ISIS Papyrus Software

Focus on Customer Outcomes for Long-term Profitability

In markets on January 17, 2012 at 2:42 am

Firms competing in mature markets usually apply two broad strategies to secure growth and profitability. The first strategy centers around aggressive pricing. This strategy is particularly tempting in downturns or to force competitors out of the market. But overall, it is a shortsighted strategy and hurts long-term profitability despite apparent initial success in terms of growth. The cut in margins is usually the start of a downward spiral followed soon by some cost cutting in its various forms, which is the ultimate goal of most Business Process Management (BPM) projects and the only justification for oversimplifying customer-facing processes with flowcharts. The result is poorer service and product quality, the outsourcing or even complete elimination of services with all its dire consequences but without bringing back margins to sound levels.

The other strategy is about focusing on customer outcomes. This requires a shift from the notion of products and services as a commodity to that of shaping the perception of the customer in terms of value received. In this setting the customer judges about the successful outcome of a business process instead of a bureaucratic system. In most cases this is a substantial differentiator from the competition. However easy it sounds this shift is not something that can be achieved overnight and it is certainly no one-off procedure.

Starting with the focus on customer outcomes requires goal-orientation, transparency and empowerment in process planning and execution. It considers knowledge and an organization’s adaptive capabilities to put it into action for accommodating different customer preferences. Giving participants the means to create a value perception interactively instead of mere exception handling along a sequence of predefined steps builds the cornerstones of long-term customer relationships which result in increased loyalty and revenue.

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