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Customer Focus Linked to Company Profits

Employees who are too focused on sales targets can ignore customer needs. Meanwhile, customer focus is emerging as a key trend in business management. Ksenia Klepneva, postgraduate student of the HSE School of Business Administration, examined factors contributing to customer focus in companies operating in developed and developing economies.

Competition forces companies to build long-term customer relationships. A strong customer focus and close attention to customer needs is a widely recognised trend in business management, sometimes described as 'cusomer orientation' – a term which lacks a uniform definition and is understood by most experts as a company's deliberate attention towards the needs and interests of its customers, so it may satisfy them as much as possible and thus generate additonal profit.

Employee Psychology

Western experts often refer to customer orientation as 'market orientation', comprising a company's focus on its customers and competitors, as well as cross-functional coordination, according to Ksenia Klepneva's report Managing Employee Customer Orientation, presented at the conference 'Contemporary Problems in Management: Exploring the Boundaries' hosted by the HSE. Research reveals a direct relationship between a company's focus on its customers and its bottom line, employee commitment and team spirit.

A number of corporate and personal factors determine employee customer orientation; the former include centralisation of communications and business processes and human resource management practices, while the latter include an employee's education, status in the company, gender, age, and psychological characteristics. And finally, some external factors, such as culture, also play a role.

Klepneva makes an attempt to determine which factors affect employee client orientation in companies based in developed and developing countries and to come up with a client-orientation management model.

She studied twelve branches of an international B2B marketing company in developed markets, such as the U.K., Ireland, France, Germany, Italy, Spain and the U.S., and developing markets, such as Russia, Brazil, Mexico, China, and India.

The study methods included reveiw of internal documents, participant observation and semi-structured interviews (14 interviews with company managers and seven interviews with their corporate clients).

During the final stage, a survey was conducted, and the data from 356 completed questionnaires was processed using IBM SPSS software (Statistical Package for Social Sciences); the researchers applied factor and correlation analysis, and then used clustered regression analysis.

Money or People

Klepneva's key finding was a direct relationship between an employee's client orientation and his or her social skills, including communication skills – i.e. employees who were generally better at relating to people showed a higher ability of understanding and responding to customer needs. Certain technical skills, such as the ability to analyse data and use various corporate systems were also found to contribute to customer orientation.

The author also noted a statistically significant direct relationship between customer orientation and employee motivation, job satisfaction, decision-making authority, and formalisation of business processes.

In addition to this, the study examined the relationship between customer focus and employee remuneration and found no statistically significant relationship as far as a fixed salary was concerned, yet bonuses and other add-ons had a significant effect on customer orientation.

Interestingly, customer orientation was negatively affected by excessive focus on economic targets; thus, an employee trying to get more sales tends to be less customer-oriented. When a company is more concerned with making a profit than with customer satisfaction, its individual employees are less likely to be customer-oriented.

Incentives: Helpful or Not?

Certain factors can contribute to employee customer orientation in developing countries, yet make little or no difference in developed economies. In particular, advanced training in using corporate software, formalisation of processes, satisfaction with one's job, manager and colleagues, and even the promise of a bonus can improve customer orientaltion only in developing countries. In contrast, training in methods of dealing with corporate data works only for developed markets.

The responses to questions about employee training and incentives revealed that they can contribute to customer orientation in developing countries, while in developed economies the link between employee incentives and customer focus is less obvious.

 

Author: Гринкевич Владислав Владимирович, January 19, 2016