Apr 15, 2008
Structuring the Business Around the Customer
A Story about Evangelists and Verticals
About five years ago I was invited to a high-level meeting to discuss the re-organization of our business division into new business units. Also attending were the company president and various VPs of sales, marketing, operations, GMs of various business units, etc. I was the only manager there; my role was to formulate an internal communication plan designed to roll out the new organization to employees.
After the new divisional VP of Sales outlined his plan for the sales organization, which was to include separate units for software and equipment sales, I quietly asked if he had considered re-organizing around “verticals.” He said that he had but rejected the idea. I politely persisted, asking if it didn’t make more sense for his sales people to gain expertise in a particular vertical market so as to better serve their clients. The VP repeated that he had rejected the idea. One of his colleagues stepped in by suggesting that, in his experience, verticals were the way to go. As far as I know, he was never invited back to any of their high-level meetings either.
I recently spoke to a former colleague who is still with the company to see if she was going to be at the On Demand Exposition or Mailcom. She replied that she was not because they had recently re-organized sales and marketing around vertical markets and that she would only be attending shows in her particular market.
True genius is rarely appreciated in its time.
In my last column I mentioned a contradiction in American business regarding the customer. In the first few years of this decade there were numerous pronouncements about customer-centricity and putting the customer first even as businesses were outsourcing and off-shoring customer call centers to save money. Replacing experienced customer service representatives with staffers in another part of the world where the major qualification for hiring is the mastery of an American regional accent must seem, at least in retrospect, to negate that rhetoric. I’m glad to report that many CSRs are now coming home.
Business organizations that are structured around divisions, business units, countries, and regions are not as effective as organizations that understand that customer relationships are a strategic priority and act accordingly. Customer segments—such as verticals or other categories—are what the customer-centric company structures around. Management discussions are focused on customers, not product lines or shareholder value, which should follow customer value in the mission statement. If a stock is under-valued or is otherwise under-performing, the answer may not be in re-branding or in re-structuring the business units—except to the extent that the organization re-structures around the customer, commits to valuing each customer relationship, and delivers value to that customer.
Your most profitable customer is a loyal customer; organizations that value their customers will be valued in turn by investors, who understand the value of customer relationships. In the print and mail business, for example, customers tend to align themselves with a particular vendor by saying that they are an X shop or a Y shop. It is in their interest to establish fewer, deeper relationships with suppliers as long as the supplier values their business and seeks to deepen the relationship. The best sales stories I heard in my half-dozen years writing and editing case studies were when the sales person took the suit off, put the gloves on, and worked side-by-side with the customer to understand them better.
I had a conversation yesterday with a gentleman who was exploring the concept of Transpromo. He said that all he wanted from his phone bill was usage reports and that, given the limits of their working relationship, a phone company could offer him no more good service at a reasonably low price, and wondered why he would ever look at a phone bill for advertisements and promotional offers.
Fair question, to which I replied that if the phone company wanted to strengthen their
Relationship with him they could provide him with service announcements—a plan that better suits his usage profile, perhaps, or an incentive to upgrade his telephone. In fact, the possibilities are virtually endless. The fact remains that his relationship with his telephone service provider could be better and it is up to them to make it so. He may not be receptive at first but if they are persistent, honest and understand his needs they will eventually overcome his doubt.
Likewise, when you are in the business of providing software or equipment to telecoms, it makes sense to understand their communication needs and meet them as best you can. Having personnel that can become a trusted advisor or an evangelist, as my friend PC McGrew has become for Kodak, is a very worthwhile investment for organizations seeking to strengthen relationships. Emphasizing her knowledge of the customer's business situation—and their vertical market—instead of just her own product line, makes it possible for her to deepen existing customer relationships. In fact, her in-depth knowledge of the customer has led her on several occasions to contact me in order to integrate our product lines in a way that will deliver value to her customer. An evangelist needs to have the ability to coordinate multiple business units from both inside and outside the company in order to deliver customer value.
Just as vendors want to reach decision-makers within their client organizations, clients want to gain access to expertise that applies to them without having to navigate corporate bureaucracies, which means that quality customer service, or products--as opposed to price-- is your key differentiator.