3 essentials of a successful go to-market strategy
Is Your Customer-Centric Transformation Living Up to its Promise
1. Four out of five companies are disappointed
by the results of their customer-centric trans-
formations. Pragmatic remediation is possible.
Delivering superior value to customers, profitably, is fast becoming a key competitive
differentiator. Always-on communication, the democratization of information, and a culture
of immediate gratification means customers have more choices, louder voices, and more
ways to share their perceptions. As the balance of power continues to shift to customers,
organizations that become more customer-centric will capture a disproportionate share
of the market.
Not surprisingly, corporations worldwide are investing in customer-centric transformations,
together spending more than $10 billion a year in consulting fees alone. Yet four in five corpora-
tions are disappointed by the results delivered.1
What’s the disconnect?
We have studied the causes of sputtering transformations, and performed more than 100 interven-
tions to remediate customer-centric transformations (across markets and industries). We know
what the overarching reasons for failure are and why these programs continue to disappoint.
Rather than looking back, we recommend leveraging these insights to look forward and
encourage our client CEOs to consider three specific actions:
1. Measure real customer value, not just advocacy or satisfaction
What gets measured gets done, so the first action is to fix how customer-centricity is measured.
Advocacy and satisfaction scores are excellent in evaluating a firm’s performance in delivering
on a promise to existing customers, and are easy-to-understand proxies for determining brand
appeal. But these scores are not ideal for measuring untapped opportunities—the potential
customer value left on the table.
An A.T. Kearney ACTS score determines the extent to which a brand is capturing all potential
customer value. Short for awareness, consideration, trial, and share, ACTS is calculated
CEOLetter
Series
Is Your Customer-Centric
Transformation Living
Up to its Promise?
1
Based on interviews with executives at 100 corporations worldwide across industry sectors conducted
by A.T. Kearney (February 2015–February 2016)
2. as a combined percentage of four factors: awareness of the brand, consideration for buying
the brand, trying the brand, and share of spend on the brand.
The score is understood in combination with the value potential of a market, a customer
segment, or even a particular “event.” For example, if the young professional segment represents
a value pool of $100 million, an ACTS score of 5 percent means the firm is capturing just
$5 million from this pool—indicating significant customer value left on the table.
A company with a high ACTS score but a low Net Promoter® Score (NPS) is at high risk of losing
its franchise value. Likewise, one with a low ACTS score and a high NPS is likely not appealing to
the market beyond its immediate customers. Raising your ACTS score requires knowing where
your company ranks compared to competitors and understanding the buying behaviors
of customers.
Case in point: A retailer is considering offering financial services under its brand and needs
to determine the potential market value. Without existing customers there is no NPS score.
ACTS was used to develop a business case, a granular segmentation, and a customer assessment
(to gauge the extent to which customers might consider the retailer for financial services).
2. Ensure your segmentation is not your enemy
Segmentation is a double-edged sword. Too simple and engaging customers with a one-size-
fits-all approach is limited; too complex and emotionally connecting with customers is
impossible. In fact, too-complex segmentations are the culprits behind many failed customer-
centric transformations.
It is rare to find segmentation that is dynamic (especially in the B2C space), co-created across
functional silos to ensure a shared language, and actionable by the front line. But when
performed in this way segmentation becomes a powerful asset in sharpening a company’s
customer-centric efforts.
The first step to optimize segmentation is determining what factors truly drive differentiation.
Fewer factors are better than more, and behavioral and needs-based factors are more relevant
than demographic or descriptive ones. Underlying this choice is a strong hypothesis about
what drives differential customer value.
Knowing the ACTS score and the value pool of each segment is a compelling way to determine
if the segmentation is “balanced,” and where pockets of untapped opportunity may lie. The
shape of this distribution is informative. A low mean value implies over-segmentation and
complexity that will be difficult to address economically; a high standard deviation implies
a skewed or unbalanced segmentation with a long tail of less compelling segments.
Case in point: A B2B security services company wants to reduce complexity of its 13 segments.
The company uses behavioral differentiators to identify five clusters of complexity, which allows
clearer separation and articulation of the necessary dispersion of propositions. The stage is
set for a $145 million savings program in year one—two-thirds of savings are in sales and field
operations. By year three, the board commits $100 million to the program.
3. Focus on a small number of market-beating, customer-centric propositions
Most customer-centric transformations have big ambitions—to transform propositions,
sales, and services across multiple channels that are enabled by digital, fueled by analytics,
and powered by innovation. That’s a mouthful to describe and a nightmare to execute.
3. In our experience, less is indeed more. Focusing on a few market-beating propositions
delivers more tangible results faster, and, if these are chosen carefully, improves the return on
investment of the entire exercise. In some industries, a market-beating proposition is a block-
buster productor service that requires “disciplined” innovation, meaning the focus is on a few
big bets to avoid spreading the innovation budget too thin. But in other industries—in most
B2B and B2C industries, in fact—blockbusters are difficult to come by. An answer for these
firms lies in going beyond the core product to create differentiating experiences or solutions
around what we call “pivotal events.”
A pivotal customer event is the window at which a customer has a clear need, and a business
has an opportunity to create real customer (and business) value by meeting that need. We
recommend identifying one to three PCEs per priority segment in a year, with the potential
to deliver expansive and differentiating propositions around each event. As one CEO explains,
“To identify PCEs requires both art and science, but once learned can become a competitive
advantage.”
PCEs have the added advantage of identifying challenges that digital and analytics can
address together, which is more valuable than running each as separate, often disconnected
investments.
Case in point: Our telco client illustrates the impact one pivotal customer event can have on
advocacy, costs, and growth. The company unlocked $40 million in value simply by focusing
expansively on the “relocation” event. What was once a source of angst for customers became
a differentiating market proposition.
Steering the Organization
Customer-centricity often gets lost in a forest of functional initiatives. A CEO has the power to
nudge such programs into a higher performance orbit. The operative word here is “nudge.”
Rather than taking charge of the program, perhaps undermining good leaders genuinely trying
to advance the cause of customer-centricity, it’s important to steer the organization in the right
direction. A few suggestions:
1. Give permission to explore more powerful approaches
Begin a conversation with leaders by recognizing the hard work and resources already
invested in the program—this will fend off knee-jerk reactions to defend what has been done.
Be honest about the results attained versus the results desired to clarify why a different
approach is needed.
2. Inspire new ways to approach customer-centricity, in four weeks or less
Thoughtful questions can fuel the right leadership conversations. For example: To what extent
do we create value for our customers relative to our competitors (an ACTS score analysis)?
What is the level of complexity of our segment and proposition architecture (a market-value-
per-segment distribution analysis)? Which PCEs are we implicitly or explicitly famous for
(a PCE prioritization exercise)?
Exploring answers to these questions is often eye-opening, revealing new possibilities
and perhaps a new vocabulary to shape a clearer path forward.