Conventional wisdom regarding customer relationships suggests that a company should strive to deepen the loyalty of its customer base. While multiple approaches have been suggested, each approach advocates moving a subset of the customer base from one level of affinity (e.g., neither satisfied nor dissatisfied) to a higher one (e.g., satisfied). While seemingly appropriate, this approach assumes that moving customers up to higher categories is important and should be the focus of a firm's efforts. Instead, we recommend an approach that involves focusing a firm's resources disproportionately on its most satisfied customers. This approach provides two major benefits relative to conventional approaches. First, it focuses a firm's resources on a narrow segment of customers. Hence, it requires significantly less financial outlay and associated financial risk than any approach that is aimed at all or even a majority of customers. Second, as we demonstrate, the financial benefit from leveraging high satisfaction levels among a subset of the current customer base significantly exceeds the financial benefit of other strategies (e.g., moving customers up from neutral to satisfied). We present the results from two case studies that illustrate our main points and provide useful examples of how to leverage a firm's highly satisfied customers.
The case examines the evolution of GE's corporate university in Crotonville, NY from its founding in 1956 through 2010 and the start of an effort of "Re-Imagining Crotonville." One of the world's first corporate universities, Crotonville became a model of leadership development and a recognized innovator in its field. The case details the role that Crotonville played under successive GE leaders, from Ralph Cordiner - who inaugurated Crotonville to train general managers to support a sweeping decentralization program - to Jeffrey Immelt. It considers how the institution changed in response to changing business needs and the factors that contributed to its vitality and success over several decades. Beginning in the 1980s, Crotonville became the nerve center of a cultural change effort launched by CEO Jack Welch, spawning programs such as "Work-Out" to cut through bureaucracy and return initiative to individual managers. Following the global financial crisis in 2008-9, CEO Jeffrey Immelt and Crotonville's leaders set in motion an exploration of the changing nature of leadership needed to confront the new realities in which GE operated globally. CLO Susan Peters initiated Re-Imagining Crotonville to align learning and development with these new leadership expectations. The case examines the choices faced by Peters and her team in re-thinking the environment, experience, and content of leadership learning at Crotonville. Learning objectives: Understand factors that have made Crotonville central to GE's leadership culture over time. Examine role of CEO and corporate leadership in driving cultural change through learning and development. Understand the unique assets and potential limitations of a 'corporate university' model for leadership learning. Explore the change management challenges of managing a legacy of success - continuing to evolve while preserving the strong 'brand' and 'secret sauce' that make Crotonville unique.
Most companies serve customers through a broad array of interfaces, from retail sales clerks to Web sites to voice-response telephone systems. But although the typical company has an impressive interface collection, it doesn't have an interface system. That is, the whole set does not add up to the sum of its parts in its ability to provide service and build customer relationships. Too many people and too many machines operating with insufficient coordination (and often at cross-purposes) mean rising complexity, costs, and customer dissatisfaction. In a world where companies compete not on what they sell but on how they sell it, turning that liability into an asset is what separates winners from losers. In this adaptation of their forthcoming book by the same title, Jeffrey Rayport and Bernard Jaworski explain how companies must reengineer their customer interface systems for optimal efficiency and effectiveness. Part of that transformation, they observe, will involve a steady encroachment by machine interfaces into areas that have long been the sacred province of humans. Managers now have opportunities unprecedented in the history of business to use machines, not just people, to manage their interactions with customers credibly. Because people and machines each have their strengths and weaknesses, company executives must identify what people do best, what machines do best, and how to deploy them separately and together. Front-office reengineering subjects every current and potential service interface to an analysis of opportunities for substitution (using machines instead of people), complementarity (using a mix of machines and people), and displacement (using networks to shift physical locations of people and machines), with the twin objectives of compressing costs and driving top-line growth through increased customer value.