner slammed the breaks on the plan to split up the company, deciding that an intact IBM was greater than the sum of its parts. There were massive layoffs to cut the fat (sound familiar?) So how did Gerstner eventually turn IBM around? How did he get buy-in? How did he make the elephant dance? Upon his assessment of IBM's issues, Gerstner found that IBM's culture was toxic-focused internally on the company and not enough on its customers. Divisions competed against each other rather than collaborating. He sought to take on the long established culture of managers that "presided" instead of taking action. Culture change became the backbone of Gerstner's plan to save IBM. “Culture isn’t just one aspect of the game,” he said. “It is the game. What does the culture reward and punish – individual achievement or team play, risk taking or consensus building?”

Fast forward to 2015. Why is Lou Gerstner important to today's C-Suite? Well for one, IBM is going through another shakeup. And in many ways, it is representative that the business climate today is evolving fast. Marketing and sales continue to struggle to work together to shepherd new prospects through a fragmented journey that stops and starts, changes players, requirements, and channels. Technology is taking the lead; the creatives are taking a back seat to the scientists. Social Selling is rapidly becoming more effective than traditional tactics. Customer Experience is bubbling up to the top of the charts of competitive differentiation. Sounds like a revolution.

Like Gerstner in 1993, today's leaders need to envision, create and nurture a new culture in order for their companies to flourish. A corporate facelift, if you will. The companies that get out ahead and lead in the social-digital-mobile economy will sail into shore, while those that cling to the past and present will find themselves tumbling around under water, clinging to life.

With this as the backdrop, here is a plan for driving culture change in your organization:

1. Cross-Functional Teams Redux: Create "Customer Experience Teams" consisting of marketing, sales, tech and customer service which work together on targeted segments of the business (i.e. industry, geography, solution). They are compensated most heavily on (1) customer sat (2) company success (3) team success. The customer is the center of the new universe. Customer satisfaction means more revenue and higher pay for the teams.

2) Revitalize Your Value Prop: Take a fresh look at your offering. If it doesn't add value to customers, shut it down. Gerstner backed away from relying solely on IBM's Mainframe business and instead positioned the company as an 'integrator.' Re- swizzle your messaging away from a solutions and product focus to a value-centric approach. Personalized messaging and content gains more attention and converts at a higher rate to revenue. 

3). The Turn-Around Generalist: While subject matter experts are important, the senior leaders will have experience and knowledge of many of the components of the modern day business. For example, marketing now consists of many different moving parts. Those who have an understanding of how all of the puzzle pieces fit together will be most valuable. 

4). Top Down Meets Bottom Up: Organizations can’t change their culture unless individual employees change their behavior—and changing behavior is hard (HBR). Senior leadership needs to have the vision, sell it in, select leaders who will carry the ball, and engage with the rest of the organization and give them the freedom to contribute, challenge, reject, cry, laugh, share, pout and eventually(hopefully) embrace. Not everyone will stay on board and that's ok. Teams will succeed and Narcissists need not apply.

The sweeping changes developing today around buyer and consumer behavior, the expanded role of marketing, the advanced methods of selling and the way organizations work together to effectively manage these changes present a great opportunity. The old way of doing things is definitely not what it takes to succeed in the present and future. Leaders who possess the vision to deliver success in the social-digital-mobile economy will be able to evaluate the issues, deliver the vision, and boldly work toward changing the culture of their organizations. 

 Dan Sixsmith is a VP at Alinean, Inc.

He is Founder and CMO at Trammel Marketing Group and Chief Content Officer at "The Digital Advantage by Dan Sixsmith."

He is also co host of the weekly Podcast, This Week In Digital Marketing subscribe here: http://t.co/H6wqFueAB2 

Twitter:@DigitalAdvantg

The Wolf Is Always At The Door

Did you know that...

• You have a 60-70% chance of a successful sale with a current customer as opposed to only a 5-20% chance with a new prospect (Groove, March 2015) and that...
• A 5% increase in customer retention can increase business profits anywhere between 25% and 125% (Gartner), yet despite this....
• 90% of B2B marketers are NOT properly managing the end-to-end customer experience. A new study from Gleanster released this week reprimanded B2B marketers for spending too much of their budget and their focus on acquisition versus retaining and expanding customer relationships. (see "Rethinking The Role of B2B Marketing" http://ow.ly/3xIMEk)

No wonder that 'customer experience' is expected the most important source of differentiation for over 90% of companies in the next 2 years (Gartner). But there is significant work to do. Despite the overwhelming value of customer retention, marketers continue to "obsess over acquisition."(Forrester). In a recent survey, by eConsultancy only 18% of marketers indicated they are 'focusing' on retention over acquisition. So herein lies a major opportunity for marketers to substantially help drive their organization's numbers skyward. The evidence says that marketing leaders need to ease up on the acquisition pedal and start pumping more juice into the customer experience specifically that which begins at the time of the first purchase. 

With this in mind, here are what some of the experts are saying are(just a few of) the key drivers of a successfully mastering customer retention and increasing the lifetime value of your customers:

1. Constantly Provide Value: At Alinean, we work with B2B clients to help them define their distinct value and competitive advantage. While this helps with acquisition, it is also a powerful tool in nurturing the ongoing customer experience. Likewise, we collaborate on the subject of 'realized value' so our clients can continually demonstrate and justify their worth. Continually measure the value you are delivering.
2. Adoption is King: You need to make sure that your solution is widely adopted and that your client is maximizing the value he can derive from it. Training is critical. Regularly update best practices. Hands on account management and customer service is also imperative. Quarterly meetings to review activity levels help you keep tabs on trends and enable you to make adjustments along the way.
3. Change is Constant: Stay in close touch with your client team and help them manage the change process. Build out a large group of advocates within the organization. Re-orgs frequently result in players shuffling in and out. Make sure you have friends that are still standing after the dust settles. Similarly, follow your customers' every move on social media, and in the financial markets. Make sure you stay in lockstep and continue to understand their latest challenges. Your approach, service or even the solution itself may need to change in response to the customer's latest needs.
4. Up-Sell and Cross-Sell: As you continue to deliver stellar customer service in addition to account and project management, you need to leverage this momentum and turn it into new sales opportunities. Sell new products or additional features to your current constituents, ask for referrals and penetrate new divisions. Your newly budding internal advocates will pave the way for you. The act of up selling and cross selling strengthens relationships, enhances the customer experience, increases the overall value that the customer receives, and delivers higher customer lifetime value. And last but not least...
5. Increase your customer retention budget! Invest in the people, processes and culture needed to support your efforts in becoming a world class organization which effectively manages the end-to-end customer experience.

A misstep in the customer retention process can be costly. Churn is deadly. The competition is turning up the heat. The wolf is always at the door. So, keep those customers happy!