The November 19, 2012, Wall Street Journal article, “Investment Falls off a Cliff: U.S. Companies Cut Spending Plans amid Fiscal and Economic Uncertainty,” makes the following observations about continuing economic uncertainty:
“U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery….Corporate executives are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty….Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending…and eating into corporate profits. A deal to avert the cliff could include tax-code changes, such as revamping tax breaks or rates, that hurt specific sectors.”
Dealing with an uncertain economic and fiscal climate can be difficult for any business. One thing that has helped firms survive and oftentimes thrive in challenging times is optimizing customers’ experience based upon insight-driven interactions. Information and analytics-based customer insights, implemented by effectively leveraging data, can be utilized for strategic and competitive advantage and, thus, can be more easily cost justified in such an economic environment. They also expand customer understanding at every phase of the customer lifecycle – from acquisition to onboarding to growth to retention to win-back – and can lead to deeper, more profitable relationships. Leading customer-insight practices require technology-enabled, advanced, predictive, and pre-emptive analytics.
When resources are scarce, however, customer insights via data and advanced analytics are especially valuable because:
Focusing on customer experience enables “inexpensive” growth. Customer insight can help focus sales efforts on those customers most likely to purchase de-emphasize efforts focused on those less likely to purchase.
Other types of customer insight can help determine which customers are most likely to leave—guiding early warning “defector-detector” and retention strategies that prevent the high value customers from leaving. And most know that the cost of retaining an existing customer is usually a fraction of that required to obtain a new one.
Customer insight also enables a focus on customer lifetime value, which is appealing as a strategic and marketing concept because it represents each customer’s worth and, therefore, the amount a firm should be willing to invest to acquire, retain, and win back each customer. The goal of any customer experience program, therefore, should be to maximize both individual and aggregate customer lifetime value.
Information and insight-enabled customer experience strategies can generate significant return on investment – so crucial when resources are scarce – through improved operating margins, deeper relationships, and better operational efficiencies. If your firm wants to survive if not thrive in an uncertain economic climate, then a good place to start is by focusing on information and analytics that can optimize customer experience.
West Monroe Partners combines deep experience in Customer Experience and Advanced Analytics & Insights. For more information, please contact Dave Nash at email@example.com.