Drive growth with relentless focus on customer experience

Use both demand-side and supply-side planning lenses

In their pursuit of growth, business leaders need to devote unwavering attention to the customers and potential customers who hold the key to that growth.

Profitable expansion is, of course, the core objective of most business organizations. But building sales, customers and profits also comes with countless questions for a company’s infrastructure, supply chain and culture.

Focusing intently on the customer experience is critical for driving profitable, sustainable growth, Grant Thornton Principal for Growth Advisory David Koppy said in a recent Executive Forum session devoted to “The Relentless Pursuit of Profitable Growth.”

“A customer-centric organization is one in which not only are the customer-facing functions sufficiently resourced and aligned to engage with and respond to customer input and expectations accordingly, but also the back-office functions are able to understand how they help service and deliver for great customer-centricity, too,” Koppy said.

The power of customer-centric planning

It’s not just about “knowing your customer.” A growing business has to know all of its customers. Gaining these insights requires a commitment to gathering and analyzing data that can be derived from buying habits, online reviews, website behavior and other touch points where the organization comes into contact with the customer.

“The ability to understand, to segment them out into different elements of profitability or importance based upon what your strategic vision looks like, and to curate personalized experiences is a big part of being able to drive overall customer lifetime value and that relationship with the customer,” Koppy said.

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This graphic describes five key concepts that underpin customer-centric operations in an organization. The five key concepts are:

Customer insights, which for the basis for a customer-centric organization and enable creation and refinement of products, services and experiences;
Customer signals, which originate from overt and latent sources and enable a culture of continuous improvement and adaptability based upon customer needs;
Customer segmentation and personalization, which assist in creating differentiated experiences and prioritization of initiatives that drive customer lifetime value;
Customer nurture activities, which are the holistic suite of manual and automated interventions that promote engagement and drive stickiness; and
Customer service and success motions, which are critical to resolving customer issues, facilitating customer education, and driving customer advocacy.

To successfully grow and take market share, companies must first seek to understand their customers within the context of the market they serve and how they meet the needs of their own customers. This requires a data-driven evaluation of market trends and opportunities for growth, considering current and potential product and service offerings within the context of the competitive landscape, according to Grant Thornton Growth Advisory Principal Jonathan Eaton.

“Our clients are constantly thinking about not only the competitive landscape, but also trying to glean what they can from their customers.”

Jonathan Eaton

Grant Thornton Principal, Growth Advisory

“What are the specific characteristics that should go into differentiating the product or service that they may offer?” he asked. “And so, our clients are constantly thinking about not only the competitive landscape, but also trying to glean what they can from their customers. And they're also frequently doing broader market studies, looking at the market sizing on a recurring basis.”

Implementing this customer focus requires listening, learning and the ability to change to satisfy customer preferences. Insights are great, but planning is what turns them into action. For a typical Grant Thornton growth client, an eight-week planning sprint will produce a roadmap for the next two years, according to Koppy.

Companies typically begin with a sense of their go-to-market priorities and their overall strategic intent, such as building new revenue channels.

“So, the next step is how do you actually design this and bring this to life,” Koppy said.

Once the overarching framework of strategic intent is built, “then the next step is to unpack and define what are all the common business scenarios that are embedded within the organization in alignment with that portion of the strategic intent,” he added.

That might include two dozen business scenarios that cross ten functions in a typical large organization. Once those scenarios are identified, the team can list the core capabilities involved.

“In order to get to our priorities, then these capabilities need to strengthen or mature in some particular way. How do we go about doing that?” Koppy said.

A growth plan could include:

Demand generation and prediction
Classification of customer segments and cost vs. service tradeoffs
Enterprise operating model design
Adoption metrics and a continuous feedback loop

Demand generation and prediction

Aligning with customer needs in the present and the future is the essence of demand generation and prediction, which play pivotal roles in fostering organizational growth by underscoring the emphasis on enhancing the customer experience. Demand generation strategies, when tailored to prioritize customer needs and preferences, create a positive and engaging interaction between the organization and its audiences. This focus on customer-centric approaches not only attracts new customers but also fosters loyalty and satisfaction among existing ones, driving long-term growth.

Simultaneously, effective forecasting allows businesses to anticipate changes in customer behavior, ensuring that their products or services consistently align with evolving preferences, ultimately contributing to an enriched and sustained customer experience that propels business growth.

Classification of customer segments

Many companies make the unfortunate mistake of failing to segment their customers based on total revenue, gross margin return on investment, and actual cost to serve. “When profitable growth and competitive advantage are the goal, product and service decisions can be best made by understanding these three metrics for each combination of customer and product or service.” Eaton said.

In the past 15 years, the total cost of serving as a percentage of net sales has risen exponentially, thus putting a premium on understanding and properly classifying customer segments. Successful companies regularly choose to differentiate their product or service offerings through pricing strategies, order fulfillment logic, rebates and incentives, rewards programs, etc.

This differentiation is made possible by the classification of customer segments, which creates value for companies by enabling targeted and personalized strategies tailored to the unique needs of each segment. This foundational priority ensures that resources are allocated efficiently, marketing efforts are more effective, and customer experiences are optimized, ultimately leading to increased satisfaction, loyalty and overall business growth.

Enterprise operating model design

Planning for growth requires a top-down revenue and cash flow forecast based on a perspective of where a company believes growth will occur, but it's another thing entirely to look from the bottom up and say, here's what the business is capable of delivering profitably based on a thorough evaluation of the data.

And, at the core of this analysis, every company must consider its operating model and whether it is capable of supporting the planned growth.

Eaton said it’s not unusual for organizations to grow faster than their operating model and core operational capabilities can allow. For this reason, enterprise operating model design is essential because it considers many crucial factors:

Core competencies and competitive differentiation
Insource vs. outsource key business processes
Organizational design
Centralization or decentralization of business functions
The use of enabling technologies
Placement of facilities and assets
Strategic relationships with trading partners
Risk profiling and business continuity planning

Organizational objectives should focus on achieving profitable growth, and companies are also focused on finding their sweet spot for a premium return on invested capital, especially in this time of higher interest rates.

Adoption is essential

As companies grow, they need to continuously analyze their processes, verifying that they’re keeping pace as the operating model evolves.

Leaders also have to institute the right accountability and incentives for different functions, Eaton said.

One common mistake is for sales and marketing teams to be solely focused on sales, Eaton said, “without consideration for inventory, asset efficiency, capacity, utilization, or the overall profitability of the business.”

At the same time, the operational side of the business can’t just be focused on inventory levels, costs and throughput. To maintain sustainable growth, all teams have to keep the customer experience top of mind. It’s also important to develop accountabilities in all functions that take into account a common set of metrics.

“Take the insights that have been derived from individual functions and stitch them together into a broader tech strategy.”

David Koppy

Grant Thornton Principal, Growth Advisory

Without those universal metrics, companies end up with sales they can’t support or inventory they can’t sell. Integrated planning and metrics enable the match between sales and operations that helps maximize profitability.

Above all, leaders must ensure that their teams are prepared to make their growth plans real. “You can have the best operational model in terms of profit and technology, but if you can’t execute it doesn’t matter,” Eaton said.

For Koppy, that means sharing insights across functions. The goal is to “take the insights that have been derived from individual functions and stitch them together into a broader tech strategy.”

Maintaining customer focus

A lot of organizational leaders start with good intentions of being customer-centric but fall short of satisfying their customers.

Sometimes they grow so fast that their operating model can’t support all their commitments to customers. Other times, they fail to nurture their relationships with customers and don’t invest enough in retaining them for the long term.

Some simple tips for serving customers effectively include:

Keeping customer expectations at the forefront of planning
Understanding how different market segments relate to current and potential product offerings
Emphasizing the importance of retaining existing customers
Driving improvements in customer service, a function that is critical to customer relations but is affected by high staff turnover
Maintaining intelligence about competitors, customers and the market

Meeting all those objectives can lead to a rewarding relationship for the customer and the business.

"Being a customer-centric organization gives you the best opportunity to understand what sort of needs are out there in the market and how you tailor your offerings and your services accordingly to meet those needs,” Koppy said.

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Contacts:

Jonathan Eaton

Principal, Growth Advisory

Jonathan is best most recognized for his ability to help clients define their supply chain strategy in response to changing market conditions and other disruptive forces and subsequently helping

Charlotte, North Carolina

+1 704 632 3523