Customer Intimacy Imperative
According to Doug Leather, a leading expert in Customer Management in his article, ‘The risk of NOT building customer centric capability,’ for an organisation to be deemed ‘customer centric’ it will have developed the capability to design and to deliver a unique customer experience – an experience that profitably and positively impacts customer acquisition initiatives, customer retention initiatives and the cross-sell and up-sell initiatives.
However, in order to profitably and positively impact these three extremely important value drivers, the business needs the insight to optimally allocate resources to profitable customers.
A product-centric organisation is one that thinks in terms of products. Focusses it efforts on making and selling products. Organises itself around product centred business units. And it measures and defines it success in product terms including product sales (units), revenues, market share.
There is a good reason for product-centricity. Many great companies are founded on a great product e.g. Amazon, John Lewis and Apple. Apple has enriched the life of their customers through superior offerings, a first-class in-store experience, and premium brand. Amazon has done it through an effortless shopping experience and value for money pricing. John Lewis has done it through outstanding service provided by friendly knowledgeable staff, fuelled by a culture of shared purpose.
The challenge of being customer-centric comes down to leaders being customer-centric.
So what does it take to be customer-centric?
Professor Sawhney highlights three key features of a customer-centric organisation:
- A better understanding of customers, to co-create better value propositions and to improve the customer experience;
- Customers ahead of the organisations products and priorities; and
- Continuous focus on improving the customer experience.
This is what Professor Sawhney advices:
- Ingraining these beliefs and acting and thinking on this central mission is what customer-centricity is about;
- But perhaps what is most important is a culture and a leadership that really puts the customer first;
- And believes that the customer is at the centre of what we do;
- And if it ever comes to a choice between what is right for the company and what is right for the customer you will always choose and put the customer first.
Customer-centric businesses are rare
Professor Sawhney points out that customer-centric businesses are the exception. Companies that listen closely to the needs of their customers and develop products and services based on those needs are more likely to develop trusting, intimate relationships with their customers.
According to Maz Iqbal, customer-centric strategies rest on a relationship based paradigm (‘relationship marketing’) which is best captured through the adage ‘don’t make a sale, make a customer – for life’:
- If you are good to your customers you will make them feel good (about you and themselves) and they will keep coming back because they like you;
- If they like you they will feel more comfortable with you and they will spend more money with you;
- If they spend more money (with you) you will want to treat them better.
- If you treat them better they will keep coming back and the circle starts again.
Useful principles for customer-centric businesses
- It only works if it all works – solve the customer’s problem completely by ensuring that everything (products, services, channels, touchpoints….) works and works together;
- Value the customer’s time – use it wisely, don’t waste it;
- Provide exactly what the customer wants – no less and no more;
- Provide what is wanted exactly where it is wanted;
- Provide what is wanted, where it is wanted, exactly when it is wanted;
- Continually think outside the box of your product and services to come up with expanded products+services to help your customer achieve his desired outcomes in ways that are easier, quicker and more like play than hard work; and
- Leave customers feeling good about doing business with you – what you stand for matters as much as how you treat your customers.
A useful framework for thinking about the capabilities that you need to put in place to deliver on the customer-centric dream has been put forward by Peppers & Rogers:
- Identify customers at an individual level and determine how these customers can be contacted;
- Differentiate customers by their needs and financial value;
- Interact with customers through their preferred channels across the customer journey and set-up a two way dialogue that enables the company to learn about the customers and the customers to learn about the company on an ongoing basis;
- Customise your products, services and ‘interaction platforms’ so as to leave each customer feeling she has been treated as an individual
Companies must also focus on their value propositions
Finally, according to Martin Koschat Professor of Marketing at IMD, there is no shortage of extremely successful companies with business models that depend upon a high degree of customer proximity.
At the same time, this proximity to the consumer provides direct and timely insights into consumers’ needs, buying habits, shifting perceptions, attitudes and tastes.
Nordstrom, a US department store chain, consistently ranks at the top in terms of customer satisfaction surveys. Shopping is made to be a rewarding experience. Nordstrom’s personnel is carefully selected and trained to help customers along the path of finding what they want or need and, in the process, identify and present new products they never knew they needed.
Equally there are many companies that have developed operational excellence to support clear value propositions, often at a low cost to the customer. This model has fueled the growth of the German retailers Aldi and Lidl, being the largest grocery retailers. This model underlies the success of low cost airlines such as EasyJet and Ryanair.
Companies must also focus on their value propositions.
Customer-centricity is founded on a belief and rests on 3 pillars
The foundation of customer-centricity is a belief and it’s success if based on three pillars:
- Superior understanding of customers needs, wants, desires, motives and behaviours;
- Converting this customer insight into superior value propositions; and
- Crafting and delivering a superior customer experience.