Fresh off a years-long agenda of pushing operational efficiency and aggressive cost-cutting, manufacturers have...
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set their sights on enhancing customer experience, banking that this latest discipline will be a catalyst for growth.
Competitive pressures and a desire for meaningful relationships with customers have elevated customer experience to a top priority, ranked in the same league as those other longstanding business objectives, according to IDC Manufacturing Insights. In the research firm's 2014 Supply Chain Survey, becoming more customer-centric and improving service performance was cited as the third most popular objective in the short term, taking precedence over improving supply chain agility and supply chain visibility when looking out over a two- to three-year period.
"Cost-cutting is going on across all sectors, but it's a very short-term solution and it cuts into customer experience overall," noted Kim Proctor, president of Customers That Click, a customer experience consultancy. "To grow a business, you need happy and engaged customers, so focusing on customer experience is a long-term play. Manufacturers can continue to focus on operations, but they really have to come up with strategies and follow through on the customer experience element if they want to grow their business."
Consumers' comfort level with technology-driven customer experiences in their personal lives has set the bar high for similar interactions with business-to-business transactions, experts said. At the same time, the distribution channel is no longer the only touch point for customer engagement as e-commerce, mobile and social technologies open the door for manufacturers to engage directly with their clientele, many preferring that one-to-one interaction.
"The technology platform is finally here -- 10 years ago we didn't have mobile, cloud and social listening platforms that give us the ability to reach out to customers in multiple ways that we can today," noted Heather Ashton, research manager for IDC Manufacturing Insights. "The potential for customer experience has changed dramatically because of technology."
Cultivating meaningful customer relationships
Another change is manufacturers' realization that cultivating a deeper relationship with customers can lead to revenue gains not possible with single or even multiple transactions. Specifically, by owning the customer lifecycle from beginning to end, manufacturers gain entrée into after-sales service and parts opportunities that are likely more valuable over the long haul compared to the sale of the initial product.
"Service is an annuity, and discrete manufacturers selling a product with an annuity stream that is renewable year in and year out really does change the business model to something that's easier to monetize," said Joshua Greenbaum, president of Enterprise Applications Consulting, a consultancy focusing on enterprise applications. "Not only does it give companies a more predictable revenue stream, it gets them closer to the customer at the end of the day."
Forging a direct and more meaningful relationship with customers also aids in better planning, which positively impacts manufacturers' operational efficiency while improving their ability to keep up with customer requirements, Greenbaum said. For example, by optimally forecasting demand, manufacturers avoid inventory stockpiles, which keeps costs down and scores points by ensuring customers receive the products they want when they want them, he explained. From a maintenance standpoint, the ability to accurately predict end of life supports the practice of proactive service, which ensures customer satisfaction while aiding in cost reductions.
At Trek Bicycles, the key objective is to enhance customer experience throughout the lifecycle, for both the bike manufacturer's key distributors and customers, said David Peterson, enterprise collaboration manager for the popular cycling brand. Using a powerful technology cocktail of CRM, ERP and data integration software from Scribe Software, Trek is assembling a complete picture of its distributors that combines both structured transactional data and unstructured information.
"Our overarching goal is to create a picture of the consumer and distributor that allows us to better support them and find new ways of doing things that get the job done," Peterson explained. "We not only make bikes, we ride bikes and we want to treat people the way we want to be treated. This helps us take care of people and give them the right answer at the right time."
While Trek is pedaling furiously toward a high-touch customer experience, most manufacturers are just getting started, waylaid by budgets and other, more pressing IT projects like application modernization, noted IDC's Ashton. "The maturity level is low," she said. "There are early leaders in verticals, but large swaths of manufacturers are still trying to modernize ERP and are not thinking about how to address customer experience."
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