Kestio

Consulting firm business model: How to move to a recurrence and scalability model?

Halte à la baisse des prix ! Misez sur l’Expérience client

Après deux décennies marquées par une explosion de l'offre et une course effrénée à la baisse des prix, le modèle semble avoir atteint une certaine limite, et deux visions s'affrontent désormais. D'une part, ceux qui continuent de tirer les prix vers le bas et à qui la situation profite car elle fait table rase des concurrents qui ne peuvent plus suivre. D'autre part, ceux qui se refusent à entrer dans le cercle vicieux de la destruction de valeur, à asphyxier leurs fournisseurs et à tirer la qualité de service ou les conditions de travail vers le bas, au nom de la "défense du pouvoir d'achat". Ces derniers optent pour une autre stratégie : générer de la valeur en améliorant l'expérience client.

1. Ineffective supply-side or price differentiation

In the context of a globalised economy, the most agile Western companies were forced to adapt to three major phenomena from 1990 to 2000.

 

The first was to offer products at increasingly competitive prices. Faced with competition from developing countries offering extremely low production costs, our companies invested in the automation of their production lines to achieve significant production volumes and thus benefit from satisfactory economies of scale.

The second was to offer a wider, deeper, more segmented range of products and/or services. Thus, when the competition had the means to make an equivalent offer, the agile company proposed an innovative offer, thereby adding new barriers to entry to their market.

The third phenomenon was the meeting of the first two, when companies adapted to offer a wide range of products at attractive prices according to the budgets of each target. This last stage of development goes so far as to generate situations of oligopoly in many markets where companies that wish to survive must be a force of proposition.

 

In order to fight against the fall in prices and therefore margins, against the multiplicity of offers and therefore the fall in market share, companies can now turn to new levers for development. It is in this context that the customer experience becomes an essential alternative.

2. The quality of the customer experience as a differentiating factor

Thecustomer experience therefore becomes a vital axis for the growth of the company. As a reminder, customer experience is the perception that the customer has of the relationship that he/she has with the organisation (for more details on this notion, see our previous article: "Are you sure that you have mastered the 3 key approaches for building customer loyalty?).

This perception is conditioned by the client's culture and expertise in the market of the organisation that serves it.

 

The customer experience makes it possible to highlight at least three development levers. Firstly, it has a direct impact on customer loyalty. This allows the organisation to amortise the costs of winning over customers over a wider base, to increase the customer profitability ratio and therefore to significantly improve its profits in the end.

Secondly, focusing on differentiation through a qualitative customer experience generates recommendation effects for the offer. In this way, I create a colony of prescribers who, following their own satisfaction, will promote my offer and the brand. The results will then be measured in the positive evolution of market share.

Finally, making oneself distinctive through thecustomer experience makes it possible to increase the notoriety of one's company, one's brand and one's offer. This development will result in an increase in the margin of its offers and its market share.

 

Ignoring the benefits ofcustomer experience will inevitably have negative consequences, as highlighted by the results of a study conducted for Oracle [1] :

    • 70% of consumers surveyed have ended their relationship with a brand following a disappointing customer experience and 92% have switched to a competitor.
    • 81% of them would pay more (up to 5% more for 44% of them) for a better customer experience.

 

With only 22% of people saying they are almost always satisfied with their customer experience, companies have a real opportunity to grow with their competitors by providing a high quality service to their customers.

 

At KESTIO, our experience and research in the field ofcustomer experience enable us to offer you a method adapted to your performance challenges, the Welcome Experience©.

Thefirst step consists of an inventory of the situation and allows us to collect the needs and requirements of a type of customer. The method combines the analysis and definition of the 4 elements necessary to define an optimal customer experience:

    • What is the company's vision of customer relations? What are the relationship markers in line with the company's identity and its brand?
    • What are the types of customers, their needs, their explicit and latent expectations?
    • What are the stages of the customer journey before, during and after the event or purchase phase?
    • What are the channels and means used? Website, e-services, smartphone application, tablet, interactive terminal, point of sale, point of service, intermediary agency... the channels and tools have multiplied and represent as many opportunities or threats to disrupt the customer experience.

 

At the end of the inventory and analysis phase, thesecond step is the conceptualisation of the customer journey in interaction with the teams in contact with the customer. The objective is to highlight potential breaking points and moments of truth, the risks of disappointing moments and the opportunities for developing new moments for customers, known as "moments of delight".

 

Each touch point is assessed, to identify the levels of perception of its importance and the level of response from the company, with the aim ofimproving the customer journey at every stage.. The analysis is informed by internal perception, customer surveys and feedback, industry and non-industry benchmarks and is regularly updated by our consultants to benefit from current best practice.

La 3ème étape consiste alors en une phase de mobilisation et d’implication des équipes internes, orientées client. Les « Workshop Metaplan » permettent de dresser les initiatives et chantiers à mener pour modifier l’organisation, les processus, les outils, les applications et les compétences afin d’atteindre l’expérience client désirée. Une fois ces chantiers menés, nos équipes accompagnent les entreprises dans la mise en place des structures de management de l’expérience client en mode continu.

 

3. The effectiveness of improved customer experience is proven

The decision then has to be made toinvest in the customer experience. Yes, but will it make my business more profitable?

 

The study published at the end of 2014 by the Harvard Businnes Review([2] sheds light on the relevance of focusing on the customer. The researchers focused on companies with different business models: some pay per transaction, others by subscription. The common goal was to analyse theimpact of the customer experience on future consumer spending.

The study of the behaviour of an individual at a given moment and of the same individual the following year reveals divergences according to the quality of the customer experience. Indeed, the figures show that spending in the second year is higher when the experience was rich. Customers with the best past experiences spend 140% more than those with poorer past experiences.

 

The researchers went further to make predictions about the future of membership durations. A member with the lowest experience score is unlikely to stay for more than a year. Conversely, a member who gives the highest score is likely to remain a subscriber for 6 years. It will therefore be essential to focus on providing the best customer experience from the very first interactions.

 

Finally, the HBR study explains that in addition to providing benefits to the turnover, optimising the customer experience allows companies to make savings. Indeed, how much does it cost the company to manage dissatisfaction? How much do returned products, call centre issues, after-sales repairs, etc. cost?

 

In line with this first study, an analysis of the stock market performance of SP 500 companies over the period 2007-2012 conducted by Watermark and Forester Research[3] reveals the importance of the customer experience:

    • The customer experience champions have a significantly better stock market performance than the index average with 43% better,
    • The SP 500 index for the period rose by 14.5 points
    • Latecomers have a 33.9% lower performance

 

The conclusion here seems obvious: when a company focuses on anything other than the customer experience, it ends up losing stock market performance. Conversely, when the customer experience is the focus, stock market performance is boosted.

 

The multiplicity of offers and the promotion of low prices is accessible to all consumers. Faced with an almost unlimited choice, the power is more in their hands and less in those of companies. In such a context, offering the customer a satisfying or even new experience is now the challenge that companies seeking growth must address.

 

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