Page 128 - MYM 2016

OMeasuring and Managing Market Alignment Risk
ne of the biggest risks a business faces is the loss of its customers, their reduced spending and/or the inability to pro tably gain new cus- tomers. We have called these market
alignment risks.
Customer needs – in terms of what they want,
when they want it and how it is purchased and delivered – are changing rapidly. is poses a risk to organizations that do not respond. For example, changes in customer behavior in moving to online shopping have impacted customer spending at physical retail stores. is has occurred in indus- tries like advertising, recruitment, travel, books, newspapers and publish“ing, transport, retail, com- munications, nance and energy.
In summary, market alignment risks are related to how well the organization is aligned with its customers, its competitors and the broader envi- ronment that impacts its performance. When a business loses its market alignment, the strategic risks to pro tability are escalated, and its business model becomes less relevant to customers.
is is the domain of marketing and gives mar- keters the opportunity to take the lead by providing market and nancial inputs to the CEO and CFO to mitigate market alignment risks.
culture is the Most controllable driver of Market alignment risk
e degree to which a company’s culture is customer-centric has been found to be the biggest
controllable driver of market alignment risk. More than 100 research studies have shown that a com- pany that has a high level of alignment with its customers’ needs, and acts to reinforce its com- petitive advantage through knowledge of its competitors’
A company’s market alignment risks are also petitors – existing
impacted by com- emerging technologies, and new ones. ere
is easier entry into economic factors, the competitive political and legislative
competitors. ere
landscape by new changes, and social/cultural
are now threats from changes create opportunities
which will become
peripheral industries, and threats which change the more important in
the future. Markets risk pro le of companies.
not yet developed,
or even thought of, will be created by future com- petitors, as barriers to entry fall in most industries. Such new companies will always be nimble on their feet. is is no more clearly illustrated than with the advent of Uber and Airbnb. ese types of new competitive players are disrupting traditional market dynamics and taking business away from incumbent companies.
A potential market alignment risk for all companies is o en found in the broader external environment. Emerging technologies like solar power, economic factors like exchange rates, political and legislative changes brought about by changes of government, and social/cultural changes occurring through immigration and demographic shi s create opportunities and threats which change the risk pro le of companies.
strengths and weaknesses, outperforms others in its industry. ese companies also show less vol- atility in market and nancial performance and show consistent growth over time. In a 2015 cus- tomer experience study, it was found that over an eight-year period, customer experience leaders far outperformed customer experience laggards on ROI (Watermark Consulting, 2015). A strong organizational customer culture drives superior experiences of customers, resulting in loyalty and advocacy.
If a company’s culture is weak in terms of customer centricity, this may be due to lack of a “customer mindset,” lack of skills, and/or ine ec- tive processes and systems. e rst place to look is culture. e logical function to address this is mar- keting – both in the sense of marketing having an
128 | MINd YOUr MarkETING OCTOBEr 2016