Research: customer assessment efforts seen wanting.
Two-thirds of executives surveyed agreed that "having the right information and insights to tell us what customers/consumers really want" is very important. Yet only 16 percent rated their companies as doing a topnotch job of it. The 50-percentage-point gap is particularly notable in light of the efforts companies have made to get close to customers.
Over the past two years, for example, 87 percent of respondents said they had improved their ability to spot emerging consumer trends; 56 percent said they had invested in customer relationship management (CRM) technology and 49 percent said they had conducted large-scale segmentation studies.
"Clearly, these efforts have not paid off for many companies," says David Meer, a New York-based partner and head of Marakon's customer value group. "Either the research investments have not produced insights that lead to a meaningful advantage over competitors, or the companies are unable to act on the insights collected."
The survey, conducted early in 2004, elicited responses from 201 senior executives and managers across a wide range of industries, geographies and job functions. Large companies (those with sales of $500 million or greater) comprised about 40 percent of respondents.
Beyond the difficulty of understanding customer needs, companies reported significant capability gaps in attracting and retaining enough creative individuals (46 percent of respondents) and reacting quickly to changes in the marketplace (45 percent). Organizational barriers were highlighted as another big obstacle to generating organic growth. The biggest perceived barrier, cited by 42 percent of respondents, is under-investment as a result of short-term performance pressures.
Not surprisingly, large companies face a stiffer challenge in achieving organic growth than smaller companies. Consider that:
* 28 percent of large-company respondents reported below-average organic growth (vs. only 12 percent at smaller companies);
* Only 29 percent said they were highly confident of achieving growth targets (vs. 40 percent at smaller companies); and
* Significantly more large-company respondents said they felt pressure from the expectations of the financial community (49 percent vs. 30 percent at smaller companies).
Despite the difficulties, some companies are doing a better job at achieving organic growth than others. Organic growth leaders (those that reported better internal growth than their peers over the past five years) outperformed competitors by adopting growth-oriented mindsets and behaviors. For example:
* Organic growth was at the top of the agenda for 78 percent of leaders (vs. 45 percent at average and below-average performers), and leaders were much more likely to say that growth is always on the agenda.
* Leaders said they are more likely to increase R & D investment (73 percent vs. 55 percent at average and below-average performers) and are investing in improving their innovation skills (75 percent vs. 60 percent).
* Leaders said they are working harder to shorten product development cycle time (69 percent vs. 55 percent at average and below-average performers).
by Jeffrey Marshall and Ellen M. Heffes
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|Title Annotation:||Economist Intelligence Unit survey|
|Author:||Heffes, Ellen M.|
|Date:||Jan 1, 2005|
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