Today’s growth-at-all-costs model is broken. It’s time to redefine growth that delivers value for everyone.
- Customers are demanding more from companies that have been using digital technology and shrewd tactics to drive short-term revenue growth.
- The new definition of growth needs to be grounded in authenticity of purpose and long-term value.
- Sustainable product and service innovation, human-centric experiences and a reimagined operating model can help transform business for growth where everyone wins.
You’ll never believe…!”, “Why you can’t live without…”, “This is the last thing you’ll ever need…” — social media feeds are full of these clickbait headlines. Consumers dislike them because they’re often misleading. Companies love them because they work. Chief marketing officers (CMOs) and other customer-facing leaders are caught in between.
These, of course, are the mostly frustrating but otherwise harmless approaches companies use to lure in consumers. More devious tactics include harvesting data to serve up targeted ads in ways that border on alarming or driving addiction through casino-type tactics in video games or on social media. One eye-opening headline in a major UK newspaper suggested that a global fast-fashion giant was using a major social media platform to lure children into shopaholism with casino games.
Companies have been using these tactics to attract customers and drive revenue growth. It’s a ruthless, winner-take-all model, driven by digital technology and designed to meet quarterly earnings targets and shareholder expectations. In the process, consumers become lifeless commodities from which to extract and exploit the maximum amount of data solely for the organization’s gain.
Until now, this is an approach that has worked. But customers are demanding more and better from the companies they do business with. In the latest EY Future Consumer Index survey, 68% of consumers think the company’s behavior is as important as what it sells, while 69% say brands must behave ethically and in line with community expectations. Yet only 38% think the positive actions brands are taking are good enough.
As customers increasingly look for better experiences and choose brands that align with their values, a growth-at-all-costs mindset becomes unsustainable.
The race for survival has distorted good intentions
It’s easy to understand why CMOs and their organizations have followed the growth-at-all-costs path. Incumbent companies are in a race for survival. Where they once only worried about gaining market share within their industry and among their peers, they now face hyper-competition from mega tech vendors and, increasingly, small but massively funded digital start-ups. Every company in every industry has needed to become a technology company in one form or another to compete for highly coveted data and “active users.”
At the same time, customer, employee and investor expectations are changing as rapidly as the digital technology enabling them.
In response to these pressures, many companies say they have put purpose at the center of their transformations. They talk about long-term value, which seeks to measure performance beyond financials to include governance, people, planet and prosperity. Yet, very often, aspirations fail to result in action, as companies ultimately fall back on quarterly earnings as their barometer for success.
It’s time to redefine growth
Purpose-washing just won’t be accepted by today’s consumers. It’s time to rip up the current definition of growth and redefine it in the context of authenticity of purpose and long-term value.
Growth can come from new business models and ecosystems, entering new markets, alliances and acquisitions, or delivering exceptional customer and employee experiences. Regardless of its origin, the strategy that supports it will need to be deliberate, disciplined and underpinned by sound customer loyalty economics.
It will need to drive the innovation of environmentally friendly products and services at scale, shape the future of the customer experience, and build a humans-at-center operating model. Moreover, there will need to be an increased focus on partner interactions and how the new definition of growth can benefit the companies delivering the product or service. They will also need to support their clients and their clients’ customers to achieve their own ambitions.
The result will be a thoughtful approach to growth where everyone wins.
How sustainable innovation can fuel purposeful growth
Four ways companies can drive sustainable innovation that is both planet and profit-friendly.
In the latest EY Future Consumer Index survey, 68% of respondents think brands have a responsibility to invest in the sustainable production of their products and services. Further, 70% say that brands must be transparent about the social and environmental impacts of producing their products and services. As consumers begin to prioritize planet over affordability in their purchasing decisions, sustainable product and service innovation has shifted from first-mover advantage to baseline imperative for growth.
Chief marketing officers (CMOs) will want to collaborate with a much wider group of functional experts, from their chief experience officer (CXO) and chief innovations officer (CINO) to the chief commercial officer (CCO). Together, they will need to transform existing products and services to help ensure they are meeting existing and future consumer demand. The more acclimated C-suite executives are reaching beyond their comfort zones to continually disrupt themselves based on circular principles, the more they can drive their sustainable product and innovation agendas that lead to purposeful growth.
Four ways companies can drive sustainable innovation that is both planet and profit-friendly
Sustainability in product and service innovation is no longer aspirational, and it can’t be bolted on to innovation cycles after the fact. It’s essential that organizations think about and embed commercial, environmental and social sustainability into their purpose, design thinking, prototyping and scaling of every product and service.
Here are four ways to fuse planet with profit:
1. Stay in the problem longer than you feel comfortable. Companies are so used to rapid problem-solving that they’re not solving the issue behind the issue.
2. Make innovation a mindset. Innovation isn’t the responsibility of only one part of the business. Organizations need to create an innovation mindset across the entire enterprise.
3. Think backcasting rather than forecasting. A future-back approach to transformation can help companies unpack key megatrends, assess how they might shift market conditions and align these insights with the organization’s purpose.
4. Create your own competitor. Setting up a private company outside the structure of the incumbent company enables it to operate without legacy issues. It’s one of the biggest levers of innovation that most companies don’t use.
The new definition of growth relies on human-centered experiences
Five ways CMOs can speed into the future customer experience.
For the last 10 years, cloud, big data, analytics, social and mobile have challenged companies to rethink the customer experience. In the next 10 years and beyond, new technologies — Web 3.0, metaverse, quantum, edge technologies and technologies not yet conceived — will force CMOs to transform the customer experience over and over again.
Technology is always changing, but the one element that will always rise above any technology is the human factor. The future of customer experience lies less in customer centricity and more in human centricity.
Customers want to believe in and trust the organizations they do business with. According to the EY Global Consumer Privacy Survey, when asked what is most important when they choose to share their personal data with an organization, the majority of respondents point to secure collection and storage (63%), control over what data is being shared (57%) and trust in the company collecting their data (51%).
With the death of third-party cookies and other ad-tracking tools, gaining consumer trust has become even more critical now that marketers must rely almost solely on first-party data — in other words, from the customers themselves. (Note: clickbait tactics, programmatic advertising and fake news don’t build trust.)
Organizations need to align to their values and beliefs and show that in their actions. In building this trust, organizations need to know and engage with their customers as individual living, breathing human beings in ways they have yet to explore. And they have to deliver resonant experiences across every channel and platform consistently. In the latest EY Future Consumer Index survey, 62% of respondents say they would share personal data for a completely customized online experience.
The more organizations engage with the full spectrum of human needs (and not just “customer needs”), the more data they ethically collect and the more trust they gain from their customers, the better they can anticipate and improve the products and services they deliver to their customers, which leads to purposeful growth and long-term value creation.
By embedding customer centricity throughout the enterprise, organizations can make sure customer interactions are consistent, and the internal functions all have the same familiarity and understanding of their customers’ wants and desires. Moreover, they can provide a human-centered response through the customer lifecycle. CMOs have a huge opportunity to drive this collaboration throughout the organization so that the organization evolves and transforms in ways that both optimally serve the customer and improves the entire experience.
Five ways CMOs can speed into the future customer experience
Here are five ways CMOs can fast-track their way into the future customer experience — one that delivers on purpose and drives profit.
1. Talk to your customers regularly — and listen to what they say. Too often, CMOs believe they have understood their customers based on a point-in-time set of interactions rather than an ongoing dialogue. Regular one-on-one interactions help CMOs and their teams understand what resonates with customers, learn about the moments that matter and how to deliver better experiences in these moments.
2. Combine the qualitative with the quantitative. When customers trust, they are more inclined to provide more data. Harnessed properly, data and analytics can help CMOs get minutely granular in their segmentation — and take personalization to the next level without getting intrusive.
3. Design dynamic journeys with the tools for customers to create their own journeys. CMOs and other creative leaders will need to work together to design journeys that can flex and evolve with customers and give them the power to create their own journeys.
4. Flatten the silos. Silos create disconnects in data collection and analytics, segmenting customers and delivering personalized experiences that customers expect. Flattening the silos will enable CMOs and other customer-facing functions to deliver personalized experiences at every stage of the customer journey.
5. Focus on outcomes rather than activities. Today’s marketers still often focus too much on activities rather than outcomes. They incentivize and measure teams on how they perform a specific activity rather than how they arrive at the destination. CMOs need to shift the mindset of the organization to focus on the desired, consistent and organizationally aligned outcome, such as how workers contributed to making a customer’s life better, rather than how many widgets they designed, manufactured or sold.
To redefine growth, reinvent the operating model
Four concrete actions to build a successful customer-centric operating model.
Most large organizations are designed according to 20th century principles. They were founded on rigid structures to organize people only. To operate at speed and scale today, companies need people plus technology. The last century’s operating principles also dictated the division into functional silos that create competition and disconnections at critical points along the customer value chain. Therefore, current operating models aren’t in any way designed with the customer in mind.
The truth is, customers don’t care how a company’s organization chart is structured, and their experiences transcend organizational silos. As such, business and operating models need to follow the customer lifecycle. This requires a complete rethink throughout the operating model. It needs to touch everything from processes to product innovation to pricing to sales and marketing. CMOs and other customer-facing leaders need to work with the C-suite to embed humanistic customer-centricity across all business areas and anchor it to business model reinvention.
They also need to move beyond score-dominant KPIs in favor of developing a clear approach for measuring the overall health of customer relationships as an intangible asset. Investments in customer relationships need to cascade across the organization. Customer experience is not another initiative; it’s a fundamental mindset and belief system. Measurements need to transcend the operating model as well.
Four concrete actions to build a successful customer-centric operating model
The road to building a customer-centric operating model is hard, which is one reason why so many business transformations fail. Based on EY experience helping clients successfully transform their operating models for customer-centricity, we’ve identified four key actions CMOs can take in partnership with the C-suite to turn their visions of customer-centricity into a reality:
1. Create pods that align to the customer lifecycle. Leaders of the pods will own all aspects of how to make the customer journey successful across the enterprise. For example, a bank may currently be organized by division (retail, commercial, business, wealth and asset management, etc.). Under a customer journey model, a pod may be dedicated to delivering all new customers a great welcome experience in their first six months, regardless of division or the product or service they have bought. The pod would then be incentivized to and measured against delivering the best possible customer outcomes rather than divisional or enterprise KPIs.
2. Master design thinking. Service design is a human-centered approach where designers consider the complex chains of interactions involved in innovating, producing and delivering a product or service. It takes a multidimensional view of how to meet customer needs, inclusive of every impacted role within the enterprise. It’s an approach that allows companies to engage in iterative product development, scale based on customer needs and invest based on a better appreciation of market size.
3. Give pods the data and empower them to make decisions. Modern organizations are putting anonymized or pseudo-anonymized data in the hands of pods and frontline, customer-facing employees. Because they are on the front lines, they can see how a product or service is performing. Companies need to allow these employees to make data-driven decisions to pivot or shift the direction of a product or service without intervention from core leadership.
4. Create an empathy mindset. Companies need to create a culture that prizes empathy. Empathy with the end customer enables pods to intensely channel personas, and optimize products and services for maximum customer engagement.
(Courtesy EY. By Laurence Buchanan, EY Global Customer & Growth Leader; CEO, EY-Seren Limited. Adrian Slobin, EY Americas Customer and Growth Leader. Dong-Hyun (Alex) Lee, EY Asia-Pacific Customer & Growth Leader; EY Korea Digital & Emerging Technologies Consulting Leader. Patrick Ruijs, EY EMEIA Customer & Growth Leader; Netherlands Consulting Business Transformation Leader; VODW Leader)