The pulse of Hoosier business.
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2011 Focus on CustomersA report about how Hoosiers feel about the relationships they have with their customers. |
Business Confidence Declines Again
Business confidence has declined over the past four studies since reaching a high of 67 in February. Started in December 2010, the Index, now at 60 percent, is a measure of the overall confidence that Indiana business leaders and employees have in their company’s opportunity for growth and success in the coming 12 months. Where will it go from here?
That’s the question on everyone’s mind so we decided to ask about 40 Indiana business professionals what they think will happen next. Almost half feel the Index will flatten out and more than 40% feel it will continue to decline. A small minority of just over 10% feel the Index will begin rebound when it is measured next.
The primary factors for the Index’s drop appear to be a continued economic uncertainty among consumers in both business-to-business and business-to-consumer markets. This means spending is down and no short term growth is expected. What’s more, because growth is down, most Indiana businesses are not hiring and many are still cutting, leading to anxiety and decreased morale amongst Hoosier employees.
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What Did Hoosiers Say About Customer Relationships? |
BARRIERS TO CUSTOMER FOCUS |
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Even though almost nine out of ten Hoosier feel their company is customer-focused and more than 70% say they use customer input for strategic direction, challenges still exist. When asked about the barriers to being customer focused, having enough time to really engage with customers topped the list. Other common barriers cited included – too reactive instead of proactive, no financial resources dedicated to customer initiatives, a lack of systems and tools for managing customers, and the inability to track of customer feedback.
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SOURCES OF CUSTOMER INSIGHTS |
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An impressive 71 percent of Hoosiers feel they incorporate customer insights in their strategic planning and almost two-thirds feel they seek input from customers to manage and improve the business. But how do they collect insights from customers? Reacting to customer complaints was most common followed by informal feedback from customer facing employees. While any method is positive, these top two are not commonly considered to be the most accurate or actionable methods for measuring and managing customer relationships.
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WHAT CREATES LOYALTY? |
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When asked what factors create customer loyalty, two responses stood out–service and people, followed at a distance by products and price. This reinforces that Hoosiers view good customer relationships as more than just the product you purchase or the price you pay. Rather, customer relationships in Indiana appear to be more dependent on less tangible, but highly important aspects–the level of service they receive and the people they interact with.
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WHY CUSTOMERS LEAVE |
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If service and people are what drives customer loyalty, what influences them to leave? The dominant response from Hoosiers was price. Hoosiers tend to believe that if you don’t have the deeper aspects of a customer relationship in place, then price becomes the reason to stay or switch. In essence, companies must provide a good product/solution as well as a positive customer experience if they are to justify a higher price.
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STACKING UP WITH THE COMPETITION |
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Sixty five percent of respondents feel customers are more loyal to their company than to the competition. However, approximately 28% were neutral on the topic–they did not feel their customers were any more loyal to their company than the competition. What’s more, when we took a closer look we found that these respondents were significantly more negative when asked about potential sales and product demand for their company in the coming next six months.
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Opinion: What It Means For Indiana |
Gerry DickPresident and Managing Editor |
Gerry's take |
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Even though 60 percent of respondents are still confident in their business, the Business Confidence Index as a whole has significantly declined in the last eight months. Indiana executives seem to believe that the economy will not turn around quickly, however they do feel that Indiana is poised for a resurgence once the economy improves, especially compared to other states. |
Steve WalkerChairman & CEO |
Having studied the dramatic impact customer loyalty has on an organization for most of my career, I’ve seen the importance of utilizing customer insights in business planning and strategies. Three key qualities stand out in organizations that are truly customer focused: Strong leadership, a solid system for gathering and distributing customer insights, and a willingness to take action on input from customers. I have the privilege to work with over 25 publicly traded companies who are intensely customer focused and as a group they outperform the market by 7:1 in building enterprise value. Those results speak to the power of being customer-focused. |
