“Our Customer Relationships are Dysfunctional” Admit a Majority of Executives in Strativity CEM Study

Posted On February 14, 2007
By Lacey Stephen

Global study indicates that customer-centricity is lacking in many companies

Parsippany, NJ – February 14, 2007. A majority of companies fail to deliver differentiated value to customers and therefore fail to maintain their loyalty. Additionally, companies routinely fail to analyze and manage their customer relationships according to specific financial criteria, leading to the ineffective execution of customer strategies.

Although respondents declare that customer strategies are more important than they were three years ago, the majority acknowledges that their employees do not have the tools or authority to resolve customer issues – a major indicator of customer commitment. “Respondents honestly admitted that they are selling commodities and that their core value proposition does not merit customer loyalty,” stated Lior Arussy, company founder and author of Passionate & Profitable (Wiley, 2005). “Such an admission should serve as a wake up call to every executive to reexamine their core value propositions and ability to deliver differentiated customer experiences.”

Results Highlights

60% of senior executives claim they do not deserve their customers’ loyalty
51% of respondents claim that their company does not deliver unique and beneficial products or services
56% agree that their executives’ products or services are worth the price they charge
34% affirm that they have the tools and authority to serve their customers
75% do not know the cost of a new customer

Strategies Fail at Execution

According to the study, 70% of companies indicate that customer strategies are more important than they were years ago. Yet, basic execution parameters such as frequently visiting customers (34%), providing the necessary tools and authority to employees (34%), and strongly linking compensation with service quality (29%) – is lacking.

It’s All in the Financials

Overall, the study indicates a wide spread ignorance regarding the economics of customer relationships. Over 75% of respondents did not know the cost of a new customer while 81% did not know the cost of a customer complaint. 50% of respondents did not know their organization’ annual retention rates. The failure to manage customer relationships on the basis of clear and pertinent financial metrics explains why companies’ strategic intentions often fail to translate into sustainable customer-centric actions. Organizations do not invest the appropriate resources and funds to establish long-term relationships because they are unable to justify them financially.

Employee Readiness to Execute Remains a Challenge

The general trend is one of diminishing corporate investment in employees – ultimately leading to the curtailment of the employee’s ability to properly execute customer strategies.

29% of the respondents indicated that their compensation plan emphasizes quality of service and not just productivity
34% of respondents claim that their employees have the tools and authority to solve customer problems
30% of respondents agreed that their company invest in people more than in technology.

Companies continue to declare their commitment to customers while not fully comprehending what this commitment entails. As such, customer experiences are commoditized, employee readiness is limited, and strategy execution is deficient. The failure to create and deliver differentiated experiences leads to the failure to command premium pricing, drive preference of company or product, gain greater portion of customer budgets, and ensure the permanence of overall relationship longevity.

Survey & Research Methodology

The research was conducted via a structured, anonymous, on-line survey which was used for assessment and qualitative insight. The survey was hosted by CustomerSat Inc. using their advanced ECEMTM (Enterprise Customer Experience Management) solution. All data analysis was performed using ECEM.

309 surveys were submitted by executives from the US, Europe, Asia, and Africa. Participating companies represent a wide range of sizes and cross business types.

Strativity Group, Inc. is a global research and consulting firm advising both Global 2000 and emerging businesses on creating lasting, profitable relationships with their customers and employees through the transformation of strategies and their execution to revolve around the customer experience. The company offer education consulting and marketing services.

Strativity Group, Inc. works with both Global 2000 companies as well as emerging businesses around the world. Our clients include Akibia, American Management Association, Capital One, CATIC, Circle K, Computer Associates, Crown Plaza Hotels & Resorts, Dimension Data, DVTEL, eGlue Business Technologies, FedEx, Herbalife, ICMI, Honeywell, Jacada, Lockheed Martin, National, Nokia, Nordea, Nortel, RightNow Technologies, Sage, SAP, Seagate Technology, SharedBook, Siemens, The Fund, University of Pennsylvania, and Wyeth.

For complete survey results or media inquiries, please contact:

Strativity Group
1719 Route 10 East, Suite 311
Parsippany, NJ, 07054
+ 1-973-796-5310