Growth in Uncertainty: As Consumers Change, Customer Management Must Evolve as Well

Press enter to search
Close search
Open Menu
By Richard Essigs, Ernst & Young LLP - 09/24/2020

Even before the COVID-19 pandemic, consumer products companies had a strong incentive to get closer to retailers and their end customers — and now that product demand, channel preferences and customer dynamics have rapidly swung in new directions, that need has only grown more vital. Evolving into a more agile and resilient organization requires your customer management to also evolve.

In my prior post, I discussed how the pandemic has impacted shopper attitudes, preferences and behaviors in ways that consumer products companies likely haven’t seen. While shoppers continue to say they want to return to what they perceive as normal, the reality of COVID-19 has made them reluctant to re-engage with their normal activities. Leading consumer products companies are working with retailers to validate behaviors that have fundamentally changed. In doing so, it is clear that customer management must be viewed through a lens that incorporates today’s dynamic retail environment.

Beyond significant changes in shopper attitudes, preferences and behaviors, other fundamental shifts are taking place, directly impacting customer management. The nature of retailer collaboration, especially today, is fluid, often knocking customer management operating models and organizational structures out of alignment with evolving retailer needs.

At the same time, technology is changing too, in areas such as data management, analytics, modeling, personalization, collaboration and intelligent automation. There’s a talent management component to this as well, to make sure you’re working toward fulfilling those evolving needs and incentivizing and rewarding your workforce for doing so.

What you need — and how to get it

Leading customer management practices equip commercial organizations to evolve to sustain profitable growth. Getting toward better practices rests on related goals that leaders have generally accepted as beneficial — yet they’re not treated as a priority or not implemented as thoroughly as necessary. Those are:

  • Customized marketing and sales strategies, founded on shopper behaviors, all driving tailored customer experiences
  • Greater forecast quality and agility, thanks to enabling technologies that integrate data and analytics
  • A proactive inventory strategy, driven by real-time monitoring of shelves at the SKU level
  • Standardization across the enterprise, including a single version of the truth and a common business process library
  • Redesigned workforce composition, centered around specific personas (such as key account managers and category analysts), not just varied roles, responsibilities and skill sets

How does a consumer products executive tackle all this? First, like most facets of your business, better customer management relies on you as a leader to confront how you spend your time and allocate budget, which I have previously discussed. Then there are five concrete steps to take, constituting a road map that resembles this one:

  1. Identify, measure and monitor both channel and customer cost-to-serve. You need this information to make fact-based decisions and determine how best to self-fund customer management initiatives, to the extent possible.
  2. Affirm operational feasibility. Advanced analytics must produce results that are not just theoretically interesting; they also must be implementable within the customer’s operating model constraints.
  3. Reallocate existing resources, with incremental increases, toward strategic growth channels and customers. Invest disproportionately in providing value-added customer management services for top-tier customers. The goal: win in winning channels with winning customers.
  4. Rethink how and where work is performed. Change or implement joint business processes, and/or shift them to more efficient resources, such as brokers or shared services centers.
  5. Realign performance measures and variable compensation. To increase your organization’s likelihood of achieving desired targets, you should orient your talent recognition and reward strategies around business objectives.

Moving forward with efficiency and collaboration

Many consumer products companies continue to struggle with keeping up with the increased pace and expanding breadth of retail demands, largely attributed to the current pandemic. These companies view customer management as stretched to the breaking point as they engage leading retailers. They feel as though they can barely keep up with what they need to do under their current systems — because they’re doing it wrong.

Industry leaders have moved through the next and into the beyond, recognizing that some of their leading retailers have never been stronger and that collaboration with them will address challenges stemming from the pandemic. They are using the road map discussed above to fundamentally change their approach, method, toolset, organization and business processes to move into the beyond COVID-19 version of customer management. You have no control over the pandemic — but whether you use it as an opportunity to improve or an excuse to remain stagnant is your decision.

 

This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Member firms of the global EY organization cannot accept responsibility for loss to any person relying on this article.

More Blog Posts In This Series