Customers are in charge.

In the past, companies used to control everything about their products and services, but now it's the customers who are calling the shots. Thanks to technology and the Internet, today's consumers have all the information they need at their fingertips. They can buy anything, anytime, and share their opinions about everything, constantly.

Meet the millennials, also known as Generation Y. They're the ones driving commerce nowadays. Unlike their parents' generation (Generation X) and the baby boomers before them, millennials grew up in a world dominated by digital technology. They're now the largest group of consumers, and they have high expectations. They're picky, and they won't hesitate to criticize a company if they're not happy with what it offers or how it operates. And when they're unhappy, they don't keep it to themselves – they make sure everyone knows about it. So, if you're a company and you want to stay on the good side of Generation Y, you'd better make sure your products and services are up to scratch. Otherwise, be prepared for some serious backlash.

Learn from failed giants.

Underneath that "rest in peace" sign lies casualties like Circuit City and Borders. Circuit City, once the pioneer in electronics superstores, collapsed in 2009. Alan L. Wurtzel, its former chairman, blames its demise on neglecting customer feedback. Similarly, Borders, with its 500 bookstores across the US, couldn't evade bankruptcy and liquidation in 2011. Rick Newman from U.S. News & World Report points out that Borders failed to adapt to evolving customer demands.

George Colony and Peter Burris from Forrester Research said, “Customers are now in control.” Former GM CEO Rick Wagoner agreed, saying, “We used to control customers. Now we hope they like us.” Companies that don’t adapt will fail because their customers will slowly stop buying from them. Generation Y has a big impact because they complain a lot on social media. Companies can make this worse by trying too hard to change how Gen Y thinks. If Gen Y sees a company is trying too hard to influence them, “they'll stop liking the company and tell their friends”.

Generation D

Gen Y, the generation before, is a bit scary. But the next group, called Gen D, is even scarier. They're seen as the leaders of a coming "customer apocalypse." If you disappoint Gen D, Gen Y might avoid your products. But if you upset Gen D, they might actively work against your company.

Think of Gen D as the "doom" or "death" generation. They could be known for "discover, devour, and demonize." Unlike Gen Y, who might just criticize companies online, Gen D takes it further and might actually harm businesses. While Gen Y might not want to be targeted by companies, Gen D doesn't want to be targeted at all. They're not interested in traditional customer relationships.

Understand Generation D Behavior

When people keep sharing negative messages about a bank, like 'Never doing business again with [name] bank totally [ruined] my account went to [name] bank and switched accounts...you should do the same!' on social media, it can hurt the bank's reputation. Even one “influential blogger” can damage a brand's credibility by sharing facts that go against what the brand says about its products. This can spread to millions of people through retweets until it becomes news and is reported by traditional media.  

Gen Ders might rally friends to bring down a company. For them, a friend includes "everyone they've ever known, or who is known by someone they know, or who they have no relationship with other than what appears to the rest of us to be the narrowest sliver of obscure commonality." Gen D represents the future of the marketplace and your firm.

Pursue Gen D's affection.

Generation D, or Digital Generation, strongly supports and buys products they like, such as those from Apple and Google. They value "radical authenticity" and prioritize trust, transparency, and openness. Unlike traditional customer loyalty, they expect loyalty from companies. To connect with them, businesses must offer rewarding customer experiences. This often involves transforming business processes, especially digital operations, and integrating the business and IT sides of a company. Companies also need to instill game-changing mindsets in their employees.

Many companies focus on cost reduction, influenced by Frederick Winslow Taylor's "scientific management" approach, which can sometimes lead to decisions that harm customer relationships. For example, Ryanair charged passengers for using restrooms in 2010, and First National Bank of Chicago charged customers to speak with live customer service representatives in the mid-1990s. Such decisions can alienate customers.

Data Limits and Risks

Organizations must manage their data before it becomes a problem. Big data, which is a huge and complex collection of data, needs advanced systems for handling and analysis. Companies are dealing with more and more data, “from terabytes to yottabytes (equal to one septillion bytes, which has 24 zeros)”.

This vast amount of data helps companies create comprehensive views of their customers. A 360-degree customer view combines a lot of existing data about a single person. However, each customer is not “a standalone amoeba swimming in a round petri dish.” What's needed is a “1080 high-definition” view that includes data, customer intent, and revamped business processes. Focusing solely on data means looking only at a customer's past actions.

Understand  Customer Data for Better Service

Data tells us who our customers are. Intent reveals what they want and why. Processes show when, where, and how to serve them. Navigating vast amounts of data poses challenges. Companies must interpret data and train customer service staff. Without proper management, excess data can lead to “data suicide.” It’s crucial to complement big data with other sources like market research and social media analysis.

Even with a wealth of data, you only know “who the customer was.” To truly understand, you must learn why they choose your company, what they need, where they prefer service, and how to meet their needs.

“Thinking in layers” helps you grasp the context to serve your customers better. It helps identify their intent – why they want to do business with you. Intent includes their personalities, goals, desires, needs, and preferences. Understanding and aligning with your company’s intent is crucial. “If data is memory, the intent is desire moderated by judgment.” Good judgment helps you understand and serve your customers effectively.

Enhance Customer Interaction.

Data accumulation just for the sake of it doesn't get you far. Instead, use data to spot patterns in how your customers behave. Come up with ideas and test them to see what your customers are up to. By blending data with what your customers want, you can figure out your “next best action” – offering them exactly what they need, right when they need it.

Adapt your ways to make your customers' experiences personal. Make sure every interaction with your company feels smooth, exciting, and hard to forget. Always think: "How does my customer want to connect with me?" Then, tweak your methods to match.

Take a hint from Vodafone – they've got this down. Every time a pay-as-you-go customer tops up their phone, they get a message suggesting a "daily special" or a new offer tailored just for them based on how they actually use their phone. Vodafone's aim? Keeping their customers happy. They pay attention to what the customer wants and why they want it, factor in their own goals, and come up with a perfect deal every time. And you know what? Customers love it. This approach can reel in younger customers and keep them coming back for more.

The “Outside-In” Approach

Farmers Insurance's top management decided to enter the business-owners insurance market by offering tailored policies for different types of businesses. Normally, this would require a lot of time and effort for underwriting. For many insurance companies, this level of detailed work with specialized underwriters would make such a project very impractical.

Instead, Farmers took a different approach that focused on understanding its customers. Farmers successfully created a “smooth experience for insurance agents and their customers.” Farmers “looked beyond the data to understand intent.” It focused on what customers wanted – for example, “Give me a reliable quote quickly”– as a smart strategy for understanding the context” while following the necessary “business rules and state and local regulations.” Farmers developed a “customer-focused platform that captured its business intent and made it operational.” This meant changing its processes, including how it interacted with its clients.

“Liberating Your Organization” and involving clients

For many companies, changing how your culture sees technology and IT is key. It challenges the hold of channels and silos. The issue is that computer programming, which is the foundation of IT, is often a mess in businesses. It's stuck in "zombie systems" that can't be changed, "manual systems" using old workarounds, and "rogue systems" filled with temporary fixes. These systems are all flawed. The old way of thinking that created them won't fix them. They won't change until people change how they think about technology.

To make these changes, you might need to reorganize some functions. Start with the chief financial officer (CFO), as major changes need big investments in people and technology. To make this change, the CFO must be willing to make decisions that are "directionally correct" and spend money in ways that are supported by early results. Create two new roles: chief process officer and chief customer officer. These changes will help you find new ways to connect with customers at every step. Follow three basic principles: 

• “Democratize how you do technology” –Make technology accessible to everyone in your company by speaking in business terms, not technical jargon.

 For example, aim to teach computers to understand business language.

• “Think in layers” –  Consider different aspects of your technology, such as “customers, products, and jurisdictions.”
• “Use analytics to optimize continually” –Continuously use analytics to improve your understanding of customers and your analytical methods.

These changes will boost customer confidence in your company and its offerings, shaping their experience with you."