Many companies talk about customer-centricity. They tak about it in their annual reports, they talk about it in their analyst briefings, and their CEOs talks about it all the time when they are interviewed. But talk is all they do. A recent port on Customer Centricity: Discovering What Consumers Really Think of Customer Service by customer data specialists Dunn Humby shows the majority of companies score negatively for customer-centricity.

This lack of customer-centricity is both a problem and an opportunity. It is a problem because it fails to leverage the customer-equity available to companies that become customer-centric. But it is also an opportunity because most companies are content with just saying that they are customer-centric in their annual reports, without ever actually becoming customer-centric. Customers, of course, know better than to believe all the corporate bullshit. And today they can talk to pretty much everyone about their customer service catastrophes. Who is going to choose United Airlines in the near future when they have a reasonable alternative. Any company that starts to become customer-centric benefits from their competitors' sloth.

The move from product to customer-centricity has been widely discussed. It typically goes through a number of steps including:

• Step 1: Internal Social Networks
  Customer-centricity typically starts with offering support to internal social networks of staff who already work together to deliver a customer-centric value proposition. No matter how product-centric a company is, there are always a few networked individuals who believe in going the extra mile for customers. Companies starting out on the journey towards customer-centricity should start by finding out who these people are and supporting their efforts.

• Step 2: Cross-functional Teams
  The next step is cross-functional teams that formalise the collaboration of the internal networks. Once an informal network establishes itself, the company should allow the network to formalise the relationships by forming a cross-functional team and giving them the resources to drive more effective collaboration around delivers the customer-centric value proposition.

• Step 3: Customer-Centricity Coordinator
  The next step involves appointing a Customer-Centricity Coordinator who takes on formal responsibility for driving customer-centric collaboration across different teams. Things start to get serious now. Collaboration isn’t just about organising meetings, but about establishing a common view of the customer, crafting a shared customer strategy and developing a coherent customer experience that pulls all the customer-centricity levers.

• Step 4: Matrix Reporting Organisation
  The next step develops a matrix organisation with nascent customer segment teams reporting to both product and customer management. This is often where things go badly wrong. Matrix organisations are notoriously difficult to manage effectively. However, if companies have carefully followed the step-by-step development path outlined in the first tree stages, developing their customer-centricity along the way, the chances are that they will already have learned how to avoid death by matrix management. And finally,

• Step 5: Customer Segment Managers
  The final step creates bona fide Customer Segment Managers responsible for all aspects of customer experience delivery. As my earlier blog post on How Customer-Centricity Drives Profits pointed out, customer-centricity is not about being nice to customers. Far from it. It is a hard-nosed approach to creating a reliable delivery system that provides value to those customers that are economically profitable. Customer Segment Managers give profitable customer segments someone who will organise the whole company to deliver the right products on their behalf. The ones that help them get important customer jobs done better. For the most economic profit, naturally.

Congratulations, you are now a customer-centric company. And if you have taken the time to develop all the capabilities and micro-foundations
required to support each stage of the journey, you will be highly adaptable company too. Today’s profitable customer will not necessarily be tomorrow’s profitable customer. Just ask all those companies whose customers changed their behaviour during the current recession and who are now bankrupt.

What do you think. Are you developing the capabilities for real customer-centricity? Or are you just moving the pieces around the organisational chess board.

Graham Hill
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Customer-centric Innovator

Further Reading:

Dunn Humby, Customer Centricity: Discovering What Consumers Really Think of Customer Service

YouTube, United Breaks Guitar

Graham Hill, How Customer-Centricity Drives Profits

David Teece, Explicating Dynamic Capabilities: The Nature and Micro-Foundations of Sustainable Enterprise Performance