In 1987, U.S. President Ronald Reagan gave his famous “Tear down this wall” speech. He was urging Soviet leader Mikhail Gorbachev to remove the Berlin Wall — a barrier that divided and disrupted the city, sealing off the democratic western part from communist East Germany. That wall eventually did come down. And now it’s time for American business leaders to answer a similar call.
CEOs need to break down the internal walls that divide and disrupt their companies. Most companies still operate as a collection of departments. Yours probably has three classic customer-facing units: marketing, sales, and customer service. Each has its own defined roles to play in attracting new customers, selling to them, and keeping them happy. Each of these departments operate in silos and as if these processes have zero overlap. Each department also has its own budget, performance metrics, and a few have even developed their own IT systems.
The trouble is that the whole outdated structure does not fit how people today make buying decisions. Prospects and customers don’t experience the journey as a trip through these departments. Perhaps they never did, and now they’re smarter and better equipped. They search online. They may shop at physical stores but then buy online, or vice versa. And they buy increasingly through referrals and social media. Among other things, this means that existing customers are becoming a more important source of new customers. But the acquisition budget is with marketing, not with customer service, and the links between the functions tend to be primitive.
How well is your marketing department really leveraging your existing customer base to drive new-customer acquisition? A common method is to offer a cash bonus for referring a new customer, but this is insufficient and may actually backfire. You are relying on existing customers to take the initiative, which many will not. Worse, the offer is typically blasted to all existing customers without knowing how satisfied they are. If you have a lot of unhappy ones, they’ll be motivated to post their complaints where prospects can see them.
Buyers’ expectations are higher today, too. The so-called Amazon experience has raised the bar for both consumer and B2B markets. People want to find what they’re looking for in a flash, and then they expect a fast-and-friendly ride through the buying process to any followup that’s required. Delivering this kind of seamless experience requires levels of integration that can’t be achieved in a company built around functional silos.
It is possible to interconnect functions with CRM software. Salesforce, for example, offers marketing, sales, and service clouds along with the means to integrate them. But many companies don’t take advantage of this. Purchasing is done from departmental budgets, so various departments may buy just one or two of the clouds, and even if all three are bought, nobody pays for interconnection.
Thus the problems are multiplied. Hard walls between departments create hard walls between IT systems and vice versa. If the marketing team wants seamless access to customer service data, they have to go through an already-overworked IT staff and clear other hurdles to try to get it. As digital consultants, we’ve seen many cases of systems-integration bottlenecks.
One sad result is an inability to use all the data that companies have collected. With today’s technology, mining and acting upon customer data can be a huge advantage. Yet we’d estimate that many companies are harnessing only about 10% to 25% of the potential firepower in their data. The rest lies trapped in a maze of departmental silos combined with systems and data silos.
Breaking down walls is easier said than done. The current structures are firmly locked in place and a roadmap toward a new model may not be evident. Still, the CEO has to take the lead, becoming an evangelist for change. The first step is to make it clear that staying locked in is not an option: it’s a formula for missing opportunities and falling behind smarter competitors. Then the company must focus on understanding how the customer journey and prospect journey are evolving. In any industry, that knowledge is the only realistic basis on which to organize a business. It will show how your company’s structures and systems should be rewired.
The CIO must be the CEO’s right-hand person for reorganizing. Since IT is embedded in nearly everything — including the walls that divide the company — IT now becomes the single best tool for exploding those walls and laying out a new M.O.
People’s mindsets and behaviors also need to change. But they will, given time and a clear sense of purpose. We would urge every CEO to start now. Don’t let the walls hem you in until it’s too late!
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