A few months ago I wrote about where companies are investing their marketing dollars in 2016. I’ve found it helpful to watch these trends in budgeting to get a sense of where companies priorities are, but I think the budgeting process might now be broken. In fact, consumers are demanding change in all parts of your business.
A decade ago there were clear lines between marketing, sales, IT, HR, customer service, etc. Each had separate goals that contributed to the success of the company. But many things happened over the past several years that have led to companies beginning to put the customer at the core of the business (as opposed to just giving lip-service to them). In many industries now, business decisions aren’t even considered without customer input in the form of behavioral data. Customer Experience is the new buzzword – a concept that has always existed, but one that has taken on new meaning today due to the fact that it has evolved from transaction optimization to 360-degree customer/brand relationship management. This new focus on the customer makes most business processes (not just budgeting) either difficult or altogether obsolete because each department plays a role in providing a quality customer experience. Their goals are now intertwined, even if their tactics differ.
Consider this scenario:
It’s July and some of your competitors have implemented a new technology solution that was introduced in Q4 of the previous year. Analysts are showing a decline in conversion because consumers are going to your competitors for this new technology that makes for a more convenient experience. The CEO says that IT must implement the new technology by Q4, but there is no line item in the budget for the project. Where does the money come from?
Today, IT has three options: 1) make the case for the project to be capitalized, 2) cut a different project, or 3) go to an adjacent department and ask for some of their budget. While the first option is the most common, it’s often not easy and as this occurs more frequently it will continue to make department budgets even more obsolete. The second option means eliminating projects that were meant to help reach pre-defined goals; cutting them could mean cutting into end-of-year reports that likely serve employees’ individual measure of success. And option 3 means relying on unreliable politics.
Ownership for the customer relationship is no longer siloed in customer service, sales, or marketing. It now spans all parts of the business, making everyone a key player in customer satisfaction. How then do we create goals for each department when there are so many dependencies in other departments? And how do we budget when so much collaboration is needed for success? And how to we plan annually, trying to anticipate constantly changing consumer expectations?
One solution that is being implemented by many large companies is to create a Voice of the Customer (VoC) position. This person is tasked with managing customer experience across all internal departments and external channels. If this role existed in the scenario above, the primary goal of maintaining or increasing customer satisfaction/retention would fall on the VoC and IT could rely on that budget line to fund the project. But the vast majority of companies in 2016 do not have that role and are struggling to evolve processes to meet these challenges.
A few years ago, major companies were clawing their way through digital transformation – figuring out how to digitize offerings, services, and processes to stay relevant. Today, most have accomplished that, but they’ve realized that it wasn’t technology driving the demand, it was the consumer. It isn’t enough to just invest in your website or to think “mobile-first.” Businesses that want to compete have to think consumer-first. And that means everything internally is on the table for change – from how you’re staffed, to how you incentivize employees, to how you go to market. The good news is, nearly everyone is struggling with this right now, so you have time. But I’m willing to bet that we’ll watch industries put off the next evolution again just as they did with digital as long as possible, until they find themselves surrounded by old and new competitors outperforming them.
Don’t wait. This one is going to take a while.