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Achieving customer centricity calls for an understanding of customer behavior, segmentation, and insights.  It requires an integration of departments, systems, processes, and channels among many other issues.  Consequently, technology becomes a critical component in a company becoming customer centric.  Technology in itself is not customer centricity, but it enables it as well as the effective management of customer experiences.

As indicated above, inherent to customer centricity are diverse components that often require innovative technology.  In this part of the ongoing series, I point out a few of these areas where technology can be used to maximize customer centricity.

  • Designing and delivering excellent and differentiated customer experience: In this case, technologies like customer journey analytics can be adopted to measure how the organization is doing at delivering the customer experience. Example of such technologies include 3D Journey Maps, which offer an in-depth understanding of customer journeys and then identify the most critical points and opportunities to the customer experience and bottom line.  Such technologies capture how customers are feeling and experiencing and using that information to design customer experiences.
  • Voice of the Customer: Mobile and social technologies can also be used to find new ways to interact, engage, and support customers. While most companies can capture different aspects of the customer’s voice, from social media, traditional surveys or other platform – the integration of this data remains a challenge.  There isn’t a holistic view of the customer voice, but there is a need for technology that can do that.  If the truth be told, this is very difficult to achieve.  The best way to work around it is to implement technology that at least captures all customer voices leading to technology that can integrate many different platforms.
  • Data management: Under this umbrella, organizations can use Customer Relationship (CRM) to understand customer segmentation and identification (i.e. focal customers and those who are not) and collect and analyze data.  Gaining in-depth customer insights and information will enable organizations to provide relevant customer experience and the right products and services.  Customer data analytics and future customer forecasting are central to customer centricity.  The right customer CRM technology provides more than mass marketing, promotions, and seasonal sales.  It is about strengthening relationships by understanding customer data.
  • Integration, Agility and Workflow: Integration of different departments, channels, systems, and processes is an important part of customer centricity.  For example, collaboration across customer-facing teams, including access to and the sharing of information and resources becomes imperative.  This can only be attained through the implementation of effective technology.

Just as important is the organizations’ agility and workflow.  This speaks to the organization’s ability to deliver a customer centric experience at a speed that enables an organization to organize itself to meet the ever changing customer needs and act on new opportunities as they arise.   To achieve this, an organization requires an agile decision-making frame supported by technology-enabled processes that integrate teams and deliver on the opportunities for real-time responses.  In addition, customer focused processes should be designed and developed on workflow principles.

  • Systems: Technology and systems work hand-in-hand.   Systems must support the creation of great customer experiences, develop a single view of the customer, and allow for a deep customer understanding. For example, customer-facing systems should be managed effectively and help the organization deliver on the customer promise.  Customer systems address the level to which a product or service can be used by specified users to achieve specified goals with effectiveness and efficiency.  In a customer centric business model this also implies that technology takes into account user experiences such as the users’ emotions, beliefs, perceptions, physical and psychological responses, etc., that occur before, during and after use.

This is a wide step, and, for the purposes of this article, I will keep it short.  The main takeaway is: Technology is an integral part of furthering customer centricity and building the capabilities and structures for effective management.  The challenge that companies have is to ensure they create effective innovations/technologies that help solve customer management complex issues and create value going forward in an ever changing economy.

Join me again in Part 5 as we continue on our journey: A Roadmap to Customer Centricity.

This is Part 2 of “The Roadmap to Customer Centricity” series that I undertook a few weeks ago. As indicated in my previous article, the objective of the series is to offer tips on how organizations can become customer centric or how they can borrow some of the principles embedded in a customer centric model.

Once leadership has had a customer centricity awakening as specified in Part 1, the next step would be to dissect the definition of “the customer” and express the role that customer plays.   There’s no question that the management of customers as valuable assets through an effective customer management strategy, results in improved business performance.  Nevertheless, there has to be an acknowledgement that customers are different and require different treatment.

Because most organizations are product centric, it’s no surprise that most businesses are built on the premise of acquiring as many customers as possible to improve the bottom line.  This is the motivation, regardless of what type or kind of customers are acquired.

Customer centricity; however, contends differently.  A friend of mine asked me how many friends I have and, of those friends, with how many do I spend most of my time and effort.  I indicated a small number of my friends took my time, energy and resources.  Almost 80 percent of my friends are good friends, but I do not spend as much time (i.e. scarce resources) on them as the other 20 percent.   I take more time with the 20 percent and invest in them as much as I can.

The same principle is true with customer centricity. Unlike product centricity – customer centricity is built on the basis that to be successful, organizations must focus on the “right” customer (i.e. the 20 percent).  The “right” customer implies the “most profitable” customer.  Peter Fader defines customer centricity as “… a strategy that aligns a company’s development and delivery of its products and services with the current and future needs of a “select” set of customers in order to maximize their long-term financial value to the firm.”   The “right” or “select” customers are the significant ones.  They are the most profitable, and with whom organizations need to spend more time thinking about, planning around, producing and working for.  They matter the most and set the tone of the organization’s entire strategy.

I remember explaining the above principle at one of my speaking engagements and some of my audience members were puzzled by this opinion.  They shook their heads in disbelief and hands went up quickly to contest this notion.  It was understandable that they would react with disbelief because there is a paradox in the concept.  Many organizations find the idea of focusing on a “select” few very unsettling and unrealistic.  The question you would ask is, what about the other customers (i.e. the 80 percent)?

The idea is not to ignore the rest of the customers or stop doing business with them.  Because customer centric transformation is expensive and requires significant investment and resources, it will become too exorbitant not to serve the other 80 percent of customers.  Realistically speaking, as you spend more money on understanding and knowing your most profitable customers – you will need the other customers to be profitable as you make the transition.  At least in the short term, many other customers are likely to generate more profit than the right customers.

To be specific; organizations will need those other customers to continue buying the products and services bringing in the cash flow.  They are your low-hanging fruits and easy money, so to speak.  Though they are not the core customers, it doesn’t imply that they should not be provided excellent service.  They should, but with the understanding that you cannot invest your best effort in them.  The idea is for an organization to allocate resources in the most efficient way possible.  Though organizations need the rest of the customers, they must also realize more value is created through the “right” or “select” customers. It then follows that customer centricity argues that customers are not equal and should not be treated equally.

How to achieve customer centricity through the “right” customers

The idea that some customers matter more than others is unusual and most organizations battle with the concept.  For those organizations that would consider treating different customers differently, it also means altering every aspect of the business, including research and development, reworking metrics and the general running of the business.  It also means taking a radical approach in understanding and getting to know the customer.  But that is what customer centricity is all about – it is about radicalizing how business is done to maximum profits in a sustainable way. Below are some of the principles with which a company could start:

  • Understand that value is extracted from customers not products: First, there has to be an understanding and appreciation that true value is extracted from customers; not from products and services.  Extracting customer value requires a dynamic marketing strategy that uses financial and non-financial assessment procedures and customer data to optimize the acquisition, retention and cross-selling opportunities to an organization’s customers.  This maximizes the value to the company throughout the customer’s life cycle
  • Determine what they want: Peter Fader conveys this point very clearly. He says customer centric organizations “…don’t make and sell products they think their customers will want; they make and sell products they know their customers will want.” This would only occur after extensive market research has been conducted to uncover deep customer needs and wants.  So often customer surveys take the form of ticking the box.  Research should both be qualitative and quantitative.  It requires organizations to immerse themselves into the customer’s world.  Furthermore, research should uncover the respondents feelings and the factors that influence their decision making
  • Make the most of segmentation: The insights derived from understanding customer behavior will assist organizations to segment different customers. This will result in treating customers differently and creating specific and differentiated customer experiences according to different customer behavior.
  • Gaining customer Insights: This can be achieved through an effective Customer Relationship Management (CRM) system. There are mixed feelings about CRM, but if organizations used CRM systems for what they were intended to do (which is to gather data and better understand the unique characteristics and expected value), success would be achieved.  This information would enable organizations to allocate resources appropriately.  Data management will permit organizations to identify the focal customers and those who are not.  It will also enable them to accurately estimate customer life time value (CLV) for each customer and by extension calculate overall customer equity.
  • Effective customer acquisition, retention and penetration: This phase is highly influenced by how well an organization is managing its customer data.  If CRM is being used appropriately and providing great customer insights, then customer acquisition, retention and penetration will fall into place.  Acquisition of the right customers from the onset will improve customer retention and development if done right.   

Remember, customer centricity is based on allocating more resources to the managing of the “right” customer for business performance. Without understanding customer insights and failing to separate the “select” customer from the rest of the customers, customer centricity will not be attainable.  It is also important to note that customer insights and customer data will not make an organization customer-centric.  All other business areas and functions are required to work in collaboration and in sync to achieve customer centricity.

Join me in Part 3 of the series as we continue to explore how your organization can be customer centric.

This article builds on my previous article “Stuck in the ‘if it’s working and profitable, why fix it mode”.  In that article, I ventured into the concept of customer centricity by bringing a balanced comparison between product centricity and customer centricity.  The essence of the article was to encourage and motivate organizations to step out of their comfort zone, i.e. product centricity. Though product centricity is and has been profitable for many years it’s no longer adequate in a competitive environment.  Organizations need to push boundaries and take a “go” at customer centricity, which is more profitable and sustainable.  In the same article, I also acknowledged that customer centricity is not for every organization.  However, even those organizations that cannot be customer centric can benefit tremendously by adopting some of the customer centricity principles.  At the end of the day; all organizations are in business to maximize profits in a sustainable way.

This article is Part 1 of a series I have called “The Roadmap to Customer Centricity”. The purpose of the series is offer suggestions and tips on how organizations can get “unstuck” from the “if it’s working and profitable, why fix it mode” and be on their journey to customer centricity.  Organizations that are already on their customer centricity journey can still benefit by taking some of these tips and advance their transformation.

Research shows that the implementation of customer centricity is one of its major hindrances due to the complexity. In some cases it means losing money in the short-term to make a greater profit in the long-term.  The strategies that many organizations have in place are geared towards maximizing shareholder value in the short-term.

Therefore, it becomes clear that for an organization to transition from product centricity to customer centricity there has to be a reframing of the mind and a total paradigm shift. For instance, an organization would need to transition from a short-term focus to a long-term focus.  It will also need to focus on creating value for all stakeholders, and not just shareholders.  The question to ask is “where should this shift and the reframing of the mind start?”  The answer to this question leads me to the introduction of my first tip to creating a customer centric organization: Leadership.

Leadership plays an integral role in the transformation to customer centricity.  Through my research work concluded last year and published into a book (Ritz, 2015), it was established that customer centricity and the effective management of customers in general were not treated as a priority by company leadership.  It was strongly argued that if organizations wanted to see true change in the management of customers, the top leadership needed to be the change agent.   The next section of this article provides some tips on how leadership can be the catalyst of customer centricity transformation.  Leadership holds the keys and sets the stage for a customer centric business model.

Leadership role in customer centricity transformation

Leadership could put more effort to set the right tone for customer centricity transformation.  Below I provide a few tips that I believe are quite significant, but it must be noted the list is not exhaustive.

  1. Determining the organization’s strategic direction and articulating the desired outcome

It’s important that leadership defines the new strategic direction it will take to facilitate the transformation.  This means choosing and aligning projects and initiatives that will advance the new strategic direction resulting in the desired outcome.  To be successful, the desired outcome should be articulated upfront to facilitate measurement.

  1. Leading through change management

It is well known that transformation initiatives are quite complex and result in failure at times.  Leadership must appreciate the importance of managing change effectively in an organization.  Knowledge, control mechanisms and change management plans should be formulated and adhered to.  To begin, the business case and logic behind the transformation to customer centricity should be explained to bring clarity in the organization.  There should be complete understanding of the implications of the new way of doing business. Training and coaching will play a key role to ensure behavioral change takes place.  The main idea is to ensure the entire organization is aligned and committed to the new vision and strategy.  No one should be left behind – it is an organizational effort.

  1. Defining the higher purpose

According to Sandra Van der Merwe; author of Breaking Through: Implementing Disruptive Customer Centricity (2014), organizations should aspire to live beyond meeting their stated financial goals and objectives. Instead, they need to move past this standard norm.  Customer centricity requires leadership to identify and clarify what this higher purpose is.  It’s this overall big picture that would distinguish the organization from the rest through a robust vision and mission.

  1. Shared Values

Customer centricity requires leaders to be responsible and accountable for the organization’s economic well-being.  In addition, they are also responsible for considering the impact the organization has on social and environmental contexts in the community in which they reside and conduct business.   This implies embracing a shared value approach with all stakeholders inside and outside the organization; taking both the long-term and short-term views.

  1. Provide “real” support

The journey to customer centricity requires substantial investment.  Leadership must not consider any resources spent on the transformation as an expense but as an investment. Many leaders miss the mark here because they prefer to focus on the short-term instead of the long-term. Leadership must support customer centricity transformation by committing the necessary resources, whether they be financial or non-financial. This kind of commitment will achieve true transformation as it propels the entire organization to be a part of the change and; therefore, bring the change

Of course the above tips offer just a glimpse of what leadership needs to do to transition to customer centricity.  However, it is my hope that you find these tips useful and that you start asking the necessary questions that lead to true discussions of where you are taking your organization as a leader.  In conclusion, I would like to emphasize that customer centricity or customer management is not the responsibility of the frontline staff, or a departmental issue.  It is a leadership issue and it takes leadership to influence the entire organization by offering unwavering support for customer centricity. Leadership is the necessary catalyst.

Join me in Part 2 of the series, “The Roadmap to Customer Centricity” in my next article.

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Most people do not like change, especially if the existing state of affairs is yielding good results and benefits.  As a result, people or organizations get stuck in what I call, “if it is working and profitable, why fix it mode”.  But let’s go back a couple of decades when the fax was thought to be the most efficient and fastest way of communicating.  We can also go back to most recent years where the Blackberry was known as the “smartest” phone.  These innovations were great and they enabled the introduction of better and faster innovations.  However, can you imagine if we had stopped innovating at that point? After all, the fax and Blackberry were and still are working.  If we had stopped pushing the boundaries can you imagine the opportunities we would have missed?

There is another side to the story.  Those organizations that differentiated or differentiate by products and services only have experienced enormous competition from other players because it has become easy to copy and improve products and services.  It has become very difficult to find a product that is unique.  If it there is one – it won’t be unique for a long time.  Technology has enabled organizations to copy innovations eroding competitive advantage that is product based.    We have witnessed this dynamic in the phone industry with companies such as Apple and Samsung.  The number of products that these two companies have produced over the last 6 years or so is unprecedented; inspired by the “copy and improve phenomenon”.

This brings me to the discussion of the day: a balanced comparison between product centricity and customer centricity.  Peter Fader, a marketing professor at Wharton Business School, claims 99% of the world’s businesses are based on the product centric model.  This model has been in existence for many decades and it has worked pretty well.  A product centric business model focuses on the products or services more than it does on the customer. This business model is based on “creating a product, marketing a product, selling a product and repeating” the process over and over.

The premise of product centricity is embedded in the following principles:

  • Strategic advantage is based on the product and the expertise behind the product
  • Departments and teams are arranged according to products
  • Staff are rewarded based on ability to develop new products or sell existing ones
  • The long-term motivation is about product portfolio reinforcement and finding new ways to consistently expand the portfolio
  • The brand is perceived to have greater value than the customer
  • Profits are maximized through volume and market shares - driving shareholder value
  • It takes a an inside-out approach

As previously mentioned most organizations are product centric and have achieved much success.  Walmart, Coca-Cola and Apple are examples of companies that have benefited from product centricity.  (Note: It can be argued that Apple is moving towards being customer centric).

It Can’t be Business as Usual

Though product centric yields success and is “working”, it’s quite clear that the model is no longer adequate in the current environment. Product centricity is being disrupted in so many ways and from different directions that its sustainability has become questionable. This follows that companies that primarily focus on differentiating themselves through products and services are more vulnerable now than before.    I highlight some of the current challenges that pose a threat to product centricity below:

  • Globalization and loss of geographic advantages
  • Technology advances and the rapidity with which they are being created and copied
  • Deregulation leading to extraordinary competition
  • Power shifting into the hands of customers

Given the rapid change in the world economy, it’s clear that there is an opportunity for a business model that is based on deep understanding of what customers want, when and how they want it and what they are willing to give in exchange.  This model is customer centricity.  It requires a new paradigm shift, a reframing of the mind and a radical way of doing to achieve better and sustainable results.  Peter Fader states that customer centricity must focus on the right or most valuable customer for strategic advantage.  The aim is to make more profits in the long-term.

Doug Leather defines customer centricity as “the eco-system and operating model that enables an organization to design and deliver a unique and distinctive customer experience.” I define it as “a strategy that requires the entire business engine to be laser-focused on the customer, works in collaboration and makes the customer central to all business decisions creating sustainable value for the organization and the customer.” The basis of customer centricity is grounded in systems thinking – implying that the management of customers should not be treated in part or independently, but as part of the entire organization.  This implies that for an organization to achieve customer centricity, it must develop interconnectivity and integration across all business functions.

Like product centricity, customer centricity has a set of principles from which it is based:

  • All strategic advantage is based on the “right” or “profitable” customer
  • It is based on the fundamental understanding that not all customers are created equal
  • Value creation is two dimensional: customer and organization
  • A system and end-to-end operating model offering differentiated customer experience
  • It’s not driven by shareholder interest only, but Triple Bottom Line and the “Higher Purpose” philosophy
  • Customer centricity takes an outside-in approach

It is very important to understand that customer centricity is not customer service or being customer friendly.  It is much more.

The Business Case

As viable as the customer centricity model is it has its own challenges and people are skeptical about it. For starters, a lot of organizations question why they should transition to customer centricity if product centricity is “working”.  In addition, customer centricity and its implementation are very complex.  Making the transition could mean losing money in the short term, thus eroding the shareholder value. Lastly, many find customer centricity hard to measure and quantify in financial terms and, as a result, there is an unwillingness to transform.

The good news is customer centricity’s benefits outweigh its challenges.  And as stated before, the product centricity business model is no longer viable and its sustainability is under threat.  I; therefore, encourage organizations to make the transition even if it means borrowing only some of its principles.  Customer centricity benefits outweigh those of product centricity.  Customer centricity is a catalyst for:

  • Profitability and sustainability
  • Value creation for both the customer and organization (win-win)
  • Organizational resilience and relevance
  • Agility

In the long-term, customer centric organizations outperform organizations that are not.  Companies such as Dell, IBM and Wells Fargo have been successful through customer centricity. The world economy has transformed and the customer has become too demanding and powerful to ignore customer centricity. Customers have to be treated as strategic imperatives to improve business performance.  Subsequently; it cannot be business as usual for a company that wants to remain competitive in the 21st century.    But at the same time it must be realized that not all organizations can and should transition from product centricity to customer centricity. For example if a company is in an industry with low profitability the complexity and effort of being customer centric may not yield any benefit.

Roadmap to Customer Centricity – Tips

The difficulty in implementing customer centricity has been one of its major hindrances. In this part of the article I provide some tips on how you can start your customer centricity journey. However, more tips will be provided in a subsequent article.

1. Leadership commitment and buy-in: Leadership must be totally customer focused and not simply offer lip-service.  For example, sufficient financial resources must be invested into the customer centricity transformation initiatives.  A Chief Customer Officer could be appointed to ensure a customer culture is defined, articulated and reinforced in the organization.

2. Identity the right customers: Know and make the most of your most profitable customers.  Build your business structures around these customers.  This does not mean ignoring your other customers; it simply means you will treat your customers differently because they are different.

3. Vision, Strategy and Planning:  All these components must be customer focused.  They must be clear, practical and executable.  Plans must be measured and leadership must install measures to ensure the vision guides employee mindset.
In closing I would like to ask if your organization is in the “it is working and profitable, why fix it mode?”  If so, how much longer do you think you could sustain the status quo?  Product centricity is good, but customer centricity is even better. And maybe your industry falls in that low profitability category, and adopting customer centricity will not offer the desired competitive advantage?  If that is the case, you could borrow some of the customer centricity principles to improve how you manage your business and your customers.  Stretch your boundaries the possibilities are many.