Retail and Consumer organisations have always had a focus on their customers but it has now become an essential focus across every sector. Some sectors, however, are further ahead than others when it comes to tailoring their business model to cater to the end-user. Furthermore, it’s not just about the need to change business models; it’s also about changing cultures. The belief that the customer is king needs to be present throughout the entire organisation and this can only be achieved with the right attitude at Board level. So what is required of those at the top? Blackwood is an independent executive search consultancy, providing services to blue chip clients across the financial and corporate world. Its consultants discuss how the consumer is driving talent strategies within different sectors…


1

Which sectors have responded best to the need to focus on the customer?

2

What attributes are needed from leaders to provoke this customer-centricity?

3

How customer-focused must the CFOs of modern businesses be?

Alan: Across the top 100 businesses for customer service in the UK, there is little correlation between company sectors and their business models. The ones at the bottom, however, are predominantly utilities companies or businesses with a commanding market share, monopoly or duopoly – companies that have not had to use customer service as a differentiator to the same extent. There are also more traditionally structured organisations at the bottom than there are at the top. For example, First Direct is often lauded as one of the best for customer service and is an online-only business, so has a far more defined set of problems than a traditional multi-site retail bank. There are notable exceptions; John Lewis is consistently in the top five and they have a very complex model, which is offset by their employee ownership model. Every John Lewis employee takes responsibility for customer service – it is deeply ingrained in their culture.

Nick: Customer-centricity is not a new theme for FMCG companies; however, emerging technologies and social media have enhanced the capability and increased the need for it to sit squarely at the heart of today’s commercial and strategic agenda. The concept has of course been there for FMCG players for many years: Procter & Gamble for example have been seen as the vanguard of consumer focus, delivering the right products, in the right areas, at the right price, thanks to a combination of analytical horsepower, great innovation and best-in-class supply chain, but always with the consumer in mind. Others have followed suit and this focus and investment into understanding the consumer continues to be replicated across the consumer goods space. This drive has ultimately led to strong working relationships between suppliers and retailers to ensure that their shared interest - the consumer - is at the centre of strategic thinking. The FMCG sector can – and will – continue to leverage this focus through increasing ‘disintermediation’ – a means of personalising the relationship between supplier and consumer - resulting in a significantly enhanced dynamic to the connection with the consumer. The rationale is of course a commercial one. The more intimate a business is with its consumer, however, the more capable they are at understanding needs and habits through insights and getting true cut-through. Consumer goods companies have clearly shown they are at the forefront of this journey, but still want to focus on doing what they can to be better at it.

Eleanor: In Healthcare, the private pay service providers – private hospitals, dental, optical or cosmetic treatments – are inevitably leading the way on customer service. Following the recession, discretionary spend on healthcare dropped significantly, but now we see consumers more willing to pay the uplift for better optical, dental or physio, particularly because many people are increasingly losing faith in the ability of the NHS to provide a high quality service. Consequently, general management and operational roles – which used to be broadly focused on clinical quality and operational efficiencies – now require executives with strong experience in customer journey and service. Boards are looking for individuals with the perfect balance of clinical, commercial, and customer understanding, and with regard to the latter piece they have looked to bring in talent from the multisite consumer space, such as gyms or hospitality, albeit with mixed success.

Another interesting trend is the shift by MedTech companies from B2B models to B2B2C. For example, we are seeing increasing investment in the development of more consumer-focused products such as invisible hearing aids or invisible braces, even though much of these companies’ sales and marketing is directed at audiologists, dentists or GPs. More thought is going into that end-user experience, and consequently we have seen some of the larger MedTech companies making senior hires from FMCG, Technology or broader Consumer Healthcare.

Nick: A humility to learn and a willingness to focus on the human aspect of the consumer, rather than purely on the analytics, is important. Despite the continued need to utilise hard data, it is the desire to really understand the human element that gives certain leaders the edge over others when it comes to consumer-centricity; spending the time getting to know and understand your consumer is key. With this comes the need to listen and, in a world of multi-channel purchasing, move away from focusing simply on what people are buying, and shift resource and investment to understanding where, how, when and why consumers are buying. Further to this, foresight and flexibility is critical; leaders need to be able to capitalise on new opportunities through having a business model that can flex quickly to shifting trends and demands. Spotting these opportunities early gives a significant competitive edge. Ultimately the speed of change is only going to increase, and therefore possessing boldness to align a company organisationally to these shifting tides is key. By introducing high-influence positions such as Chief Customer Officer or Director of Customer Experience at Board level, leaders will be placing themselves and their businesses into competitively advantageous positions. The paradigm has shifted away from leaders asking “why are our customers being disloyal?” to “how are we being loyal to our customers?”. Leaders need to be ready and willing to respond to this shift.

Eleanor: There are two things that we have noticed about leadership in the healthcare space. One, if we look to the Pharma and MedTech world in particular, the increasing ‘matrix-isation’ of these big companies means that fewer and fewer leaders are being rounded out functionally by their organisations. Executives start in commercial and sales roles, thinking about the customer, and progress up that functional line to a leadership position without ever having to do the manufacturing or R&D side of things. Similarly, you get leaders who have been very strong in R&D, operations or manufacturing, who have never done a commercial role. This is a cause for concern, as it is really important for the Pharma and MedTech worlds to make sure that the customer-facing people understand the motivations of their operational colleagues, and that the operations people are thinking constantly about their customer. This roundedness is something we always look out for in a potential CEO, but is becoming harder to find.

One of the other challenges in Healthcare – particularly within the provision and services side – is that there is typically an absence of talent at the mid-level, particularly one level below Executive Board. This is because many Healthcare employees come from a care, clinical or technical background and so those with great commercial minds shoot straight to the top, without being developed or rounded-out as managers at that mid-level. Equally, some of the best future leaders become frustrated early on with the lack of commerciality or the inability to provide a high level of customer service and leave the sector entirely. In an ideal world, these organisations will invest in developing their people from the start, both commercially and in people management. Encouragingly, a number of companies have recognised this and have been hiring excellent HR Directors and Learning & Development specialists into the sector.

The other alternative is for organisations to bring in cross-sector consumer-focused talent at the level, or two levels, below Board, so they have time to become truly embedded in the industry from a clinical, regulatory and values perspective. This gives them the chance to be moulded and forged as a perfect fusion of all those different pieces. Nonetheless, the absolute keys to success are empathy and humility; if leaders don’t have those qualities, the transition from Consumer or Retail to Healthcare will never work out long term.

Alan: While it varies across the different industries, it is not uncommon to find a CFO with a strong customer focus – in Retail for example, CFOs often have quite compelling examples of walking the floor in competitors’ stores and bringing insight and ideas back to their own businesses. More than ever before, they will have an appreciation for the customer journey or experience and the implications for current and future costs or revenues; understanding what customers really want is at the heart of supporting growth and partnering with the business. When we ask CFOs who their customers are, however, most CFOs will give examples involving their customers inside the business; the CEO, the Board, the Sponsors, the Marketing Director, the Sales Director – the business units that focus on the end-customer, rather than the end-customer themselves. The CFOs are going to these people and asking what they need to make better, more informed decisions, both in terms of the day to day operational decisions, and the medium to long term planning. The analytics and data processing that some of this information sits on top of is more real time and complex and more additive than it was even three years ago, so IT and Finance become natural bedfellows. CFOs who understand how to leverage that relationship to create real business advantage, real customer understanding, are really in demand.

About Blackwood Group

Blackwood is an independent executive search consultancy, providing services to blue chip clients across the financial and corporate world. They are an integrated team, leveraging relationships across all sectors and practice areas.

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