On Customer-Centricity

Is your company customer-centric?

No? Join the club. According to 317 surveys released this week alone, anywhere from 97 to 98% of executives polled said their firms weren’t customer-centric (the other 2-3% didn’t understand the question).

This isn’t good news. According to the leading lights of the consultainment world, the key to business success today is: Be customer-centric!

How companies survived, let alone thrived, in the past without being customer-centric is a mystery to me. But let’s not dwell on the past, because things are different now. Consumers have changed. Apparently, they talk amongst themselves and share stories and recommendations. Who knew? Firms must now be customer-centric in order to deal with this changing behavior.

But how does your firm become customer-centric? The answer, according to a presenter at a conference I attended yesterday, is “focus on customer advocacy.” (Do you also hear the Beatles singing “won’t you please, please, please refer me, refer me, refer me, yeah, ooh.”)

I needed more help in understanding how to become customer-centric, however. This article helped tremendously. The critical success factor to being customer-centric? People. People, apparently, play a larger role in becoming customer-centric than products and services. I did not know that!

But it isn’t enough to have highly motivated, highly engaged people. Oh no no no. It isn’t that easy. It takes teamwork. And not just at the bottom of the organizational pyramid, but at the top as well.

Which is why you can’t forget that to be customer-centric, it starts at the top.

But be very careful, because just one bad day can wipe out all your customer-centricity. Isn’t that right, Mr. Neeleman?

But the important question to address is why. Why become customer-centric? Because the payback is significant. Customer-centric companies outperform the S&P by 17% (it might be .17%, I can’t remember) .

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This post is an excerpt from my forthcoming book “Customer-Centric Firms Build Customer Advocates Through Winning Customer Experiences”. I’m available to speak at your firm’s next conference, by the way.

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5 thoughts on “On Customer-Centricity

  1. Help me understand something Ron. In a sarcastic way, of course.

    When did providing good service to customers and being sensitive to their needs become a “new idea”?

    One non-sarcastic answer: some companies rarely had contact with end customers before the web “forced” them into having call centers and customer contact folks. I get that, and they have an excuse. These companies probably have had some new skills to learn.

    But the rest of them?

  2. Jim —

    My non-sarcastic reply: There IS a nugget of value in all the customer-centricity blather. [Supposedly] Peter Drucker once said “the goal is to provide value to customers, profit is the reward.” But when you’re “profit-centric” — by penalizing customers with onerous fees, and providing lousy service by keeping support costs down — you possibly maximize profits AT THE EXPENSE of long term customer relationships.

    Being customer-centric — you could argue — means betting that doing the things it takes to build solid, long term relationships will RESULT IN strong profits.

    I would stress here that the key part of that last sentence is “you could argue”. No one wants to admit to not striving to be customer-centric. But what that exactly means is not well defined. And nobody has PROVED that being customer-centric necessarily leads to higher profitability. There are plenty of examples of firms that have been highly profitable who you could argue are not (or were not) customer-centric. And vice versa.

    What it takes to be customer-centric requires that many firms re-think some fundamental, and often sub-conscious thoughts about how they view their world.

    Personally, I’m sick and tired of reading the bromides from lightweight consultainers who blab incessantly about the “imperative” to be customer-centric and force fit “best practice” examples like USAA into their prescriptions.

    Yours truly, Mr. Cranky

  3. Came somewhat late to your blog and this piece – great writing. Just another non-sarcastic take on the business case for customer centricity:

    1. Back to school: “Value is only created or augmented in the process of satisfying needs.” (Adam Smith). Fundamental economic truth, no needs (satisfied) – no value.

    2. Accidentally, the guy with the needs is commonly called… Customer. Need further selling of the centricity idea?

    OK, here’s a bit more: Consultainers Treacy & Wiersema described 3 ‘disciplines of market leaders’, and ‘customer intimacy’ (their term for customer centricity – remember the rule no.4 for becoming a ‘thought leader’: Invent your own terms!). The 3 dimensions / disciplines, more or less, are valid and still hold true, as is the thought that a business needs to be good in all three, but cannot be no.1 in all 3 and needs to choose a focus.

    Great consultainer Don Peppers (non-sarcastic disclosure: I count him among my mentors) revealed a bit of a problem with 2 of these valid dimensions: they are not sustainable over th long term. Operational efficiency (and resulting price competitiveness) only works until everyone learns how to do it (example: today every airline and its monkey are ‘low cost carriers’). Product excellence only lasts until someone else comes up with the ‘latest and greatest’ – in this technology-driven world, this means shorter and shorter ‘moments’ of leadership. (example: before the iPhone was even in the market, most rivals already had their better phone models; Intel launches a quad-core, 11GHz processor – next morning AMD has a quint-core, 11-and-a-half one). Products can also be copied (customers, allegedly, cannot)…

    Now, the genius bit: Failed consultainer Vlado DImitroff (up to the ears in client projects I never have time to write a book, but I admit the sin of speaking at conferences), comes up with this ‘thought’ on the T&W model:

    “Customer Centricity is the only one of the 3 dimensions of competitiveness which, if chosen as focus, gives you automatically the other 2 as a free bonus”.

    Why?

    If we practice some of the essentials of the discipline, we inevitably SEGMENT customers, most often by VALUE and by NEEDS (why these 2 is the subject of another consultainment story). Segmenting by value means we allocate our (always limited) resources according to the value of each segment (and individual customer). We optimise resource allocation, leading to operational efficiency and natural cost-savings, without forced, across-the-board budget cuts. Bingo! We can be a price leader (if we have to; Does this sound like increased profits?).

    If we also segment (and know ‘intimately’) the customer needs, who is in best position to develop the best product? (Back to school: any product only exists to satisfy needs!). Customer-centric companies understand what the product must do, how it should look and feel. The better you know the needs of ALL customers (rather than ‘statistically significant’ samples or, God forbid – focus groups), the more likely we become a product leader. Product leaders don’t have to compete on price (unless that is the single overwhelming customer need). Better profits, anyone?

    – – – end of shameless self-plug – – –

    Or is it already the end? wait a little: you wrote: ‘Nobody has PROVED that being customer-centric results in higher profitability’. Yes, I have proven this: not with academic business cases or mass research stats. Simply, every company I have worked with (and like to think I have helped become more customer centric) has, as a result, noticeably increased profitability. OK, my handful of clients are hardly a ‘representative’ sample – but to me hey are 100%. To prove me wrong you have to bring me another client 🙂

  4. Pingback: Customer-Centricity And The Foreign Threat To Banks « Marketing ROI: Whims from Ron Shevlin

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