Customer Revolution

Chapter 1 Embrace the Customer Revolution and Thrive in the Customer Economy Fasten your seatbelts! The turbulence you've been experiencing in the stock market isn't over yet. In fact, it's probably going to get worse. Why? Because we're in the midst of a profound revolution. And it's bigger than an Internet revolution or a mobile wireless revolution. It's a customer revolution. Customers have taken control of our companies' destinies. Customers are transforming our industries. And customers' loyalty or lack thereof has become increasingly important to executives and investors alike. If you try to understand the ups and downs of the current economy by focusing on technology trends and investment fads, you're going to miss the true underlying shift that's underway. Customers are in control. They're changing the face of business as we know it. And your company's value is in their hands. Your customer franchise has suddenly become the scarcest and the most crucial resource for your business. What's more, your company is probably at risk. Unless you act now to focus on the quality and consistency of the customer experience you offer, your firm will be hopelessly lost in the turbulence. Other companies like the ones described in this book have quietly reorganized themselves to manage by and for customer value. They measure and monitor what matters most to customers. If you continue to operate your business using the metrics of the old economy, you're going to be left standing on the ground as your competitors take off in the customer economy. Listen to the Beat of the Customer Revolution Over the past year, executives in a variety of industries have begun to feel the impact of the customer revolution. Let's listen to their stories: Arne Frager is the president of The Plant, a professional music recording studio in Sausalito, California. Arne's been in the music business for twenty-seven years and he's never seen the flow of new music dry up before: "My recording business is off 50 percent. The whole music recording business is off 50 percent this year (2000). About half the revenues in our industry come from new acts. But the big record labels are so paralyzed by the MP3/Napster/Gnutella/Freenet free distribution of digital music that they're not signing any new acts! Without the labels paying for the production of new albums, our studio isn't recording." Customers, taking matters into their own hands, have profoundly altered the landscape of the music industry. Brennan Mulligan is president of Timbuk2 Designs, a U.S.-based manufacturer of backpacks and messenger bags: "Customers love the ability to custom-design their backpacks. But there's just no way to convince retailers to take custom orders in their stores. They can't handle one-off products. So we'll go direct to the customer and do it on the Internet. Customers can design their own backpacks, we'll ship them out the next day, and if the retailers want to participate we'll set up shop on their Web sites and put kiosks in their stores, too!" Customers want capabilities that retailers haven't been able to offer. Now manufacturers are responding to customers' desires. Gideon Sasson, executive vice president of Electronic Brokerage, Charles Schwab & Co.: "Before the Internet, companies used to talk about how to lock the customer in. They thought about how to 'own' the customer. They incented customers. They brought them in, and then they worried about, 'How do I make a profit with these customers' and 'How do I get them to buy this product.' But companies can't afford to think that way any more. Even before the Internet, at Schwab we realized that if we do the right thing for our customers, they'll reward us. But other companies are facing a rudeSeybold, Patricia B. is the author of 'Customer Revolution' with ISBN 9780609607725 and ISBN 0609607723.