The company-customer disconnect

It’s a strange irony that the very actions many companies take in an attempt to grow often stops them from growing.

The most obvious recent example is Netflix. Once a darling of customer focus and innovation it has been faced with some difficult growth decisions recently, the result of which has seen 810,000 customer leave.

Here is how Reed Hasting’s their CEO explained things:

“Although we dramatically improved our $7.99 unlimited streaming service by embracing new platforms, simplifying our user interface, and more than doubling domestic spending on streaming content over 2010, we greatly upset many domestic Netflix customers with our significant DVD-related pricing changes, and to a lesser degree, with the proposed-and-now-canceled rebranding of our DVD service.”

This is what happens when a company effectively raises prices 60% without a significant boost in perceived value. To read more on exactly what happen and the wall street reaction you can click here

The point I am making is that there is a significant disconnect between companies and their customers and where there are gaps there are opportunities. While most companies believe they are delivering a great experience, while the majority of customers disagree. The disconnect can be seen below in a chart taken from an Bain and Co whitepaper on this topic:

So what do the 8% of companies that have alignment with their customers do?

Firstly they really understand what their customer’s find most valuable about their products and services.

Secondly they understand who their most valuable customers are and they create strong compelling and different value propositions for them.

Not only do they identify the value propositions but they actually deliver them.

This is where culture comes in, it’s not good enough to know what the value proposition is, you need an organization that is willing and able to align around it and make it happen. This requires a organization-wide mindset that is customer centered, not just company centered. Are you leading that type of organization?

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