Companies measure growth by the numbers such as profits, margins, returns, and share prices. They compete and try to win against all odds to meet shareholder expectations with impressive quarterly figures. It is the growth pressure that drives companies and brands to exert tremendous effort to gather data from consumers as they navigate the challenging highways of the digital economy, perhaps oblivious of having regarded the consumers as mere commodities rather than people. All this will have to change if brands are to take the pulse of future consumers who demand more from companies that use digital technology and processes to drive short-term revenue growth.
Consumers now expect more and better from the companies they do business with. They are empowered consumers who are not satisfied with brands that only pay lip service to sustainability and purpose-led growth while conveniently sliding back to quarterly earnings as their barometer for success.
In the latest EY Future Consumer Index survey, 68% of surveyed consumers think a brand’s behavior is as important as what it sells, while 69% say brands must behave ethically and according to community expectations. Yet only 38% think the positive actions brands are taking are good enough.
Companies that have taken heed of the call for sustainability and the new growth strategy talk about long-term value that seeks to assess performance beyond financials to include governance, people, planet and prosperity. This redefinition of growth will need to: drive the innovation of environmentally friendly products and services; redesign customer experience; and build an operating model with humans at its core.
GREEN INNOVATIONIn the EY Future Consumer Index survey, 68% of respondents think brands have a responsibility to invest in the sustainable production of goods and services. In addition, 70% say that brands must be transparent about the social and environmental impact of producing their goods and services.
This clearly establishes a sense of urgency on fusing planet with profit and rejects the notion that sustainability in product and service innovation can be merely aspirational. Organizations will be better off with commercial, environmental and social sustainability embedded into their purpose, design thinking, prototyping and scaling of products and services.
It begins with a little more effort to thoroughly understand a problem before coming up with a solution. Rapid problem-solving often impedes the company’s ability to solve the underlying issue. Staying in the problem longer than one feels comfortable with is a wise step towards driving sustainable innovation that is both planet and profit friendly.
FUTURE OF CUSTOMER EXPERIENCEIn shaping the future of the customer experience, it helps to look at the rapid changes in technology. In the last decade alone, technological advancements have challenged companies to rethink the customer experience, and this will be the case over and over again. There is one thing that will be constant though — the human factor that rises above any technology.
The EY Global Consumer Privacy Survey shows how customers want to believe in and trust the organizations they do business with. Marketing campaigns alone will not do the job though. For brands to win customer trust, they will need to align to customer values and beliefs and demonstrate that in their actions. This trust is built by knowing and engaging with customers, not as statistics but as individual living, breathing human beings.
Engaging with the full spectrum of human needs increases the likelihood of collecting data ethically, and this should result in more trust from customers. This, in turn, enables brands to better anticipate and improve the products and services they deliver to customers, which leads to purposeful growth and the creation of long-term value.
With customer centricity embedded throughout the enterprise, customer interactions are much more likely to be consistent. Familiarity and understanding of customer wants and desires will be spread across the different functions in the organization.
There are a few ways to fast-track an organization’s way into this future customer experience while delivering on purpose and driving profit at the same time. One is talking to customers regularly and listening to what they say. Marketing chiefs can sometimes assume they already understand customers based on past interactions, and this deprives them of perspective that can be gained from an ongoing dialogue.
Interactions with customers that trust the organization can uncover more data, allowing for the organization to combine quantitative information with qualitative perspectives.
Marketing chiefs need to shift the mindset of the organization to focus on the desired and organizationally aligned outcome, such as how team members contribute to giving the customer a positive experience, rather than how many gadgets they developed, manufactured and sold.
REINVENTING THE OPERATING MODELOrganizations should rethink their business and operating models to truly sustain healthy customer relationships. This is called for mainly because most large organizations were designed according to 20th century principles and founded on rigid structures to organize people only — without considering the impact of technology. This created functional silos that result in disconnects that do not help create a positive customer experience.
Based on our EY global organization’s track record in helping clients transform their operating models for customer-centricity, a few key actions have been identified that marketing chiefs can take in partnership with leadership. One of these is creating pod teams that align to the customer lifecycle. A pod is a cross-functional team or a group of individuals with complementary skills working toward a common purpose or to accomplish tasks that form part of a larger project. It transcends existing divisions within an organization. A pod, for instance, may be dedicated to delivering a great welcome experience to all new customers in the first six months, regardless of the product or service purchased. Performance measures will then have to be tweaked to focus on the best possible customer outcome.
This cross-functional team needs to be empowered to make decisions for them to be truly effective in delivering the best customer outcome. They are front-facing and therefore capable of seeing how a product or service is performing. Ideally, they should also have the leeway to make data-driven decisions to pivot or shift the direction of a product or service.
Redefining growth requires a shift in mindset — a change in the way the organization looks at things to deliver new results. It requires specific steps that go beyond little tweaks here and there. Purpose-washing, or representing the brand as if it is committed to a larger purpose, does not work. Instead, companies need to reexamine their current definition of growth and redefine it in the context of authenticity of purpose and long-term value.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.
Marie Stephanie C. Tan-Hamed is a Strategy and Transactions Partner of SGV & Co.