The Customer Revolution

About the Author

Patricia B. Seybold is a renowned author and thought leader in the field of customer-centric business strategies. She is the founder and CEO of the Patricia Seybold Group, a consulting firm based in Boston that specializes in customer-focused business practices. Seybold has been a pioneering voice in recognizing the pivotal role of customers in shaping business landscapes. Her previous bestseller, Customers.com, established her as a leading figure in the realm of e-commerce and customer relationship management. In The Customer Revolution, she continues to explore these themes, offering a comprehensive guide to thriving in an economy where customers are firmly in control.

Main Idea

In The Customer Revolution, Patricia B. Seybold articulates a profound shift in the business landscape, where customers have taken unprecedented control over industries. This revolution is characterized by three fundamental principles: customers are in control, customer relationships count, and customer experience matters. To survive and thrive in this new economy, businesses must adapt by responding to customer demands, fostering strong customer relationships, and delivering exceptional customer experiences.

Table of Contents

1. The Three Principles of the Customer Economy
2. Principle #1: Customers Are in Control
3. Principle #2: Customer Relationships Count
4. Principle #3: Customer Experience Matters
5. Eight Steps to a Great Branded Customer Experience
6. Step 1: Create a Compelling Brand Experience
7. Step 2: Deliver a Seamless Experience Across Channels and Touchpoints
8. Step 3: Care About Customers and Their Outcomes
9. Step 4: Measure What Matters to Customers
10. Step 5: Hone Operational Excellence
11. Step 6: Value Customers' Time
12. Step 7: Place Customer DNA at the Core
13. Step 8: Design to Morph

The Three Principles of the Customer Economy

Principle #1: Customers Are in Control

Seybold begins by highlighting the dramatic shift in power towards customers. With the advent of digital technologies, customers now have unprecedented access to information and options, allowing them to dictate terms to businesses. This shift is evident in industries such as music, where digital downloads have upended traditional business models.

"Customers have taken control of our companies' destinies. They've taken control of our industries and are reshaping them from the outside in." - Patricia B. Seybold

how customers are reshaping industries include:

• Downloading and sampling products before purchasing
• Buying individual items instead of bundled products
• Mixing and matching products from different providers
• Repurposing and sharing digital content
• Co-branding and publishing customized versions of products

One clear example is the music industry. With the development of digital music file sharing, customers no longer need to buy entire albums to enjoy their favorite songs. Instead, they can download specific tracks they want, often without paying. This has forced the music industry to rethink its business model to accommodate these new customer behaviors.

The trend extends to other soft goods industries, such as books and software, where customers demand the ability to try before they buy, purchase in smaller increments, and even customize their purchases. Businesses must adapt to these demands by offering flexible purchasing options and compatibility with other products.

Principle #2: Customer Relationships Count

The value of a business is increasingly tied to its customer relationships. Seybold introduces the concepts of customer capital and customer momentum to quantify this value. Customer capital refers to the lifetime value of current customers, while customer momentum is the projected value of future customers.

"The value of your present and future customer relationships - your customer franchise - will determine the value of your company." - Patricia B. Seybold

One notable example is Charles Schwab, which educates investors on the value of its customer franchise by reporting metrics such as net new customer accounts and active customer accounts quarterly. This transparency helps investors understand the true value of the company based on its customer relationships.

In the customer economy, the market value of a business is directly proportional to the value of its customer relationships. This value is determined by calculating the lifetime value of current and future customers. The lifetime value of current customers, or customer capital, considers factors such as the number of active customers, their segmentation, current average profit per customer, cost of acquisition, retention rate, and expected growth or decline in profits.

Customer momentum, on the other hand, is the projected value of future customers based on assumptions about acquisition costs, average profit per new customer, and retention rates. By combining customer capital and customer momentum, businesses can determine their customer franchise's total earnings potential. Investors care deeply about this metric, as it reflects the true health and potential of a company in the customer economy.