“Fundamentally, the only competitive advantage one has is client knowledge,” says Thomas Kalaris, CEO of Barclays Wealth and Investment Management. Understanding customers as individuals has become priority one for CEOs – as a group, they’re investing more in consumer insights than any other area.
After in-person interviews with over 1,700 CEOs from 18 industries across 64 countries, IBM released the results of their biennial Global CEO Study. Here are three key takeaways from the study.
Data will finally define “markets of one”
Among the traits of a great CEO, 61% of those surveyed say they must exhibit “customer obsession.” Knowing customers used to mean understanding the generalized customer base as a whole, and often defining segments with like qualities. But as consumers’ lives become more digital, the amount of data they’re creating and sharing about their themselves as individuals is growing exponentially – making it possible (and more important) to define and serve “markets of one.”
It follows that seven out of ten CEOs are making major changes in their organization to scalably deepen understanding of the individual customer’s needs. Defining what each existing customer cares about, and how to better serve them, will drive customer lifetime value – 66% of CEOs see customer relationships as key sources of economic value, making it the second-most important value source behind human capital.
Translating data into action is the foundation of future growth
To reach these markets of one, 73% percent of CEOs are making significant investments in understanding data – spend intended to increase their organizations’ ability to translate the data flood into specific business actions. A company’s ability to capture more data, draw better insights, and act faster than competition will determine future success – and failure. Says Mike Rillstone, CEO of Health Support Services NSW:
“Survival skill 101 for the next five years will be deriving insight ahead of peers.”
It’s already clear. IBM identified “outperformers” among the sample group, businesses in the top 20% in terms of revenue and growth. Over half (54%) of outperformers’ CEOs said they have access to and can draw insights from data – compared to only 25% of underperformers. And 57% of outperformers said they could translate those insights into action, while only 31% of underperformers agreed.
Social will become businesses’ preferred tool for communicating with customers
As companies get better at translating data into insights, their data appetite will only increase. It’s no wonder, then, that CEOs see social – a consumer data goldmine – as an increasingly important communications channel. After in-person conversations, CEOs’ current preferred methods of communication rank: websites, then channel partners, call centers, traditional media, advisory groups and lastly, social. But that will soon change, as CEOs predict social will top the list in three to five short years. According to David McKay, Group Head of Canadian Banking at RBC Royal Bank:
“Our business will continue to be ‘face-to-face,’ just on a different medium.”
The march of social is unavoidable, says one unidentified US CEO:
“From 1995 to 2000, the web went from something only some people used to something almost everyone used to conduct business. I view social media in the same way – we’re approaching the stage when almost everyone will have to figure out how to use it to conduct business successfully.”
Businesses already using social to collect structured customer data and identify trends will be to quickest reach markets of one.