Virtually every large company says it is becoming more customer-focused. Yet many cannot truly delight customers because their operating model — how they organise and operate resources to execute the strategy — gets in the way.
Some companies are struggling to adapt their operating model to recent changes in the customer landscape. Digital technologies have led to new channels, each of which must work seamlessly with the others. That has made operations more complex. At the same time, these technologies allow for rapid, very public feedback from customers, which makes poor performance visible.
Providing the optimal customer experience requires more than understanding customers’ needs and priorities. A company must also ensure that each element of its operating model — organisational structure, accountability, governance, ways of working and key capabilities — work together to meet those needs.
Several years ago a multinational retail bank set ambitious customer-loyalty goals to counter the pressure from locally based competitors in a particular region. The competitors were gaining ground on a key measure of customer loyalty, the Net Promoter Score or NPS®. The bank used NPS customer surveys and other data to analyse 11 customer episodes, such as “onboarding” and credit card loyalty programmes, to understand precisely which interactions delighted or annoyed customers and why.
It became clear that each country had its own approach for these interactions, which added cost and complexity. The senior executive team had not established where variation helped and where one approach worked best.
In response, the bank decided to standardise regional product development, marketing and branding for items such as welcome packs and the website. At the same time, to preserve local flexibility the bank empowered country-based teams to tailor the experience in the branches and call centres to local preferences.
Country teams could refocus their attention and resources on delivering excellent service at the front line. This realignment of structure and roles, as well as a focus on building greater trust and collaboration among the groups, has put the bank on track to achieve its goals for customer loyalty.
Centralising some activities and decisions is not always the best route to fulfilling customers’ needs, though. In fact, the impulse to centralise should face a high hurdle because companies often underestimate how much front-line accountability they lose in doing so.
An operating model that is truly centred on customers goes all the way to defining accountabilities at the front lines so that employees can be highly responsive to customers. For many years, the Ritz-Carlton hotel chain has had a policy of giving front-desk staff US$2,000 in discretionary funds to solve any customer complaint in the manner the employee feels appropriate. This local autonomy reminds employees of the company’s dedication to honouring a customer’s lifetime value and frees employees to do the right thing quickly without having to navigate time-consuming procedures.
Building a truly customer-centred culture and organisation involves people throughout the organisation. Employees need to see the fundamental connection between their everyday work and its impact on customers. How a company designs its operating model can either prevent employees from making that connection or it can elicit their best energy, enthusiasm and creativity.
This article was written by Marcia Blenko, an advisory partner in Bain & Co’s organisation practice; James Root, a partner and head of the Asia-Pacific organisation practice; and Nader Elkhweet, partner and Southeast Asia lead for the organisation practice. Follow @BainInsights on Twitter.