Customer power: Who's calling the shots now?

Organizations are waking up to a simple truth: They're not in control any more ... the customer rules. So how can companies succeed in this new world?

For years, enterprises have talked grandly about striving to be 'customer-centric ' and 'putting the customer first'. But that was at a time when they actually had a say in the matter — and the luxury of enough time to think about it.

Today, if you don't put the consumer first and give them exactly what they want, right away, you may as well as close your doors.

Corporate casualties

The need to satisfy customers as a priority is borne out by history. Having a powerful and illustrious past doesn't guarantee your revenues in the future. Taking the long view, it's notable that only 13% of Fortune 500 companies in 1955 are still operating today — 87% went bankrupt[1].

What's more, the life expectancy of the biggest companies has reduced dramatically over the period from 75 years to just 15[1]. And it's still falling fast.

In fact, just weeks ago, consulting firm Innosight issued what it called a "gale force" warning to business leaders that around half of the Standard & Poor's 500 companies will be replaced over the next ten years[2].

Why the rapid decline?

There are many reasons why companies crash and burn, ranging from shrinking markets to disastrous mergers, and from massive debt through to disruptive technology that causes business models to crumble.

But quite often companies miss the obvious: Today's customers have all the power — and you can either work with them, or they'll work against you.

One of the biggest retail disasters so far in 2018 has been the collapse of Toys R Us, which looks set to close or sell its hundreds of UK and US stores.

In a recent insightful report, the BBC identified what went wrong. Aside from pricing issues, the BBC reckoned the toy chain suffered from a lack of imagination, its stores didn't deliver a magical experience for customers, or recognize that today's children download apps in seconds and want more tech.[3]

Sales were poor, reported the BBC, adding that: "Financially weak, Toys R Us has been unable to adapt to changing shopping habits."[4]

Why this is no surprise
What many retailers and other organizations miss is that customers now have more power than themselves in many areas: superior tech, better information and greater choice. They're skilled at adapting too and have a thirst for new engagement channels and tech-driven experiences.

Put simply, if you don't acknowledge that customers have the power — and satisfy their changing needs — then they'll pull the plug on you and go elsewhere. Sales will slump rapidly.

There's an upside

The good thing about this monumental shift in power is that savvy businesses will be able to steal a march on their competitors. Rather then fighting against the tide of customer power, they'll find ways to harness it as a force for good.

The new world of customer power will change business fundamentally:

  • Companies will have to engage 24/7 with consumers in new ways
  • IT strategies will be turned on their head
  • The whole business needs to get aligned to please the customer

So how can this be done? Find out by downloading our essential Customer Power e-Guide. Use it to benchmark your current approach customer power — and discover your next best move.

Sources:

[1] S.Denning Forbes Magazine

[2] '2018 Corporate Longevity Forecast' (Innosight, February 2018)

[3] 'Five reasons Toys R Us failed' (BBC, 28 February 2018)

[4] 'Toys R Us UK goes into administration' (BBC, 28 February 2018)

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Posted by eckoh at 11:16 AM on May 25, 2018

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