Leadership Judgement Series – Part Three
Customer Reality and Customer Perspective
Most leadership teams would say that they understand their customers; that they have good customer perspective.
They have more information available than ever before. Customer data sits within CRM systems and dashboards, account teams provide updates, satisfaction is measured, complaints are analysed and customer feedback finds its way into management reports.
Yet businesses still invest in products customers value less than expected, make themselves harder to buy from, misunderstand why established customers begin looking elsewhere and discover shifts in buying behaviour later than they should.
There is an uncomfortable contradiction here. Organisations can become increasingly sophisticated in the way they measure customers while becoming progressively more distant from what customers actually experience.
McKinsey’s research illustrates the gap particularly well. In a study of growth leadership behaviours, 63% of respondents described customer feedback as a leading source of growth ideas. Yet only 15% said they consistently incorporated customer input into their decisions, while just 23% regularly engaged customers to make sure their offerings were delivering genuine value.
The problem, therefore, is rarely whether customer information exists. The more important question is what happens to customer reality between the customer experiencing something and the leadership team making a decision about it.
Customer Perspective Is Not the Same as Customer Data
Good data matters. Leadership teams cannot run complex businesses on anecdotes, instinct or whichever customer happened to complain most loudly last week.
However, customer data and customer perspective are not the same thing.
A dashboard might tell a leadership team that retention remains high, service levels are being achieved or sales conversion has fallen. Customer perspective asks different questions: why are customers staying, what does achieving the service level actually feel like to them, and has conversion fallen because the sales team is performing badly or because the customer’s buying criteria have changed?
The distinction matters because data tends to record what an organisation has chosen to measure. Customers experience the whole business, including the elements nobody thought to put on the dashboard.
A company can therefore be hitting its internal measures while customers find it increasingly difficult to understand the proposition, navigate its processes or get an answer to what should be a straightforward question.
Both realities can exist at the same time. Leadership judgement depends on recognising when they do.
Growth Creates Distance From the Customer
This problem often becomes harder as businesses become more successful.
When a founder has ten customers, customer reality is difficult to avoid. They probably know why customers bought, what nearly stopped them buying, what frustrates them, which competitors are appearing in conversations and whether the relationship is genuinely strong or simply convenient.
That level of direct exposure cannot continue indefinitely. As a business grows, specialist teams, management layers, reporting structures and processes are necessary. Nobody running a substantial organisation can personally maintain the same relationship with thousands of customers that they had with the first ten.
The danger is not the organisational structure itself. It is what can happen to information as it travels through it.
Imagine a customer telling an account manager that dealing with the company has become more difficult. They mention that quotations take longer, different departments appear not to speak to one another and a competitor now seems easier to deal with. The account manager may hear a relationship warning. By the time several similar conversations reach a sales manager, they may become an issue around response times. In the monthly report, that may appear as a small deterioration in an operational KPI. At the executive meeting, the discussion could then focus on improving the process by five per cent.
Nothing in that chain is necessarily wrong, but something important has disappeared. The customer was not really describing a response-time problem. They were saying that the business had become harder to do business with and that an alternative supplier was becoming more attractive.
That is how context disappears.
Growth creates organisational layers. Layers create filtering. Filtering creates abstraction. Abstraction can turn customer reality into internal assumptions.
Harvard Business Review has described the wider leadership problem: senior leaders frequently struggle to obtain complete, unfiltered information from the people around them, despite those people holding insights that could materially improve their decisions. It creates a paradox worth taking seriously:
As organisations grow, leaders can become better informed about customers while becoming less familiar with them.
The information improves, but the proximity deteriorates.
If nothing deliberately reconnects the two, customer perspective can gradually disappear.
Customer Reality Can Move Before the Numbers Do
The commercial danger is that this loss of perspective rarely announces itself with an immediate collapse in performance.
Revenue may still be growing, renewal rates can remain healthy, the sales pipeline may look strong and service measures might still be comfortably inside target. Meanwhile, customers can already be changing.
They may be placing less value on something that once differentiated the business. They may tolerate a poor process because switching supplier remains inconvenient. New buyers may expect to research, engage and purchase in ways that differ significantly from established customers. A competitor previously dismissed as unsophisticated may have removed exactly the friction customers increasingly dislike.
Those changes matter because internal measures are usually retrospective. Customer behaviour is often an earlier signal.
McKinsey’s 2024 B2B Pulse research, based on nearly 4,000 B2B decision-makers across 13 countries, found buyers using an average of ten interaction channels during their buying journey. More than half said they were likely to look elsewhere if they could not move smoothly across those channels. The research also found increasingly consumer-like expectations and greater willingness among B2B buyers to use remote and self-service channels, including for substantial purchases.
The important point isn’t that every B2B business suddenly needs another digital channel. It is that customer reality moves.
What customers considered excellent three years ago can become ordinary. An issue that they once tolerated can become unacceptable. What previously created loyalty can become less important as alternatives improve.
If leadership continues interpreting today’s market through yesterday’s understanding of the customer, perfectly rational decisions can start producing progressively weaker results.
Losing Customer Perspective Has a Commercial Cost
It is tempting to treat customer perspective as part of customer experience, marketing or account management. That understates its importance. Customer perspective influences where businesses invest, how they allocate resources, which products they develop, how they price, where they add complexity and what they believe differentiates them.
Get that perspective wrong and the consequences eventually reach the numbers.
Revenue suffers when changes in buying behaviour or reasons for leaving are recognised too late. Margin comes under pressure when a business compensates for weaker perceived value through discounting. Investment is wasted when products, features or capabilities are developed around internal assumptions rather than customer priorities. Competitive position weakens when leadership continues comparing the business against yesterday’s competitors while customers have already expanded the alternatives they consider.
There is evidence that the commercial relationship is substantial. McKinsey’s analysis of US companies found that customer-experience leaders achieved more than twice the revenue growth of CX laggards between 2016 and 2021. Its broader work connects stronger customer experience with improvements in measures including wallet share, cross-selling, retention and customer engagement.
I would be cautious about turning that finding into a simple claim that improving customer perspective automatically doubles revenue. It doesn’t.
What the evidence does support is something more useful: understanding and responding to customer reality is commercially material, not a soft measure sitting alongside the serious work of running the business.
Seeing the Business Through Customer Spectacles
I have previously described the discipline of deliberately viewing a business through the reality experienced by its customers as putting on Customer Spectacles.
It sounds simple, but it can produce a very different interpretation of decisions that appear entirely sensible internally.
The leadership team says, “We’ve simplified our product portfolio.” A customer says, “I can no longer work out which option I need.”
The business says, “We’ve improved sales efficiency.” The customer says, “I can’t get hold of somebody who understands my business.”
The dashboard says, “Retention remains strong.” The customer says, “Changing supplier is more trouble than it’s worth at the moment.”
Finance says, “We’ve increased the value within the package.” The customer says, “You’ve put my price up.”
Operations says, “We’ve improved the process.” The customer says, “I now have to deal with three different people to get the same thing done.”
None of the internal statements has to be false. That’s what makes the problem difficult. The organisation and the customer are simply viewing the same business from different positions. Leadership judgement requires enough exposure to both perspectives to recognise the gap before the gap becomes commercially significant.
Reconnecting Leadership With Customer Reality
The answer isn’t for every CEO to spend the week listening to call recordings or attending sales meetings. Nor should experienced customer, commercial and service teams suddenly be bypassed.
The objective is to prevent all customer reality becoming interpreted before it reaches the people making strategic decisions.
The following five questions are therefore diagnostic rather than exhaustive, but they are useful questions to introduce periodically into strategy reviews, quarterly business reviews and major investment discussions:
- What has changed in the way customers buy from us during the past 12 months? Look for movement rather than averages. The important signal may be how behaviour has changed, not whether the overall score remains acceptable.
- Which customer frustrations are we beginning to normalise internally? Businesses become remarkably good at learning to live with problems their customers still experience every day.
- What do frontline employees know about customers that this leadership team probably doesn’t? Some of the most commercially important information in a business never reaches a dashboard.
- Which of our internal measures of success would customers care least about? A metric can be operationally important without representing anything the customer actually values.
- When did somebody in this leadership team last experience our complete customer journey as a customer would? Not a presentation about it, a process map or a summary of customer research. The actual experience.
These questions should not simply be handed to marketing, customer success or a CX team and returned as another report.
Some customer reality needs to reach the people making strategic decisions before somebody else has decided what it means.
Customer Perspective Is a Leadership Discipline
No leadership team can know every customer personally, and growing organisations inevitably create greater distance between the boardroom and the customer. The goal isn’t to remove that distance. It is to stop distance becoming disconnection.
That requires leaders to recognise the limits of dashboards, create routes for uncomfortable information to travel upwards and periodically test whether the internal story of the business still resembles the reality customers experience.
Customer perspective is ultimately about more than customer satisfaction. It influences where leaders invest, what they choose to change, what they decide to protect and which emerging risks they notice early enough to do something about. Customer reality can move long before business performance makes that movement obvious. Good leadership judgement is partly about noticing that movement while there is still time to respond.
So, before the next strategy meeting, investment decision or quarterly review, there is one question worth asking:
When did we last experience our business exactly as one of our customers does?
If the answer is difficult to remember, the distance may already be greater than you think.
Next in the Leadership Judgement Series
Why More Data Does Not Always Improve Leadership Decisions
Customer perspective can disappear even while the amount of information reaching leadership continues to grow. In Part Four, we look at why data can be accurate, plentiful and professionally presented — yet still be the wrong evidence on which to base a decision, particularly when context has been filtered out along the way.