Defining Your Customer Strategy

Organisations recognise that their customer strategy is a top business priority. Indeed, improving customer experience was identified as the top business priority amongst executives (58% of respondents) in a 2021 HBR study – higher than reducing costs (47%), increasing revenue (44%) and increasing innovation (37%). But what a good customer strategy looks like is not always clear. Defining and implementing a successful customer strategy is even harder.

Ultimately an organisation’s customer strategy is about how it is going to win, retain and grow customers, through a combination of who it will target (targeting), its unique selling proposition (offering) and the customer experience it provides (experience).

With that as the goal, it’s clear that while a customer strategy may be the purview of the Chief Customer Officer, to be successful it requires a strong team-based approach across the entire organisation, particularly Brand, Marketing, Product, People, Sales, Service, Operations and IT.

Targeting

Customer targeting is about defining which customers an organisation wants to target. Which customers does it actually want – what is the ideal customer and which customers can it most successfully win, retain and grow? A company’s current portfolio of customers may or may not be the ideal portfolio tomorrow, and even if it is, their needs are likely to change. Defining which customers to target requires consideration of strategic questions such as:

• Which customers are likely to grow and sustain
  or improve their margins?
• Where is the white space – customers with needs
  that are not currently being well served?
• Where are there emerging needs and emerging
  business models to meet those needs?
• Which customers have higher profitability and/or
  lower cost to serve?
• Which customers have needs that align with the
  strengths of our offering and business model? i.e. where we can meet their
  needs better than our competitors?
• Which customers will we be able to provide
  additional services to, and grow our relationship with over time?
• What customers can we reasonably expect to win
  and retain based on our current and future capability?

Offering

Customer offering is about why a customer will choose you as a provider. Different segments of customers have different sets of needs, both functional and emotional – understanding those and carefully and credibly developing a differentiated offering to meet those needs is vital. Key questions to consider include:

• How is our brand perceived and what brand
  attributes are likely to resonate with different segments of the market?
• What are the functional and emotional needs of
  different segments of the market? What are the primary and secondary factors in
  their purchase decisions?
• What is the economic value of our offering in
  the context of our customers’ businesses?
• What sets of trade-offs do customers make in
  different elements of the overall offering, what is their relative value and
  how can we optimise these?
• What competitors do our customers compare us
  against, how does our offering compare, and how might we differentiate our
  offering?
• What capabilities do we need to build or buy in
  order to strengthen our value proposition?

Experience

If targeting and offering is about attracting customers, experience is about keeping them. However, customer experience leaders can also expect to achieve higher word of mouth, greater revenue per customer, lower cost to serve and higher employee engagement, as well as greater retention. Improving customer experience is the top priority of executives, yet achieving tangible improvements and outpacing competitors continues to be a challenge. The types of strategic questions to focus on include:

• What is the link between improving customer
  experience and value creation? What investment in CX does this support and how
  do we prioritise that investment?
• What are the most critical end-to-end customer
  journeys to get right; what are the moments of truth?
• Where are the biggest pain points to address in
  terms of customer impact and volume?
• How do we creatively envision the future customer
  experience?
• How do we leverage digital to create seamless
  experiences?
• How might we harness the power of AI to deliver
  the personalised experiences and move from reactive service to predictive
  service?

Ultimately, the heart of any business is its customers. Having the customer front and centre of an organisation’s strategy development and planning is key to success – whether that is who to target, how to differentiate your offering or how to deliver a superior customer experience. If you are thinking about your customer strategy and would like to discuss, please contact us here.