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C-Suite Study: The Rising Influence of the Customer

At a moment when it seems that companies are really starting to tap into the deluge of data, the next big question becomes: Can we apply this insight broadly across the organization and fundamentally change how we do business?

According to a new IBM study, the more accurate question is not if business will change, but when. The study, titled “The Customer-activated Enterprise,” found that a growing number of CEOs are already actively seeking out their customers to influence not only business decisions but, remarkably, business strategies as well.

Based on face-to-face conversations with 4,183 C-suite leaders across the globe – 312 from midmarket companies – the ambitious effort examines how the C-suite views this new data-driven world and the impact it will have on their businesses.

We spoke with Heidi Dethloff, Vice President of Global Midmarket Marketing at IBM, about the study’s key findings and what it means for the future of midmarket businesses. Read excerpts from the interview below.

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ForwardView:
The title of the study is “The Customer-activated Enterprise.” What does “customer-activated” mean?

Heidi Dethloff:
This study uncovered three major business shifts. One was to open up to customer influence. Two was to pioneer the digital physical innovation. And three was to craft engaging customer experiences.

What’s driving these shifts is the customer. Many enterprises, I think, are moving from customer-centric organizations, to now, customer-activated ones. Customers are more empowered than ever thanks to smart technology, greater access to information and new ways to socially collaborate directly with organizations. Sixty-three percent of our midmarket leaders from this study say customers have a major influence on their business and how they do business with their traditional customers. And 89 percent of midmarket leaders plan to collaborate more extensively with their customers going forward.

ForwardView:
How does the C-suite leader view the world? How has that evolved over the years?

Heidi Dethloff:
The report is IBM’s first study of the entire C-suite. And it is actually the seventeenth in an ongoing series of our CXO studies that are developed by the IBM Institute for Business Value. So we now have data from more than 23,000 interviews, and that stretches back to 2003.

Quite a bit has changed since then, as you can imagine. Back in 2004, the top concerns were focused on cost reduction and competing in this global economy. And then new business models started to evolve in 2008, which basically enabled new partnerships, new collaboration. Today, the customer is front and center, and a digitally activated customer moves to the top of the agenda.

When IBM published its first C-suite study in 2004, CEOs ranked their own customers sixth on the list of all market factors they believed would drive the most change in the organization. Nine years later, 60 percent of CEOs expect customer influence to go beyond traditional activities such as developing new products. Instead, they’re ready to engage customers directly in shaping and developing their business strategy.

ForwardView:
The study found that CEOs want customers to have a greater say in how their company runs and in its business strategy. How does a company go about doing that?

Heidi Dethloff:
Without a doubt, new and creative ways are needed to get customer input on key decisions and create that deep foundation. And that deep foundation needs to be built upon trust and collaboration. Two-thirds of the organizations that outperform their peers are not just managing customer experiences; instead they are now reorienting their organizations, their strategies and their investments to cultivate new relationships across all customer touch points – or all customer interactions. And some of the most advanced enterprises are actually establishing customer advisory boards to get that direct input on strategic issues.

ForwardView:
Another key theme that you talked about is the intersection of the digital and the physical worlds.

Heidi Dethloff:
I think we as consumers recognize the emergence of social, mobile and digital networks. They are all playing a huge role in driving new relationships between the consumer and retailer. Well, the same is true in driving a new relationship between organizations – whether they’re business-to-business organizations or business-to-consumer – and with their customers.

It’s also forcing organizations to rethink how they work. There’s this intersection between the digital and the physical worlds, which is really the leading edge of innovation. For example, smart pills and smartphone heart monitors; or intelligent vehicles and crowd-source traffic routing; or books that respond to a reader’s location and the applications that will actually enhance their physical in-store experience.

The possibilities are huge, and CXOs realize that it’s important to start to bring those two digital and physical worlds together and drive new innovation.

"Every member of the C-suite wants to become far more involved and engaged in managing the customer experience. And they are turning to technology and digital channels."

ForwardView:
Let’s tackle this idea of crafting engaging customer experiences. This seems to represent a fundamental shift in how many C-suite leaders, with the exception of the CMO, view their role in the business.

Heidi Dethloff:
Based upon the study itself, every member of the C-suite wants to become far more involved and engaged in managing the customer experience. And they are turning to technology and digital channels.

Midmarket leaders plan to actually increase the use of digital channels by 45 percent so that they can engage with customers directly. And when you think about some of the most advanced organizations, they’ll actually go further. They’ll apply data and analytics to actually understand customers as individuals, and then design a system of engagement based upon individual customer needs. Eighty-five percent of midmarket leaders hope to understand their customers much better in the future.

ForwardView:
What do you think needs to fundamentally change in the organization in order to become what IBM calls a “customer-activated enterprise”?

Heidi Dethloff:
It all starts with the willingness to open up – if you will – to your customers, and then design an engagement model that drives internal and external collaboration. It’s gathering and using customer insights, feedback, viewpoints – and the viewpoints may come internally and externally, may come directly from one customer or many customers – but to take those viewpoints and actually help them provide input on product innovation or perhaps give feedback on pricing policies.

It also requires that the company’s C-suite team work together with common objectives and outcomes so that they can drive this new customer-active enterprise to really become a reality for them. It’s this idea of being willing to be open, being willing to trust your customers and designing a system around that; but at the same time, internally, working together as a collective team.

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