In the modern global economy, the ever-changing marketplace can present a challenge to any business that wishes to meet the goals of growing sales, increasing profits, and generating customer loyalty. Tried and true business strategies are meeting resistance and are slowly declining in effectiveness due to increasingly diverse market pressures. While mitigating some of these market pressures can certainly be undertaken through innovation, product development, and marketing research, the reality is that businesses that do not adapt to be flexible in light of these diverse pressures are destined to fail to reach their goals of growing sales, increasing profits and generating customer loyalty.
In order to meet the stated goals, each business must be willing to undertake an adaptive strategy approach. To facilitate this approach, it is important to realize that there is a distinct hierarchy of goals, as stated. Generating Customer Loyalty causes sales to grow and thus increases profits. This is opposed to a non-adaptive approach of ” grow sales to increase profits and generate customer loyalty.” In effect, placing the consumer at the end of the hierarchy of goals and creating a linear, static flow strategy that places the priority on generating sales at the expense of customer loyalty. At first, this may seem similar to the “Customer First” approach employed by businesses since the early ’80s; however, the “Customer First” strategy was employed to grow sales, not to generate customer loyalty. By taking this new hierarchy and using it to deploy a viable adaptive strategy, market pressures can be reasonably contained.
Development of an Adaptive Strategy
Of course, generating customer loyalty, thereby growing sales and thus increasing profits by using an adaptive strategy, is more than just a rearrangement of goals. This rearrangement only provides the directional focus; a cohesive strategy must still be developed. In order to effect this process, businesses must have the means and the ability to capitalize on the enormous asset it continually develops, and that is customer information. Mining customer data allows a business to identify trends, anticipate actions, develop product targeting, and much more.
There are real-world examples of where mining customer data has allowed a business to develop an adaptive strategy that results in customer loyalty. A North American generator manufacturer began developing trend analysis from incoming customer call data and discovered that a primary issue was the operation of older units that were no longer in warranty. To generate customer loyalty, the company began offering lifetime technical support to original owners on all newly purchased units. Changing to lifetime technical support from the standard support model of two years increased customer loyalty and grew sales by 30 percent in the first year of the offering. This clearly illustrates the key function of developing customer data and using it to become the foundation of the development of an adaptive strategy and then employing said strategy.
Creating and applying an adaptive strategic approach to generating customer loyalty to increase sales and therefore increase profits is not always an internally generated proposition for many companies. For companies in this type of concern, it takes the engagement of an experienced and knowledgeable consultant to help navigate the process of developing the tools necessary to generate an adaptive strategy to achieve the main objective of generating customer loyalty and thereby growing sales and increasing profits.