The success of any company, large or small, depends on whether or not decisions are made with customers in mind. This seems like an uncontroversial statement, but it is very common for firms to make decisions designed to grow revenue or increase efficiency without thinking about the impact those moves will have on their customers. The truth is that long-term success in almost every business is driven by repeat customers and customer retention. Therefore, a sustainable future stems from customer-centric business decisions.
While not all potential impacts to customers are testable beforehand, it is necessary to include potential negative customer impacts among the set of risks under evaluation before making a decision. There are ways to make decisions to improve operational efficiency while also improving the customer experience. Switching to lower-cost suppliers may allow for a price decrease and more competitive product, but might also negatively impact product quality and customer experience. Consolidating a customer service center can increase customer service hours and consistency in the service experience, but the move should not increase customer wait times enough to decrease satisfaction. The key is knowing what all the ramifications of the decision on customers will be – positive and negative – before making the change.
However, not all business decisions have visible or easily discernible outcomes with regard to customers. A single decision has the ability to influence a multitude of variables resulting in positive and negative impacts simultaneously. The business case to make such decisions lies in the net impact on the customer. And, to make matters more complex, short-term and long-term net impacts may be in conflict.
A Cicero client, a brick and mortar education provider, illustrates this principle. The firm had a significant footprint of campuses, and its unique connection with its customers provided much of its competitive advantage. The firm decided to offer customers self-service online options to both grow revenue, reduce costs, and stay ahead of the competition. On the surface, this move promised very positive outcomes for customers, including:
- Customers farther from campuses could participate, increasing customer convenience while growing the firm’s reach and revenue
- Customers were given more flexibility to complete their courses, allowing busy professionals to enroll
- The firm was able to offer customers lower prices as online courses were cheaper to provide
However, despite all of these positives for the customer, the firm had not accounted for how the decrease in customer touch points would negatively impact the customer experience. In the move to digital, the number of customer touchpoints dramatically declined. Students were given less support and it was much easier for them to fall through the cracks.
The initial impact of the online courses was positive customer response and revenue growth. But over time, course completion rates decreased and course retention took a dive. As growth fell, the decreasing retention and course completion rates began to pose a major problem. The customer relationship, which was once one of the firm’s advantages, was now a problem so large it threatened their business. It all could have been avoided if the firm had taken the right approach.
Approach for Evaluating Decision Impact on Customers
The following guiding principles help ensure the customer impact of strategic business decisions are known to the full extent possible:
- Brainstorm all possible ways a decision could impact customers, categorized by positive and negative; short and long-term
- Test assumptions in the market through research
- Launch pilot programs and measure impact
Through collaboration with the right parties, many assumptions can be made to hypothesize the impact of a business decision. Involve anyone who is knowledgeable about the customer or the proposed change, particularly those who might bring a different perspective to the table. All impacts should be recorded and categorized as positive/negative and short/long-term. Thoroughly considering many of the potential impacts of the move will help with a go-no-go decision up front.
Once the team has defined the predicted impact based on various assumptions and the proposal still seems promising, it is important to go to the market and test hypotheses. Asking customers through quantitative and qualitative research will help to prove or disprove your assumptions, and will likely illuminate new impacts that weren’t previously considered.
If the brainstorming and research phases suggest a go-forward on the initiative, develop a pilot program to test assumptions in the actual market. Measuring the specific impacts you expect to see is key to confirming the short and long-term impacts. Give the pilot enough time to allow yourself to observe mid- to long-term effects. Do not be afraid to pull the plug if the negatives appear to be outweighing the positives. If the pilot is successful, you are ready for a full-scale launch.
These three guiding principles help ensure that the focus is always first and foremost on the customer. A focus on anything else—no matter how important in and of itself—is a risky strategy.