Three Different Flavors of Customer-Centricity

The recent discussions on the CustomerThink form about the definition of customer-centricity got me thinking about whether it has a common definition, or whether there are in fact several different flavours of customer-centricity.

An article on Mainstreaming Corporate Social Responsibility: Developing Markets for Virtue in the current Califiornia Management Review sheds some light on the question.

Corporate Social Responsibility (CSR) is similar to and indeed, encompasses customer-centricity in a number of ways: It means different things to different people, it arouses considerable passion in its advocates and it deals with intangibles that are hard to manage, like customers, for instance. The article describes a study into what CSR meant for a large number of senior managers in various organisations involved in CSR activities. It identified three distinct flavours of CSR that bear remakable similarities to what we anecdotally see in customer-centricity.

The first flavour was managers and organisations that saw CSR from a business-case perspective. For them, CSR was something that must show a superior financial return against a number of competing initiatives for it to be worthwhile investing in. In other words, CSR had to be demanded by the external market otherwise it wasn’t worth doing. And it had to create significant value for shareholders too.

Many organistions look upon customer-centricity from a similar narrow perspective. They are too busy making money to spend too much time focussing overtly on customers. That doesn’t mean they ignore customers, they still have to sell stuff to them, but they are not the raison d’etre for being in business.

The second flavour was managers and organisations that saw CSR from a social values perspective. For them, CSR was something that was worthwhile doing because it was socially (and sometimes morally) the only way to do things. CSR was a higher-order business goal demanded by staff and provided a non-economic standard by which everything was measured. Economic factors like profitability were only important in so far as the organisation must be economically viable to continue to do its good work.

A small number of organistions look upon customer-centricity in this way. They were often founded by charismatic individuals bent on doing what is best for key groups of customers and making a living in the process. Some of them are very highly profitable too.

The third flavour was managers and organisations that saw CSR from a broader stakeholder perspective. For them, CSR was comprised of a broad range of stakeholders (including customers) whose needs must be traded-off against each other and somehow balanced in a profitable equilibrium. This is the most challenging of the three perspectives, recognising as it does that most organisations must not only deliver value to shareholders and customers, but to a number of other sometimes conflicting stakeholders too.

I believe that most customer-centric organisations take this broader stakeholder perspectve. They recognise that shareholders are a key stakeholder, but that they must balance short-term profitability with longer-term viability. They recognise that customers are a key stakeholder too, but that there is more to business than just pandering to every customer’s whim and fancy. And then there are the other stakeholders like staff, suppliers, partners, local communities and society at large that all play a larger or smaller part in the organistion’s success.

If any organisation epitomises this approach it is Toyota; a company that does very well indeed by taking account of a broad range of stakeholders needs.

Despite what you might have been led to think by earlier discussion, customer-centricity is more cimplex than meets the eye. And it does mean different things to different people, whilst still being customer-centricity. Just like its neighbour CSR.

What do you think? Is customer-centricity as simple as it sounds? Or is there much more to it than that?

Post a comment and get the conversation going.

Graham Hill
Independent CRM Consultant
Interim CRM Manager