Some new, unmistakable trends: Local is back. Bricks hold the profits. Customers want the human touch. In other words, if you want to tap the value potential of your customers, you have to get close to them. In our experience, "good local" added to "good central" is worth 10-20 percent extra to the bottom line.
Recent developments held the seed:
Technology: According to some reports, CRM information technology spending is growing twice as fast as the overall growth in IT. Behind much of it is a bias for control--a presumption that the ability to make a decision here, and see it carried out at remote locations, is the best way to exercise the company's will. But efficiency, consistency and rules often war with the personalization customers expect and employees wish to deliver.
Size: Sheer size can distance companies from the local. The Wall Street Journal reports, "CEOs say bigness has become a battle with a new kind of complexity and a new degree of turmoil. Capital whips around the globe, economies gyrate and consumer tastes turn on a clime....Vastly expanded overseas operations can make simple everyday functions, like communicating with employees, increasingly difficult." (Feb. 28, 2001)
Structure: Before the explosion of customer information and technology, customer knowledge naturally resided mainly in the local markets. But since then, there has been an overwhelming transfer of decision-making to central marketing--and a corresponding diminishment of local empowerment.
The intention behind these developments was to "scale" the organization--to position it to serve customers anywhere, any time, through any channel. But where they proceeded purely at a central level, neglecting the power of local, these developments have actually "de-scaled" many companies--rendered them less able to meet those customer expectations. Customer dissatisfaction (customer alienation?) is at all-time highs.
As a result, many organizations are quickly moving to shrink the physical and psychological distance between their customers and their decisions about them. Like Coca-Cola, they are balancing their gains at the corporate...