Customer Centricity : Becoming Customer Centric
Craig Bailey is the founder and president of Customer Centricity and an expert in creating customer-focused organizations. He has an extensive background with high technology firms in operations management, customer service, business process engineering and IT.
As Vice President of Customer Care for Genuity's U.S. based customer service centers, Craig led numerous initiatives which increased customer satisfaction and positioned the company for its August 2002 ranking, by Network Magazine, as the #1 Internet Service Provider in customer service.
Craig has lectured on corporate strategy, operational effectiveness, and entrepreneurship as a guest speaker at Babson College, Bentley College, Boston College, Harvard University, MIT's Sloan School of Management, and Rivier College in New Hampshire, in addition to participating on numerous panels for other organizations and events. Craig has also recently served as an adjunct professor at Bentley College, teaching a course on Global Business.
Craig lives in Hudson, NH, with his wife and four sons.
Visit the Customer Centricity website www.customercentricity.biz
Increasingly, firms are aspiring to become customer centric. Relatively few have made significant progress; many simply pay lip service to “the slogan.” Are you prepared to “walk the talk ?” If so, you will benefit from the following overview of a highly pragmatic approach to embarking on the journey to becoming customer centric.
Why become Customer Centric ?
In a word : differentiation. Becoming customer centric allows you to stand head and shoulders above the crowd in the eyes of your customer and in terms of the results ( profitability ) that you achieve !
For too long, companies have focused internally ( total revenue, product profitability, operational efficiency and organizational structure ), on product features ( playing leap frog with the competition ) and on price ( can we deliver the same or better product at the same or better price ). Said another way, they have been navel staring.
Instead, companies must think externally. The key question is : WHERE IS THE CUSTOMER ? Without customers you have no business.
It is a well known fact that retaining existing ( profitable ) customers is far more advantageous than acquiring new customers. So why do so many firms invest significant amounts in acquisition, but consider retention an expense or a periodic ( SWAT team ) initiative ? There are 2 primary answers :
- Lack of clear ownership of the customer experience and success of the relationship.
- Reward systems geared towards new business vs. a blended model including ALL customers.
Enough is enough. Your customers know when they are being treated as a number, a “win” or a one-time transaction. Customers can also spot those “positive changes” that are designed ( ONLY ) for your internal efficiency. To be clear, you most certainly have NOT gained their loyalty. As soon as the same or better product becomes available at the same or better price – they are gone. Becoming customer centric requires that you demonstrate to your customers that they are important to your firm and your goal is to not only meet, but exceed their expectations both now and for the foreseeable future. In short, you must get into the heart and mind of your customer.
An added challenge impacting high-tech firms is that of focusing on the leading-edge technology and related features. After the firm and product-line achieve a measure of success, competition emerges. The competition will do one or both of the following :
- offer the same product / same features at the same or better price
- offer the same product with more features at the same or better price
Participating in this cycle turns your products into a commodity - not a place where you want to be.
A key to becoming customer centric is determining what is required to KEEP the ( profitable ) customers for the long-term and implementing strategies to do so. Without a customer centric strategy, it will only be a matter of time before customers defect.
What It Is / What It Isn't
A key challenge to becoming customer centric is overcoming two of the most common misconceptions. The first misconception is that becoming customer centric is a customer service problem. While customer service is an important aspect of the initiative, this is where many of the problems ( of not being customer centric ) manifest themselves. To become customer centric, you must address the root cause : the over-arching business strategy. The second misconception is that becoming customer centric requires you to become a doormat ( or yes-man ) for the customer. This could not be farther from the truth. Becoming customer centric actually requires that you say “no” when it is appropriate to say “no” while offering alternative approaches to meet the customer’s need.
My definition of becoming customer centric is : Aligning the resources of your firm to effectively respond to the ever-changing needs of the customer, while building mutually profitable relationships.
In summary, becoming customer centric encompasses EVERY aspect of your organization and must start at the top.
Customer Centric Imperatives
There are many steps to becoming customer centric, but at the top-level, there are three primary imperatives :
- Know Your Customer
- Align Your Resources
- Listen and Respond
Know Your Customer
Clearly, you can’t always know each individual customer. But, you can segment customers based upon common characteristics. The key theme is that each customer has a specific set of needs. And, each customer deserves an “appropriate” level of attention ( responsiveness, phone-time, face-time, etc. ), but not every customer deserves the “same” level of attention.
Customer segmentation is the process of grouping customers to effectively and efficiently meet the unique needs of each segment through tailored value propositions. This enables a firm to allocate limited resources where they can best be leveraged to maximize customer acquisition, retention and profitability.
- Typical customer attributes involved in a segmentation model include :
- Size of customer ( market capitalization, etc. )
- Type of business
- Nature of products/services/solutions purchased
- Revenue ( how much they buy from you )
- Strategic significance ( name recognition, potential for growth, etc. )
- Level of complexity ( unique / highly specialized requirements )
- Method of selling and/or delivery
To be effective, Customer Segmentation requires that the entire firm align all its resources to the model.
Align Your Resources
What resources are we talking about ? Becoming customer centric includes the alignment of your people and organization structure, processes, technology, products and services to the customer. The following table provides a list of these resources, the key principles to adhere to, typical realities plaguing non-customer centric firms and, finally, key requirements to becoming customer centric.
Once a firm has aligned its resources to the customer ( via segments ), the next step is to listen to and respond to the customer; on an ongoing basis.
Listen and Respond
If you are like most firms, you conduct some form of customer satisfaction survey. However, administering a survey by itself is NOT listening. Listening requires that you not only internalize what is heard, but also respond. And, listening goes way beyond a customer satisfaction survey. A common name for this listen and respond strategy is : “Voice of the Customer.”
A complete Voice of the Customer strategy includes continuously obtaining and analyzing customer input from every touch-point that a customer can have with your firm. These touch-points include :
- Sales / account management
- Customer care / technical support
- Field service
- Credit and collections
- Customer surveys and interviews
- Customer focus groups, user groups or board of advisors
- Third-party vendors ( service delivery partners )
- All forms and media ( web-site, phone, email, fax, orders, complaints, returns, etc. )
Truly listening requires that you obtain input from each customer touch point, integrate this information, internalize, analyze and…respond !
Responding to customer input requires that you take the results of the prior steps ( obtaining and analyzing customer input ) and :-
- Socialize internally to ensure cross-functional awareness of customer sentiment and needs.
Perform response planning which includes defining :
- Customer segment and account specific strategies to improve the customer experience.
- Clear ownership for delivering on necessary improvements.
Establish organizational goals and objectives with regards to improving customer success factors ( customer satisfaction, retention, revenue, profitability, share of wallet, etc. ).
Update the customer-base with the following :-
- This is what we heard
- This is what we have done
- This is what we have planned
Taking Your Business to the Next Level
Wouldn't you like to achieve the following successful business relationship with the majority of your customer base ?
Several members of your firm are meeting with a very demanding account. The key decision maker ( CIO ) is in attendance. The CIO’s team shares some fairly complex requirements to take the relationship to “the next level.” The CIO ( your customer ) states “if we are asking you to do anything that would make our relationship unprofitable for you, please let us know. We are invested in your success. So, the key is to make sure we clearly articulate our needs, enabling you to respond with a solution that you can effectively deliver.” True story – a great ( win-win ) relationship !
The result of aligning your resources to respond to the ever changing needs of the customer will be the building of mutually profitable relationships. Focus on the customer and your bottom-line will naturally improve. Focusing on your products and operational efficiencies ( navel staring ) will only alienate customers and ensure that your firm’s products and services remain a commodity where price is the key differentiating factor.
If you are considering embarking on the journey to becoming customer centric a logical first step is to take a baseline, performed by an outside objective resource, to determine where you are today on the path of Customer Centricity. Upon doing so, a road-map can be defined to pragmatically close the gap between where you are and where you want to be.
© Copyright, Craig Bailey, 2005