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Is “closeness to customer” a new measure of success?
Posted on August 7th, 2009 by and currently 8 commenting.Verne Harnish (love that man, his is one the few email newsletters I actually read top to bottom) turned me on to Hermann Simon in his latest email.
Simon, from Germany, is considered to be the Jim Collins of the world of privately held mid-market companies. He wrote the book Hidden Champions of the 21st Century. I haven’t read the book yet, but Verne’s sound bite prompted me to Google him and find this slide deck.
There’s a lot of talk about the ROI of social media lately. We are all trying to find meaningful ways to justify effort and spending in the work we do in the world. This set of words from Simon really intrigues me:
“Closeness to customer”
It seems that of the Hidden Champions Simon has studied, 88.7 % of them have this characteristic in common: Five times as many employees (25-50%) have regular customer contact. This is compared to larger companies who typically have only 5-10 % of their employees who have regular customer contact.
Hmmm.
It is probably important to note that Hidden Champions are number one or two in world market share, less than 1 billion in revenues with low visibility and public awareness. An interesting (and some might argue odd) bunch for those of us involved in social media to learn from for sure. But I love studying the less obvious.
So what is the value of customer closeness? According to Simon, by staying close to your most demanding customers, these companies drive performance and innovation. Their strategies become value driven, not price driven, so they can charge 10-15% more for their product or services. (I would bet money that employees are more engaged if they are closer to the customers. It’s always a signal of corporate health and profitability in my opinion.)
I have seen this work at work first hand in the movements we have co-created with out clients. When you are on a first-name basis with a larger group of your customers, it changes the game. They are no longer your target audience. They are people. With fascinating lives. You find common passion and interests with someone you know more intimately.
I’ll read the book.
In the meantime, ask yourself this: “How close is your COMPANY to your CUSTOMERS?” What percentage of your employees have regular customer contact and conversation?
Tags: closeness to customer, Hermann Simon, Hidden Champions, Hidden Champions of the 21st Century, Verne Harnish
8 Responses to “Is “closeness to customer” a new measure of success?”
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Such a great post. Closeness to customer should be a core social media measurement, because its with this “medium” (if you can call it that) — that allows the most access and closeness to your customer. I’m reminded of companies that have not brought their cusotmers closer and to their peril, I’m thinking Tropicana’s rebranding which scorned their most loyal customers causing a significant backlash. Thanks for the insight
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I’m a big proponent of pushing customer knowledge from the edges to the middle of organizations. How else can companies realistically hope to improve their innovation efforts?
I’ve written about it in my “Broadcasting the Voice of the Customer” white paper available here:
http://www.business-strategy-innovation.com/Voice-of-the-Customer-White-Paper.pdf
Just my two and a half cents.
Braden
http://twitter.com/innovate -
How close are you to your customers? Great question to ask yourself as you use social media to market. [link to post] http://friendfeed.com/e/5a0280e1-d634-4f07-9b83-897cdd5b33f7 -
How close are you to your customers? Great question to ask yourself as you use social media to market. [link to post] -
Leave it @brainsonfire to keep me thinking - How close are u 2 your customers?How does that contribute to yr success [link to post] -
“Сloseness to customer” as a new measure of success [link to post] -
This begs the question: are you a company your customers want to be close to? Really makes you think. Thanks.
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Is “closeness to customer” a new measure of success? by @robbinphillips answers my Q re measuring advocacy [link to post] Thx Robbin!
