January 15, 2015, Target announces the closure of its stores in Quebec and Canada. The retailer has shielded its creditors and closed 133 stores, resulting in the loss of 17,600 jobs in Canada. The shutdown of his Canadian activities costs them between 500 and 600 million. (Source: Target WSJ)
What caused the Target to be missed?
Many analysts have looked at this question, and most of them agree: one of the most important factors causing the failing of Target to penetrate the Canadian market is a lack of knowledge on the needs and expectations of the Canadian consumer.
This is an example among many others of companies who misjudge the environment in which they operate and that keep on thinking that their position on the market is stable and adequate. As a result, they aren’t able to identify the key parameters they need to evolve in order to adapt to the evolution of their market. There is a process that allows organizations to avoid these situations; strategic planning.
Like a pilot flying his plane, a business executive must know where he wants to go and how to get there, especially during turbulent times due to market volatility or increased competition and disruption.
What is strategic planning?
Strategic planning is a process that allows you to visualize the ideal future positioning of your business, establish business strategies to achieve it, and define actions to take, depending on your company’s ability to execute. It allows you to mobilize your employees in the execution of your plan while maintaining the integrity of your operations, minimizing the risks associated with the investments required.
What is a business strategy?
“According to a study conducted by BDC in 2015, only 12% of Canadian SMEs are developing formal strategic planning, the same proportion as SMEs claiming to experience strong growth.”
A business strategy is a set of guiding principles that, when communicated and adopted within the organization, guide the decision-making process throughout and allocates available resources appropriately to achieve key objectives.
A good strategy provides a clear roadmap, in harmony with a set of guiding principles or rules that define the actions that people in the company must take (and not take) and the things to which they should give priority (and not prioritize) to achieve the desired goals. It leverages a company’s competitive advantage, enforces its uniqueness and must be feasible and measurable.
What is the strategic planning execution process?
Strategic planning is a reflection tool that highlights the full potential of your business. It consists of analyzing the current context of the company, its market, and formulating the desired future vision as well as the steps to achieve this vision.
The collection of internal and external information are gathered to explore the key elements that make up the strengths and weaknesses of the company, identify the elements valued by the direct and indirect market, defines a strategic framework that addresses elements that need improvement or that are missing in order to achieve company objectives.
The process is led by a team of key employees under the President’s governance who together, will make render a 360-degree view of your business. It is strongly recommended to be accompanied by external experts that are able to bring new perspectives and rigorously frame the planning process.
Here are some examples of questions you should be referring to during this process:
- What is your business today?
- What is your mission and who are your clients?
- What will your business be tomorrow?
- What is your market potential?
- What are key market trends?
- What should My ideal company be?
- What is your vision for the future?
- What structural changes, due to innovation and consumer evolution, will affect your market?
- What changes in the environment will impact the characteristics, mission and goals of your business?
- What opportunities exist or can be created to fulfill the company’s objectives and mission by transforming it?
- How will you integrate these expectations into the evolution of your company (objectives, strategies and actions) ?
Customer experience, an integral part of strategic planning
« The customer experience is the customer’s feelings in all its interactions with a company. It must include all points of contact at each stage of the client journey. »
« A study by Walker demonstrates that by 2020, the customer experience will prevail over the product and price in terms of brand differentiators»
Imagine a business without customers: you say that it is impossible or that it is an unlikely situation. Well, a company that disregard the perception and expectations of its clientele during its strategic planning exercise acts as if customers did not exist!
Unfortunately, this situation is more widespread than we think. Many companies dropped their customers by forgetting to listen to their voices, relying instead on the intuition and experience of the team members as to the needs of the customers. We often hear it: “I’ve been working in the industry for many years, I know what customers want.” Remember the Bain & Company study that showed that when we ask senior executives if they believe their company is offering excellent service to their customers, 80% of them believe that yes. However, when we question customers of these same companies, only 8% believe the same. This discrepancy reveals a finding that companies need to address without delay: managers’ perceptions of the quality of the experience offered to clients are not always aligned with those of their clients. A study by NewVoiceMedia estimated that $ 62 billion (US) was lost by companies in 2016 due to a bad customer experience. This represents a 50% increase over 2013. Specifically, Genesys estimated that the average annual value of each lost relationship, for any type of business combined, was $ 289.
How well do we know the real needs and expectations of our customers?
Your customers travel throughout your organization horizontally, across organizational silos. They experience transfers, inconsistencies, delays, and any other anomalies created by processes that sometimes lack consistency, coherence and integration. The customer experience allows you to evaluate the emotions of your clients at every stage of their journey in order to take action during all its interactions, but especially during the moments of truth. Moments of truth are the key moments that, in the interactions between a client and a company, will have a strong positive or negative influence on the perception of the overall experience.
Integrating customer experience practices into your strategic planning will allow you to implement practices that will favor retention of customers in order to avoid the adoption of a “Leaky basket” strategy, because let’s remember that acquiring a new customer costs 6 to 7 times more than retaining a current customer.
Companies that include the customer experience in their strategic planning leads the company to adopting a customer-centric and focused approach. A study by the Temkin Group (2016) showed that customers of companies that have a customer experience centric approach:
- Have a REPURCHASE probability with the company of 86% versus 13% for a company that offers a poor customer experience;
- Have a probability of RECOMMENDING the brand of 77% versus 7% for a company that offers a poor customer experience;
- Have a probability of TRUSTING the company 79% versus 11% for a company that offers a poor customer experience;
- Have a probability of FORGIVING an error from the company of 62% versus 11% for company that offers a poor customer experience;
Gartner predicts that by 2018, more than 50% of companies will redirect their investments towards innovations in customer experience. The question is whether your company will adopt this approach and if it doesn’t, rest assured that your competitors will.
The goal of including the customer stakeholder and his experience in the strategic planning process is to focus the organization on the customer’s voice in an effort to better understand and respond to their expectations. The results is an increased capacity to create positive emotions and value in the eyes of the client. Several tools are used to support organizations that want to understand the needs and expectations of their clients:
- Exploratory studies and surveys allowing to listen to the voice of the customer;
- The creation of Personas which allows to personify the clientele and to adapt the practices of the organization to the typical profiles of consumers;
- Mapping client paths to understand the client’s emotional journey in the company, to measure the current situation and to target gaps in the desired experience.
With these tools, the company becomes empathetic in relation to the customer experience, enabling it to understand expectations, adapt and differentiate itself from competitors.
The customer experience, a tool for measuring the implementation of the business strategy
Too often, leaders forget to validate the result of all these decisions. The most telling results are your customer’s experience with all of your customer touch points. This measure provides insight into a company’s ability to deliver on its brand promise, its corporate vision and business strategy.
In short, the customer experience is a must in the strategic planning process if you are to maximize the value of your business.
This article was produced through the collaboration of 1 + 1 Consulting and SSA Solutions.