Customer-Centricity is Dead! What's Next?
33 comments | 8774 reads Dick Lee asks a provocative question in his new white paper: What's next after customer-centricity?
He sums up customer-centricity as follows:
The common implementation-level model coalesced into a structure implementers could grab onto and follow. Theory aside, becoming a customer-centric company meant an amalgam of customer-driven business strategies, customer-aligned process, CEM, CRM (customer relationship management) technology - and a dollop of highly targeted marketing, often supported by marketing automation technology and marketing analytics.
What Dick seems to be saying is that customer-centricity is a mashup of different ideas. Start with a little CRM, season it with CEM, then add process management and analytics as side dishes. Voilà - you've got customer-centricity!
While it's true that these concepts are all out there in the market, in my research I don't find any consensus on what customer-centricity is, or isn't. There's no common implementation model. Some promote the CRM model and others the CEM model. Some say the answer is to create a "social business" and others believe companies should "compete on analytics." And each can claim, at least in part, that they are "customer-centric."
According to Dick, customers are becoming more individualist, more cynical, less civil and increasingly turning from "hunted" to "hunter." I largely agree, but see this as just a continuation of consumer empowerment that's been strengthening for decades.
But I think it's worth discussing some of the "Assumptions" and "New Realities" that Dick asserts in his paper. Are these really new or even happening as Dick describes? (Note: the bolding is mine.)
Undercut Assumptions
- Assumption: Customers are looking for win-win relationships with companies
New reality: While sentimental “Main Street versus Walmart” customers will never disappear, most buyers want the best deal for themselves, without regard for seller welfare. “What can you do for me next?” is replacing “What have you done for me lately?” In buyer-seller relations, the past is no longer prologue.
My take: I'm not sure that buyers ever had much concern for the seller's welfare, except in some edge cases like small towns. But smart companies that succeed strive to deliver value (win for customers) while driving company value (win for company). Win-win is a company strategy, not the customer's strategy.
- Assumption: Most customers are willing to “play nice”
New reality: More and more customers, even Boomers, are “going over to the dark side.” Buyers are becoming more cynical, jaded, mistrustful and resentful of sellers – leaving them quick on the trigger when companies cross or fail them. With so much negativity in play, even wowing customers with great service doesn’t necessarily carry through to the next interaction. Moreover, customer pushback is now expanding to include seller positions on social issues, a real powder keg.
My take: This is overly negative. The research I've seen is that the majority of online reviews are positive. However, it's certainly true that it's easier for a negative situation to go viral. As Dave Carroll of United Breaks Guitars fame says: "No customer is statistically insignificant."
- Assumption: Sellers can accurately profile their customers
New reality: Market segments are splintering into “universes of one,” leading to increasingly idiosyncratic customer behaviors. That doesn’t bode well for profiling, which even previously seldom met predictive expectations, except in the hands of the very best customer analysts/statisticians. Nonetheless, overuse of profiling will die hard, because so many customer-centricity advocates have built executional models around it.
My take: I have exactly the opposite opinion here. Analytics technology is getting simultaneously more powerful and easier to use. I think the future of 1:1 is finally becoming possible, and won't depend on just the hands of a few "statisticians."
- Assumption: Buyers appreciate frequent seller contact
New Reality: Here’s another assumption that will die hard. Maintaining constant customer contact gives marketers work to do and their agencies a revenue source. But customers face such an immense volume of “buy, buy, buy” messaging, little of which they believe, they’re pushing all of it away – even messages offering real value to them (which, admittedly, are few and far between).
My take: Don't agree with the assumption, and the reality is already here. Targeted and relevant messages are, and have been, more likely to be acted on. That said, Dick is right that it's still all too easy for marketers to spray and pray (social media is latest attempt). Smart marketers have known better for a long time.
In general, while I agree with the general trend of consumer empowerment, the "new realities" seem like an overly dire outlook for companies.
Dick wraps up with this: "What will be left of customer-centricity – and will it still matter?"
Actually, as long as a sizeable portion of the customer base continues to “pay nice,” tactics developed within the context of customer-centricity will continue seeing widespread use. However, customer-centricity will be one way of interacting with customers – not the way as advocates have always hoped. And the more buyers try insulating themselves from sellers, a train that’s definitely left the station, the smaller role customer-centric business practices will play. Rather a quiet winding down of a “movement” that created high hopes, lots of noise, and at least some action. However, time marches on…as do customers.
My take is that Dick is looking at customer-centricity something like Sampson Lee, who says Customer-Centricity Is Not the Solution; It’s the Problem. And like Sampson, Dick is right -- IF you think of customer-centricity in the way he describes. Do you?
I believe that customer-centricity should be about delivering customer value in a profitable business model. I don't think that's going out of style anytime soon, even if the "new realities" come to pass as Dick suggests.
Dick's thought-provoking paper is available for free download (no registration required) in CustomerThink's premium content library: After Customer-Centricity Comes...?
Take some time to read it, then add your comments!
Bob Thompson
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33 comments »
Michael Lowenstein
As discussed, we are pretty much in agreement.....
....with regard to how customer-centricity should be defined, and applied. Essentially, customer centricity is about identifying and delivering customer value within a profitable business model. In my article on the subject from earlier this year - http://www.customerthink.com/blog/customer_centricity_vs_customer_friend... - I opened the definition up just a bit more:
"Customer centricity is a strategy to fundamentally align a company's products and services with the wants and needs of its best customers and those which can readily be bootstrapped (through research segmentation tools such as advocacy level) to become more financially attractive. It is about identifying the most valuable customers and then doing everything possible to bring their (positive and negative) ideas into the center of the enterprise, create value for them, generate revenue from them, and to find more customers like them. That strategy has a specific business outcome goal: more profits for the long term."
My concern about the similar perspectives expressed by the Mr. Lee #1 and Mr. Lee #2 is that both are insinuating that, given an identified set of "assumptions" and "new realities", the baby should be thrown out with the bathwater. That strikes me as a little too polar a position.
Michael Lowenstein, Ph.D., CMC
Executive Vice President
Market Probe (www.marketprobe.com)
Andy Hanselman
Customer - Centricity Isn't Dead If Done Properly!!!
You make some great points Bob and I feel I'm with you on this!
The definition of marketing that I use, and I would argue, the definition of customer-centricity, is "finding, attracting and keeping the customers you want and maximising financial returns' ( I do recognise that definition itself is open to debate!)
It's EVERYTHING your business does to find and attract customers, and crucially, develop relationships with them that encourage them to stay, and keep coming back!
Yes, we're in a world of greater customer choice, rising customer expectations, ever increasing 'transparency' and therefore those that do the above things badly, struggle, and those that do it well, have a better chance of winning.
In other words, I would suggest that the difference between customer - centric, and non customer centric organisations is getting bigger, and will continue to do so.
In terms of the 'assumptions':
1. MANY customers are looking for Win -Win relationships: the challenge is to find and attract those customers ( see Assumption 3)
2. Lots of customers are willing to be 'nice' and say good things, but yes, many say bad things - customer-centric businesses monitor, and respond, to these things and turn 'disappointment' into 'delight'. Good news (as well as 'bad news') spreads quickly - this again widens the gap between the customer-centrics and 'non'!
3. This provides real competitive advantage for customer-centric organisations. It does mean 'profiling', and the tools are there to do this - I believe customer-centric business's 'Choose 'em or lose 'em! That means they focus on the customers they want to do business with.
4. Customers do not want to be 'bombarded' with 'buy, buy, buy' messages, but many do appreciate stuff that 'educates', 'stimulates' and 'interests' them. By definition, customer-centricity encourages organisations to send stuff that's relevant and 'value adding'. Today's (and the future's?) technology allows them to do this in a targeted manner!
My conclusion (for what it's worth!) is that there has never been a more important time to be 'customer-centric', and that this will prevail in the future!
Andy Hanselman
Richard Shapiro
It's human nature
I agree and disagree with a bit of everything at the same time. I agree that customers want value, but they also want to be treated as individuals. If businesses treated their customers as people first and made their customers feel important, appreciated and welcomed, it would be a better world for all us. It's a crazy and fast paced environment, with technologies changing the way we live every minute of every day. However, I know that so many of my purchases accompany an underlying personal emotion. Can I afford this item? Will it look good? Is the best neighborhood for my kids? Does this sales representative really care about me? Can I trust this company? etc, etc. Those companies that understand that every customer is unique will flourish no matter how mobile our society becomes or what the latest business philosophy might be.
Shep Hyken
Customer Centricity is defined by the company's culture
While I've always liked the term/phrase "customer centricity," it is really just another phrase for a culture focused on the customer. All if the information in this article, and more, apply to creating a customer focused culture. Doesn't matter what you call it. It's all about the customer. And, when customers realize that is the way your company operates, they want to do business with you.
Bob Thompson
focused or targeted?
Shep, I understand what you mean by "customer-focused culture" and it's very much what the core idea of "customer-centricity" is about in my view.
But you should know that "customer-focused" is also commonly used to mean "customer-targeted." Companies are focused *on* their customers so they can make more money from them, via targeted marketing for example. But the customers don't perceive it as the company genuinely caring about their needs.
As an example, when I receive a bit of direct mail that was the output of a marketing automation system, this is not necessarily the result of a customer-focused culture.
Said in a more cumbersome way, I think we're both talking about a culture that focuses on delivering value to the customer. And of course doing so in a way that also drives value to company stakeholders.
Michael Lowenstein
Agree, Bob, and........
....the final paragraph of your response to Shep captures the essence of customer centricity in a fairly succinct, and not so cumbersome, way.
Christopher Brown
Customer Centricity = Customer Focused Culture
Bob I thought I would jump in here as its the culture side that my consultancy focuses on.
From reading your post I can see our thinking is aligned.
Unfortunately there can be a lot of confusion around these terms, so we tend to use the language our customers use which is generally "customer focus". In their minds they are internally focused or product focused and recognize a need to improve their "customer focus".
This manifests when they see declines in business results due to again in their minds a loss of "customer focus".
To Dick's article I would suggest customer centricity is more important now than ever, a primary reason for customer centricity is competition. Without competition businesses don't actually need to be customer centric. With competition intensifying in every industry across the globe the need to provide more value than alternatives is just accelerating.
The only way to provide more value is to produce something customers will pay for and the way to discover what they will pay for is by having a company focused on their needs.
The reason it needs to be cultural is that business is a team sport, everyone needs to play their role in delivering the "promise" companies make to their customers around their products and services.
To your direct mail example Bob, if that was mail that was not relevant that is simply a poor targeting choice at a tactical level. The company that sent it clearly is trying to attract new customers but in the wrong way.
A customer focused company would review its acquisition strategy and decide whether that approach fits with its overall value proposition for customers or whether that approach is actually devaluing its brand and annoying potential customers rather than attracting them.
Bob Thompson
maybe
Chris, I still think (and my research backs this up) that when companies decide they need to be more "customer focused" instead of product focused, they don't mean it in the holistic sense that you advocate.
Instead, a common first step -- with help from CRM and other marketing technologies -- is to organize targeted marketing activities around customer and their segments or profiles, instead of around products.
That's a decent first step, but falls far short of becoming a customer-focused culture.
Defining customer-centricity and customer-focused is a bit like nailing jello to the wall. I made an attempt at identifying 4 stages of development in my article: Let Your Customers Inspire You! Four Stages of the Customer-Centric Journey.
However, I'm thinking about change my "stage 1" to "customer-targeted" to better convey what I mean.
Christopher Brown
Great work on the model
Bob, I like the model, I agree customer-targeted is a better description of stage 1.
This model is a useful way to ID where companies are and create some tangibility as to what they are trying to actually achieve with any customer centric initiative.
Most of the companies we work with are in stage 1 and 2, often recovering monopolists.
Also some companies have taken their eye off the customer and focused too much on technology or engineering without enough insight from customers to really be leading the marketplace ie stage 3 and 4.
Graham Hill
Delivery isn't Working!
Hi Bob
Delivering value to the customer implies that it is the company that does all the work and customers just get what the company, well, delivers. Recent research suggests that companies don't actually deliver value per se, but instead provide the resources for customers to co-create value for themselves. Customers in return provide different resources for companies, typically in the form of money, knowledge and relationships. This exchange of resources is the heart of a working win:win relationship between a company and its customers.
I suggest the 250 year old emphasis on 'delivering value', on companies delivering stuff to customers, is as much a reason why customer-centricity is not working, indeed, why it can never really work.
Graham Hill
@grahamhill
Bob Thompson
co-creation doesn't explain my shovel
Graham, the debate about "co-created value" is probably best left to another post. I find the concept interesting and useful in certain situations, but it really doesn't explain why I bought a shovel that sits in my garage, unused.
That said, maybe "delivering value" isn't the right way to express what's happening, either.
What really matters is the customer's perception. As a customer told me many years ago, "perception is reality." If the customer perceives that it's getting more/better value from company A instead of company B, company A will likely win. Substitute value for "job" getting done if you prefer.
Whether the value perceived/received is functional, emotional or social, the customer is the only one who can decide whether it's worth providing value back to the company, normally in the form of a payment.
My view is that companies still have to "do" something that ends up being perceived as value by customers. I call that something "delivering value." Certainly agree that in some situations some of the value requires the customer's participation.
Michael Lowenstein
Co-creation, which can be part of customer-centricity.....
....tends to be selective, depending somewhat on the industry involved. There is evidence of some companies - Harley-Davidson, Legos, John Deere, and Daimler Chrysler come most immediately to mind - where proactively bringing in groups of customers and distributors have helped to shape new products and services. In addition to incorporating customers' ideas, these companies make certain that customers and prospects are made aware that these resources were included in any product or service planning.
Graham Hill
A Typology of Co-Creation
Hi Michael
As my 2009 article on How Customer Co-Creation is the Future of Business suggests, co-creation as crowdsourced co-design is only the starting point on a journey towards value co-creation. Adrian Payne and Penny Frow show in a their ANZMAC article on Co-creation: A Typology and Conceptial Framework, that there are multiple different stages on this journey.
Ultimately, value co-creation provides a robust framework grounded in service dominant logic that enables companies to rethink how they can co-create profitable value, one touchpoint at a time, together with their customers.
Graham Hill
@grahamhill
Graham Hill
Value Co-Creation is Everywhere... If You Know Where to Look
Hi Bob
If you look more closely you might find that value co-creation does explain why you bought the shovel that sits in your garage.
I assume that you had some kind of 'job to be done' for which you bought the shovel. It is likely to have been a functional job of digging your compact Californian garden. But it might have been an emotional job as you bought another shovel to add to your private shovel collection. Or maybe it was a relational job as you wanted to show your wife and son what a caring father you are as you set out to dig the garden. It might even have been a social job as your neighbours see what an fine upstanding member of the community you are as you tend your carefully planted garden. We all hire tools to help us do important jobs.
But the value you co-create from the shovel only comes during its usage. Unless you are into shovels, where ownership of teh shovel is of value to you, you only create value when you use the shovel. If it just sits in your garage unused, the shovel creates no value to you at all. We hire tools to do jobs, but we only create value if we actually use the tools for the jobs we hired them for.
And just as you have jobs to be done, so do all the actors in the supply chain that let up to thepoint of purchase. Obviously, their jobs are likely to be different to yours.
The key to suceeding in business once the economics for all businesses are roughly similar is in understanding what jobs customers are trying to so, what tools they currently hire to do them and how you can innovate better tools to help customers do important jobs better, faster and cheaper. This applies equally to shovels, to call ecentres and to social business.
Value co-creation is everywhere... you just need to know where to look.
Graham Hill
@grahamhill
Bob Thompson
value is not just usage
Thanks, Graham. I need to read more about co-creation and think about it. Thanks for you comments and the link to co-creation paper.
Certainly agree it's an important idea. I've advocated "collaborative" relationships with customers for 10 years (more than just communications a la social).
Yes of course there is value created in use, but also value when something may be used. Like an insurance policy. Or the shovel in my garage.
I don't know if the concept of "latent value" is part of the co-creation idea, but I think we buy lots of things that don't get used. And yet we still think they are valuable. Value is just a perception in our minds, no?
If value doesn't come exclusively from usage, then where does it come from? And what does "usage" really mean?
Graham Hill
Usage is a Flexible Concept
Hi Bob
Usage is a flexible concept. It depnds upon your situation, the job you hired a tool to do and the outcome you desire from using it. To remain with the shovel analogy, if you had hired the shovel to do a functional digging job, you only achieve your desired outcome when you use it to dig the garden. Until you use the shovel for digging it is a just an inexpensive value proposition waiting to be used. Ditto for the relational and social jobs. This is similar to your proposal for latent value. On the other hand, if you hired the shovel to do an emotional collectable job then just owning the shovel would create value for you.
In other words, usage depends up on the job you hired the tool to do and the outcome you desired from doing so.
Insurance is a more complicated service version of the shovel. Most people buy insurance for the psychological security of knowing they are insured should anything untoward happen. This is an emotional and to a certain extent, a relational job. Heaven forbid that anything untoward does happen, because as everyone knows, getting insurers to pay out on their policies is more difficult than getting blood out of a stone. Owning an insurance policy thus creates value for the insured by delivering security outcomes. It also provides a value proposition if something untoward actually happens.
Graham Hill
@grahamhill
PS. I will email you with a few core value co-creation papers to get you started.
Hank Barnes
Inside-Out v. Outside In
Interesting post and comments. I think the core question for customer centricity is whether it is an inside out strategy or an outside-in one.
Inside out customer centricity seems to be all about trying to do things to make customers feel like you care--almost like imposing your will on them.
Outside In customer centricity is more in keeping with the times. its, as you say, about delivering customer value (that limits defections) in a profitable business model.
While I also agree that win-win is primarily a business strategy, savvy customers will be more willing to support a win-win model--recognizing that a stronger vendor means better products and services for them (as long as they are confident that the vendor will use their side of the win to focus on customer value).
Dave Brock
Deja Vu All Over Again
It's hard to agree or disagree with both Bob's and Dick's articles. Likewise, the article could have just as easily been written 10-20-30..... years ago.
A lot of the trends that are cited are true, for example the lessening of civility--but this is not just a buyer/seller issue, this is a general social issue. Within our companies, within our communities, there is a lessening of civility.
Technology has made problems that have existed for milleniums increasingly visible.
Many of the issues are core to company business strategies and not to the buyer seller relationship. In fact customer centricity is more a company value system/business strategy issue than it is a sales/buying issue.
In looking that the assumptions Bob outlines:
1. Assumption: Customers are looking for win-win relationships with companies. I think it would be wise to look at the positions of sourcing/buying professionals. The leading thinking of these professionals is they are looking for win-win relationships and they do care about their supply chains. In more and more cases, a failure in the supply chain can create catastrophic consequences for the company. Sophisticated buyers are looking at these issues, assessing risks, and making sure they are creating relationships that promote the long term viability of their vendors. Will they always seek the best deal they can get, absolutely, and they always have. The problem sellers put on buyers is they fail to differentiate their offerings in ways that are meaningful to buyers. In that case, the only way to differentiate is price.
2. Assumption: Most customers are willing to “play nice” Frankly, I'm not sure I get the point of this or whether it is even meaningful. But it certainly begs the question, Are most sellers willing to "play nice" It's been my experience the way you treat behave to your customers is generally recriprocated. Abuse your customers they will abuse you. Treat them with respect, deliver value to commitments, they will treat you well. There will always be exceptions, but so what.
3. Assumption: Sellers can accurately profile their customers. This is an area where I tend to agree with Bob. The availability of data and BI/Analytic tools provides tremendous ability to profile customers and truly look at serving markets of 1. But this concept is hardly new. Joe Pine wrote about this in 1992 with his book Mass Customization, and similar ideas preceded him. The evolution of this much more achievable. The issue is, however, while the tools provide this potential, are we able to do it smartly?
4.Assumption: Buyers appreciate frequent seller contact. Like Bob, I disagree with the assumption. Buyers appreciate appropriate seller contact. In my career of selling, frequent seller contact has never been an objective of buyers and I tend to doubt it ever has been. Buyers have always wanted and will continue to want appropriate seller contact. The channels through which we contact them and engage them may change as technology allows different possibilities. We have enriched face to face, complementing it with telephone, then email, then social, texting, videoconferencing. Probably soon we will have holograms and potentially Vulcan mind melds. Regardless of the means and technology, each of these engagements is appreciated and relevant if it creates value. If it doesn't---well we know the answer---and we've always known the answer.
The sun will continue to rise and set. We never debate that this will continue. Customer centricity or what ever fashionable phasing we invent will always be an issue and a challenge.
Bob Thompson
B2B vs. B2C: do customers want "win-win"
Thanks for the comments, very interesting!
Regarding "win-win" thinking by customers, count me as a skeptic for B2C, maybe with a few exceptions of high engagement brands. My feeling (sorry, no research to back this up) is the most consumers care about their value, and don't spend much time worrying about whether the company is making money. Especially when there are several alternatives in the market.
But I agree B2B is different, as Dave articulated very well. Savvy customers know that their suppliers have to "win" too, because if the supply chain isn't viable the company won't succeed. Again, if there are suitable alternatives that "concern" will be quite limited.
Broadly speaking, I still feel it's the company's job to strive for a win-win. In certain cases the customer may have an interest in the supplier's "win" but I think it's limited to complex B2B.
Dave Brock
Agreed
Bob, absolutely agree--my perspective always is biased to the B2B perspective. It do think this is a real challenge at the B2C level--ufnrotunately, over the past decades we have seen the decline of the "local" customer focused B2C stores (think the local book store, hardware store, etc.), replaced by the depersonalized experience of the "category killers," being displaced by the web........
To the degree that B2C leads B2B, the outlook for B2B is challenging.
Lynn Hunsaker
Was Customer-Centricity Ever Really Alive Yet?
Every one of us is a customer, so this should be a very simple topic to understand. What do you, as a customer, think it means for your suppliers to be customer-centric? For me, it means they "get me" to the extent that I can easily access and use their offering that helps me do something in my life/business. Just stick with that statement and the gems are there:
- "easily" typically means without much cost in terms of burdens in financial, time, worry, effort aspects
- "access and use" typically means both finding the solution that helps me get something done *and* using to get something done (pre-purchase and post-purchase)
- "helps me get something done" typically means that whatever I buy is a means to an end -- I don't wake up each day and think about how much I'd like to buy a widget or how much I'd like to distrust, get the upper hand, be mean, receive or ignore messages. Those things aren't even on my radar screen as a customer. I'm just trying to live my life.
Note that as a customer it's all about me. Sure, I may like to provide feedback to my suppliers, but typically because I hope it will help me in the future -- or at least help a fellow human being not experience the pain that I might have experienced. And this is the foundational fallacy of most CRM/CEM/NPS/C-Sat/etc. endeavors: companies tend to ask questions from their perspective, to map the customer journey from their perspective, to incent employees from their perspective, and on and on -- NOT from the *customer's perspective*.
To be customer-centric, companies need to simply see things the way customers see them, and center their daily decision-making accordingly, with all other aspirations being secondary to seeing things the way customers see them.
Why would it behoove a company to be customer-centric? Because customers enable the monetary machine. Shareholders leave when customers leave, not the other way around. When companies *align* with customers, they abandon non-value-add and wasteful efforts, policies, processes, behaviors, time, and costs. And alignment helps customers sense that the company *gets* them, leading to organic customer evangelism: retention, share of wallet, positive word-of-mouth ... company growth.
All of the "Assumptions" and "Realities" in this article are not stated from the customer perspective in the first place. They're stated from the faulty perspective of companies. Customer-centricity is not a way of interacting; it's a way of life that must transcend the front-line to incorporate the ripple effect of hand-offs across the entire internal value chain enterprise-wide. Marketers, engineers, accountants, and everyone else in the value chain will only be customer-centric when they view their roles as advocates for what's important to customers -- when they put other aspirations first, they'll always be at odds with customers and creating waste, distrust, and ill will. Those things aren't created by customers, they're created by people within the company.
As Bob notes: "customer-centricity is a culture that focuses on delivering value to the customer" -- and I'd like to add that it's a culture that prevents non-value to customers. This holds true for both B2B and B2C. (However, among B2B purchasing processes, the customer often abuses the supplier via extensive periods for payment terms, hurry-up-and-wait, non-win-win legal terms, etc. -- supplier management and purchasing agents need to be aligned with the company's customer experience excellence principles, because you can't expect your customers to love you, but not show love to your suppliers -- that's not sustainable, as unhappy suppliers will have a ripple effect eventually to your customers' well-being.)
Very few companies have ever been truly customer-centric. Hence, many people view this as a buzz word, jargon, something fleeting, a misguided concept. But let's get real: since YOU are a customer, you do know what it should really mean.
Encouragingly, I've been receiving more and more inquiries from companies that feel the need to nurture a customer-centric culture, and it's exciting to see them discover so many gems they have at their fingertips to make significant inroads in establishing customer-centricity as an enterprise-wide way of life.
Bob Thompson
customer perception vs. company activity
Lynn, thanks for a great perspective on a complex area.
Customers tend to say a company is "customer-centric" when it's delivering value they care about. It's really the same as looking at loyalty drivers. Quality products, good experiences, etc.
Companies tend to focus on how they are managing, or attempting to manage, customer-related processes.
So it's easy to see why a company can say "I'm being customer-centric" when it is doing a VoC campaign, targeted campaigns or whatever, and yet customers don't really "feel" that the company is customer-centric at all.
In the end, the only thing that matters is what customers perceive. To change that perception takes work and time.
Michael Lowenstein
Creating Customer-Centricity
Bob -
We've had some really good dialogue about this issue. I absolutely support your premise. The result of customer-centricity, the product if you will, is how the customers perceive the value of the product or service they receive and how much trust and believability the enterprise is able to create.
This is something I addressed in my very first CustomerThink blog of 2012 - http://www.customerthink.com/article/inside_out_advocacy_creating_and_su... - when I looked at what I described as "inside-out advocacy creation", aka customer-centricity. For me, one of the best references for understanding how to do this at an enterprise (large, medium, or small company, almost irrespective of industry) comes from the book, Firms of Endearment. Commenting on the book itself, and the authors' concepts, I said:
"...it's important for organizations to understand that customer commitment and advocacy behavior can result in one of two ways. The first way, which we identify as generation of "inside-out" customer commitment and advocacy, is where companies endeavor to manage and influence attitudes and perceptions of customers (and prospects), as well as where, how, and when communication takes place.
Though there are many thought leaders who offer insights into how organizations can produce benefit for stakeholders through culture and value, Glen Urban, professor of marketing at MIT, initially outlined this very well in his book, Don't Just Relate—Advocate. Two other books, The Experience Economy and Authenticity, both by James Gilmore and B. Joseph Pine II, and a fourth book, Firms of Endearment, by marketing professors Jagdish Sheth, Raj Sisodia, and David Wolfe, did an even better job of explaining how organizations can create superior experiences and value for all stakeholders.
Particularly in Firms of Endearment, the authors identified elements of stakeholder relationship management (rather than a traditional stockholder and stock price-focused) model for creating a strategic and emotional bond between the enterprise and its customers. Importantly, they recognized that the "invention" of the World Wide Web (by British software engineer Tim Berners-Lee) in 1991 became a seminal, high-frequency communication enabler, also fundamentally changing the balance of decision-influencing and informational power to the B2C and B2B consuming masses. It also changed the form and amount of interaction between peers. Most critically as it impacts stakeholders, this has forced organizations to act with greater and greater openness and customer sensitivity.
Skepticism, information availability, and economic instability has combined to change the landscape of product and service decision-making, probably forever. As B2B and B2C consumers seek more meaning from everything—their work, their relationships, even the companies with which they do business, the result is that organizations will be perceived as partners to the degree with which they can align their products, services, values, and culture with the needs of stakeholders. Very few companies have been able to do this, either at creation or through transformation; however, those that have succeeded are true customer advocacy performance exemplars.
Sheth, Sisodia, and Wolfe call such organizations "humanistic" companies which seek to maximize their value to each group of stakeholders, not just to shareholders. These companies, which the authors refer to as "FoEs," have succeeding in aligning (not just balancing) the interests of all stakeholders. They are focused on employee hiring, training and teamwork, and empower employees to optimize, and 'humanize', customer experiences. They work in partnership with suppliers.
The authors identified companies like Southwest Airlines—an organization with a 93 member Culture Committee, whose charter is to preserve Southwest's leadership position among airline companies, and develop employee leaders on a local level who will live and share the culture with other employees, passengers and the public—as unique. As they state, right up front (Chapter 1, page 4):
'What we call a humanistic company is run in such a way that its stakeholders—customers, employees, suppliers, business partners, society, and many investors—develop an emotional connection with it, an affectionate regard not unlike the way many people feel about their favorite sports teams. Humanistic companies—or firms of endearment (FoEs)—seek to maximize their value to society as a whole, not just to their shareholders. They are the ultimate value creators: They create emotional value, experiential value, social value, and of course, financial value. People who interact with such companies feel safe, secure, and pleased in their dealings. They enjoy working with or for the company, buying from it, investing in it, and having it as a neighbor.'
For the authors, a truly great company is one that makes the world a better place because it exists. Simple as that. In the book, which was published in 2007, the authors have identified about 30 companies, from multiple industries, that met their criteria. They included CarMax, BMW, Costco, Harley-Davidson, IKEA, JetBlue, Johnson & Johnson, New Balance, Patagonia, Timberland, Trader Joe's, UPS, Wegmans—and Southwest Airlines. Had the book been written a bit later, it's likely that Zappos would have made their list as well.
The authors compared financial performance of their selections with the 11 public companies identified by Jim Collins in Good to Great as superior in terms of investor return over an extended period of time. Here's what they learned:
- Over a 10 year horizon, their selected companies outperformed the Good to Great companies by 1,028 percent to 331 percent (a 3.1 to 1 ratio)
Over five years, their selected companies outperformed the Good to Great companies by 128 percent to 77 percent (a 1.7 to 1 ratio)
- Just on the basis of comparison to the S & P 500, the public
companies singled out by Firms of Endearment returned 1,026 percent for investors over the 10 years ending June 30, 2006, compared to 122 percent for the S & P 500, more than an 8 to 1 ratio. Over 5 years, it was even higher—128 percent compared to 13 percent, about a 10 to 1 ratio.
How did they do it? By what magic did these companies achieve such stellar results? According to the authors, it begins with "emotionally intelligent" management, based on ideas offered in the 1995 and 1998 books by Daniel Coleman. This is principally the ability to be self-aware and self-regulating, emotionally and socially; a capability the authors recognize as being absent or ignored in most organizational cultures, even those that are otherwise fairly customer-centric. However, it is a necessary component of leadership development at all levels, and in all functions, of any company. Without it, the authors assert, the tone of the enterprise and its culture—how much people give and want to give, and how much they care about the enterprise and its stakeholders—will be impaired, yielding low morale and interpersonal consideration, and high levels of conflict and stress. The result is that business effectiveness, i.e. bottom-line outcomes, will suffer.
Also recognized is the power of communications, both inside and outside of the organization. As the authors state:
'Instead of business-controlled monologues, the marketplace is now dominated by conversations. People talk to each other as never before about the companies they work for, buy from and invest in. This is forcing companies to operate with greater transparency. But that is not a problem for companies with nothing to hide, as firms of endearment have discovered. Transparency helps customers, employees, and other stakeholders develop trust in a company. It has proven to be effective as a motivating force among employees.'
Much of the creation of trust, per the authors, has to do with the employees who create differentiated customer experiences. The relevant point made is that, beginning with the hiring process, firms which create strong bonds with their customers select employees based both on skill set fit and also fit within the culture. L.L. Bean looks for employees who are dedicated outdoor types. Whole Foods and Trader Joe's look for people who like dealing with food (and people) as a key part of their lives. Harley-Davidson looks for new staffers who are into motorcycles."
So, at the end of the day, customer-centricity relies heavily on culture, people, and processes. It's elegant, yet complex, chemistry for the creation of customer value.
Andrew Rudin
The Beginning of Wisdom . . .
"The beginning of wisdom is to call things by their right names." --I read this yesterday in an article about the crisis in Syria, and whether it's appropriate to term it a civil war.
The quote fits customer centricity, too. There are a lot of things people call--or proclaim--as customer centric that really aren't. Flawed assumptions, as I just read from Bob's commentary, are one probable root cause. I agree.
So the effort to expose and question assumptions is very worthwhile.
#1: Customers are looking for win-win relationships.
My take: good assumption. If the idea win-win is corroding away, replaced by "all I care about is the best deal!", then there's a great threat to buyers and sellers having a mutual exchange of value. For me, that is foundational for customer centricity.
Like Dave, lately I haven't seen any manufacturing company with a complex supply chain seem uncaring about the vitality of its critical component vendors. Just ask anyone who works for Toyota.
#2: Most customers are willing to “play nice.”
My take: yeah, I pretty much agree. Customers aren't becoming nastier. But I think that some companies are now so good at delivering fantastic customer experiences that certain customers know that companies can do better, so they are prone to acting bitterly disappointed when their experiences fall short of expectations.
e-commerce websites should be boneheadedly easy to use. I know they can, so I sometimes get rankled when they're not! On the other hand, I seldom get hot and bothered when I have a cruddy flying experience. More likely, I'd be surprised if I didn't.
#3 Sellers can accurately profile their customers.
My take: theoretically, this is true. The tools are there, but things won't change until cultures do. In application, there are too many "old school" marketers who still lump customers into large demographic sacks like "soccer mom's" or sanitize their unique characteristics altogether by using faceless terms like "our average prospect . . . "
#4 Buyers appreciate frequent seller contact.
My take: boy, I wish this assumption would die, because it drives so many awful tactics and behaviors: "We find, on average, that it takes five contacts for a salesperson to make that first appointment." So sales executives reward Tom and Jennifer for making lots and lots of fairly useless and annoying contacts. Why? Because they're making their 'required numbers!' How dumb is that?
Things would go much better if vendors used a different assumption altogether, such as "Buyers appreciate communication that is valuable and useful to them."
I don't think that assumption is perfect, either. But when I think of customer centricity, I think it's much healthier than the frequent contact one.
Jeannie Walters
Is Customer-Centricity A Model?
I really am loving this discussion. I agree with your take, Bob, especially about the way it's easy to see the overly negative when many customers are happy to provide public, positive feedback. I would question, however, if customer-centricity is a model or a philosophy. I have found that many entrepreneurs are customer-centric because they simply have to be. They are delivering a certain experience organically. It's when additional people, layers, and processes are introduced that really start messing with that positive experience. If the leadership doesn't instill a true value system around focusing on the customers, the model simply won't follow.
Those who are implementing this model are the ones who actually care enough to do so. Customers will always look for the "what's in it for me" first, because the very definition of customer means they are seeking some value for their investment. Organizations can do what they can to help them feel as valued as they should.
This whole discussion is thought-provoking. Great stuff.
Bob Thompson
re: Is Customer-Centricity A Model?
Interesting question. I suppose the answer is "yes" because a model is "a simplified representation or description of a system or complex entity, esp one designed to facilitate calculations and predictions."
So I think it's fair to say that "customer-centricity" is a model for how businesses should treat customers, and hopefully also how they make money doing so.
However, I'm not sure how much it helps this discussion to decide whether customer-centricity is a model, philosophy or for that matter, a strategy. These are all words subject to multiple interpretations. Defining one fuzzy concept using other fuzzy words didn't help CRM -- which some still proclaim is a business strategy and philosophy -- did it? The market thinks CRM = tools, by and large.
Personally, I like to use 'customer-centric' as a modifier of business strategy: as in "customer-centric business strategy." Maybe this is redundant for those (me included) that consider customer-centricity to include some profit-making outcome. But other use customer-centricity to just mean doing whatever the customer wants, without necessarily creating value for the enterprise.
Matt
Customer centricity
Stripping back the reason for the widespread emergence of customer focus & what do you have? Tighter margins, growth forecast adherence pressure or adapting to a changing landscape of heightened competition..the entire concept is purely another strategy to secure market positioning.
Here are my problems:
<1% focused on the actual people who will have direct contact with your customers? Treat people the way you expect to be treated!
Customer satisfaction is paramount? Are you running a charity? Customers are the vehicle to organisational success.....why pretend you care when it derives self promotion? Do you care otherwise?
Customer centricity starts with employee centricity - fundamentally it begins in the absence of profit base economies & inequality. Not in the real world? The entire human existence has only met with inequality in the past 5-10k years. It isn't innate but learned.....for intelligent beings please think about more than your existence, starting with the world our kids are going to grow up in......you are wise enough, but are you selfless enough!! The current path only ends in one place.....
Graham Hill
Hi Bob An interesting post
Hi Bob
An interesting post and some interesting points.
Pretty much every company today claims to be ‘customer-centric’. Reality of course, is somewhat different. As Bain & Co research shows, although 80% of executives think their companies deliver a superior customer experience only 8% of customers agree. So what has gone wrong with customer-centricity?
Unfortinately, Dick’s assumptions don’t really help explain the difficulties.
Assumption 1: Customers are not looking for win-win relationships with companies.
I agree with you and Dick entirely. Most customers are not looking for win-win relationships with companies; the are just looking to win for themselves. And that’s OK, because most companies are just looking to win for themselves as well. Companies may talk about developing win:win relationships with customers but in my experience, they rarely have much interest in finding out what customers really value in the first place.
Assumption 2: Most customers are not willing to play nice.
I agree with you entirely. Faced with serious service failure, customers have traditionally been limited to complaining to the company or simply defecting to another company. Voicing to others was not really an effective option. That has all changed. Customers now have a broad range of social media to voice to anyone interested and maybe even, to get recalcitrant companies to respond. Having said that, the social influence of customers is hugely overrated. Dave Carroll’s ‘United Breaks Guitars’ hit on YouTube is way outside the capabilities of anything except a music professional. And Laurence Buchanan showed that it didn’t move the market needle one little bit for United Airlines.
Assumption 3: Market segments are splintering into ‚universes of one’.
I agree with you entirely. There is little evidence that customer behaviour is fragmenting any more than it has always been fragmented. Most high-level segmentations based on demographics, are almost literally a waste of time. They don’t look at what is important for customers, they can be interpreted in too many different ways and they don’t lead to actionable changes by companies. More data and better analytics doesn’t always result in improvements either. Not if companies are using them to ask the wrong questions. But used intelligently, it does offer the opportunity to create more meaningful segmentation. And it doesn’t need to be individualised segments of one to be effective.
Assumption 4: Buyer’s don’t appreciate frequent seller contact.
Here I agree with Dick but not with you. There is no doubt that the level of spam received by customers has reached unprecedented levels. We are stranded on the tragedy of marketing commons, bombarded by messages that shout ‘buy, Buy, BUY!!!”. And we have switched off as a result. What buyers do appreciate is what Tulli et al call ‘relational support’. This means the right kind of contact (for the customer), providing the right kind of support (for the customer) at the right time (for the customer. This might include sales messages but more than often than not, it won’t. It will mostly be contextual help, some of it before the sale, some of it after the coast, but the vast majority of it during the weeks, months, even years of usage long after the sale.
If Dick’s assumptions don’t really help explain why customer-centricity isn’t working for companies or customers, what does? Perhaps it is the almost total lack of interest most companies have in their reluctant customers. Perhaps it is the overwhelming focus on everything up to the point of sale and nothing afterwards? Perhaps it is because customer-centricity as a business strategy isn’t the most effective anyway? If only anyone really knew!
Graham Hill
@grahamhill
Jeanne Bliss
Customer Centricity
Here is what we know and are seeing about the companies who continue to thrive:
- They treat their employees well. They honor them.
- These companies enable a workforce of heroes vs. forcing heroics - when folks have to arm wrestle lousy processes and policies
- They choose to believe in the importance of understanding customers' lives - and use that to build products and services with these lives in mind.
- They work hard to not be cynics. Most businesses create the majority of the rules to protect themselves from the minority of the customers. These companies don't.
- They are accountable. And they are deliberate. And they insist on creating an operating system of reliability for their customers.
The things noted above are about running an optimal and profitable business - based on delivering value to managing the asset that drives growth - customers.
Graham Hill
Show me the Money!
Hi Jeanne
It sounds really great. But, do you have any hard financial evidence that such things actually deliver superior profits for companies adopting them, over and above controlled competing strategies.
We have seen many other equally great lists of corporate characteristics held up to the light only for them to fail miserably when they were: from Peters & Waterman's 'In Search of Excellence', to Collins 'From Good to Great', to Reichelds's 'Loyalty Effect'. They all suffered from the post hoc ergo propter hoc fallacy, largely due to inadequate research.
If only life was as easy as creating a list!
Graham Hill
@grahamhill
Bob Thompson
Customer-Centric vs. Customer-Focus
There's a fascinating discussion going on at Dick Lee's LinkedIn discussion group: Building the Customer-Centric Organization. 100+ comments were generated by Dick's simple question: should the name of the group be changed?
... I’m wondering about changing the group name to “Building the Customer-Focused Organization.” To me, “customer-focused” speaks more to reacting to customers however they want us to react, including leaving them alone; whereas “customer-centricity” goes more towards increased buyer-seller involvement. Your feedback?
You'll find a lot of contrasting ideas about what exactly does it means to be "customer-centric" vs. "customer-focused." Some think they are the same, others see a difference.
And plenty of conversation about "relationships" too. Is a business/customer relationship defined by the amount of customer communication. Or can a consumer have a strong relationship with a brand with little/no communication?
Another interesting debate is whether companies selling commodities have a relationship or are being customer-centric.
I've learned a lot from engaging with this group. When you've got some time, join the conversation here.
Guest
Customer centricity is like quality work on time and on budget!
Hi everyone, I have been in marketing for almost 20 years but because I have spent the last 7 years buried in P.O.P. advertising, I am finding myself having to familiarize myself with many new aspects of marketing.
I read both and quite frankly, coming back to the rest of the marketing mix was both head spinning and the same old thing
.
First off, I read the comments and this is where I found it “interesting”. We lose ourselves. All this refined talk, buzz words, new techniques... all of it sounds like corporate poetry. Customer Centricity has been around for years, only somebody somewhere coined the phrase after tweaking the concept a little. Quite frankly, is customer centricity going to die? I don’t think so. I don’t think it is going to die anymore than one might claim it was born a child of marketing. It was around long before marketing existed. The essence of commerce was built on some sort of centricity. No one ever made a dollar by not giving a damn, except for criminals. If you go into business tomorrow you need to be able to do the flowing; deliver quality work, on time, on budget and by your own definition of customer centricity. If you can’t answer to these 4 basic business survival skills then go punch a timecard in a factory.
Questioning if customer centricity should be common practice in a company is as ridiculous as saying, “I’m a good citizen, I have never been to jail” You’re NOT supposed to go to jail. So please, customer centricity is just a pretty word for considering your client in everything you do and how YOU see fit. Do you think Apple is customer centric…? They are almost the opposite in so many ways. The only think they care about is wowing us with technology, but sincerely, they have us eating in the palm of their hand. Which reminds me; I need to take an appointment with one of their “genius” to fix the operating system on my iphone, if I simply show up at their store, they’ll turn me away.
But since we’re on the topic of customer centricity, let’s see how the rest of us (Apple aside) should view it. What jumped out in all the discussion for me is how customer centricity at consumer and B2B levels seemed interchangeable. CPG manufacturers have two clients; retailers and the end users; consumers. There should be (because there is) a clear distinction between customer centricity (B2B) and consumer centricity; two different practices, two different philosophies.
Second, the problem with social media is similar to HR problems regarding communication. Any HR manager will tell you that there are two forms of communication within a company, the first one is formal (an email from 1 colleague to another on a project, a Presidential meeting with staff, a communiqué regarding vacation pay, etc.) This communication is controlled and disciplined. The other form of communication is informal communication, (Sue and Tom by the coffee machine, talking about how the new procedure is a waste of time, or the fact that the new manager is a real ass). The latter one is the problem, because companies can’t control it.
So, think of ATL advertising as formal communication then think of the social media as the coffee machine… Same thing! How do you, as a company, manage acid tongues and bad mouths? You appeal to them, you win them over, you suck up to them. They are the hipsters of the world, the opinion leaders, they’re the alpha male of the group and until you get on their good side, they’re a problem.
So if you want consumer centricity to work, seek and befriend the bad seeds. If you are a cosmetic company, befriend cosmetic bloggers, send samples and talk to them. Literally, pick up the phone and talk to them, make them visit your plant… They are Generals waiting to build you an army of loyal consumers. Address the girl on FB who complained about your product. Mc Donald’s does it. Social media is home to opinion leaders and wolf pack chiefs so look for them and make sure they’re on your good side. Win over the hipsters with their attitude, their flair for the next cool thing and their opinion for everything. Don’t worry so much about the “play nice” crowd, you won them over a long time ago -but don't take them for granted.
Customer centricity will never die because it is a must in the foundation of business –as it always was. The new thing, the next buzz word, the next "should be" I think, is… “opinion-leader-centricity”. Food for thought!
Lori Hutton
You should not be in
You should not be in hospitality if you do not want to be a server...that means managers... housekeepers...all the players in the game!
I love to serve people...
I love to give...
I love to be the one to change a person from being angry...to turning to me with a smile.
I love hospitality...
It is not a game or a job to me...
I am so totally disappointed that I have to work through a pile of people who are trying to sell... in order to get to a place where I can 'serve'!
From the beginning of my 'going to work'... I loved to 'got to work'. I escaped my home life and went to my job! I loved to do a good job! What happened to that idea? If you do a good job ...serve people... what is more ?? ...
Maybe that is next...
Just serve if you are a server...
Just give your best...
And continue ...
Some people will return ...some will not ...
But everyone will be happier in the long run...
Lori Hutton
Join the conversation!
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