The Economic Recovery Mirrors Customer Strategy

This is an interesting article that compares and equates the broad economic dynamics of the past year with that companies in how they deliver to their customers...

"There was a shattering of confidence and no trust" within the global banking sector. If a lack of confidence and trust brought the world's economies to their knees, imagine how a lack of customer confidence and trust can impact a company. "Once confidence goes, you're in a terrible position because you don't know how far down it will go," added Gerard Lyons, Ph.D., chief economist at Britain's Standard Chartered Bank. He was referring to national economies, but he may as well have been speaking to a room full of customer executives.



1to1 Weekly
Date: 11/09/2009
Issue: November 9, 2009

The Economic Recovery Mirrors Customer Strategy
Global economic recovery and customer-focused business strategy have a lot in common.

These days, when economists get together, the conversation usually isn't pretty. The Great Recession this past year hit almost every industrialized nation, and then some. At last week's Premier Business Leadership Series (PBLS) conference, however, leading economists framed what they think will be a global recovery in a way that mirrors customer-centric strategy.
The recession has two overarching causes, according to Joseph Quinlan, managing director and chief market strategist at Bank of America's Global Wealth and Investment Management division. "There was a shattering of confidence and no trust" within the global banking sector, he said. If a lack of confidence and trust brought the world's economies to their knees, imagine how a lack of customer confidence and trust can impact a company. "Once confidence goes, you're in a terrible position because you don't know how far down it will go," added Gerard Lyons, Ph.D., chief economist at Britain's Standard Chartered Bank. He was referring to national economies, but he may as well have been speaking to a room full of customer executives.

As the recovery begins, the tactics and strategies being discussed sounded a lot like what you would find in a customer strategy playbook. "We are seeing the first flickering signs of recovery," said David Hale, a global economist at Hale Advisors, referring to slightly positive numbers around housing starts, consumer confidence, and the loosening of credit by banks. However, we've got a long way to go, he said, and there is still rampant unemployment and uncertainty.

One positive outcome of the recession, Hale noted, was that as a consequence of layoffs in the U.S. there has been a gain in productivity compared to other nations that did not eliminate as many jobs. "U.S. businesses will enter 2010 ten to 15 percent more competitive than Japan or Germany," he told the PBLS audience. "This puts us in a good position for export growth."
Growth in exports is akin to a strong customer acquisition and retention plan: Who are we going to export U.S. goods and services to, and will they buy? Lyons said that within the past decade more people in the world have emerged from poverty, creating a new middle class in China, India, and other parts of the world. As potential customer bases expand, nations will have to understand the needs of these new consumers to deliver the right products and grow share-of-wallet in these emerging markets. "Countries with the ability to adapt and change will be successful," Lyons said.

The invisible versus the visible handIt's almost impossible to get a group of economists together without someone bringing up Adam Smith, the father of modern economics. And the PBLS event was no different. During the conclave Lyons pointed out that Smith's term "the invisible hand," which describes the free market, doesn't tell the whole story. He explained that Smith also defined a "visible hand" – morality and ethics. "People talk about the power of the invisible hand, but not the visible," Lyons said. "The financial sector has lost that."

This is another direct reflection of customer-centric thinking. As Don Peppers and Martha Rogers, Ph.D., discuss in their latest book, Rules to Break and Laws to Follow, a company that does not act in the best interests of its customers shouldn't operate a business at all. Acting in customers' best interest is necessary to create an internal corporate culture that encourages morality and ethics in all business dealings. Trust and transparency, effective employee engagement, and the balance of short- and long-term strategy are the foundation of a successful customer-focused organization, they write. It's also the foundation for a successful global economy. "We need to get some morality and ethics back in the system and focus on the long-term opportunity," Lyons said.