Customer Centricity: Revolution or another fluffy buzzword?
Customer (noun) a person who buys, with whom one has dealings.
Centricity (adj) central, situated at the center
No single company would ever claim that customers are not important to their business. Most of them (if not all) are usually stating in their annual report, mission statement or during employee meeting that their company is customer oriented, customer focused or customer centric. You can even find these statements printed on posters and hung on walls in their offices. The reality might be different as rightly said by Thomas Levitt (1960), “It is not surprising that, having created a successful company by making a superior product, management continues to be oriented toward the product rather than the people who consumer it”.
In The Consumer Conversation report published by Econsultancy in association with IBM experienceone, only one in three consumers believe that their favorite companies understand them. The dramatic conclusion for brands is that brands’ belief in the strength of their customer experience doesn’t line up with their customers’ reality.
Historically, firms have tended to be product centric. Their attention were on manufacturing superior products rather than on being oriented toward the purchasers and users of those products.
Their focus for creating value is to develop, enhance and reinforce their capabilities around the same value chain approach:
Value= inbound + transformation + outbound + Process + Customer
The IT revolution in the latter part of the 20th offered a great opportunity for building customer relationships with personalised treatment of each customer. Millions of dollars have been invested in CRM package and IT infrastructure for marketing services; CRM, Direct Marketing ….
That approach is based on one principle: continuous improvement of the company around its production capabilities. Interestingly enough, this continuous improvement approach created some misalignment and even chaos because all departments wanted their processes to be more customer-focused. Even the role of Marketing became blur and spread across multiple functions.
Despite focus and investment, the failure rate of CRM projects was very high and most of the companies never created value for their customers. Companies were and are still stuck in their product-centric paradigm.
Today, there are few trends putting firms’ profits under more pressure: intensifying pressures to improve marketing productivity, increasing market diversity, intensifying competition, demanding and well-informed customers and consumers and accelerating advances in technology.
The impact of these trends is unfortunately increasing and could become devastating for some companies.
So, the question is:
Is it still possible for a company to protect and generate value through a product-centric model?
If you answer Yes to this question, you consider that you can achieve your target with the product centric model. Customer-centricity is another buzzword and you shouldn’t too much stress about it.
But if you truly believe that the only way to remain profitable in the future, is to start flipping your value chain and stop investing in a 60 years old business model (because improvement has a limit). Then customer-centricity is worth to be considered. This new business model is based on a reverse approach for creating value:
Value=Customer + Process + Outbound + Transformation + Inbound
Customer-Centricity is therefore the willingness to start this transformation and really, really put your customer as priority one of your business model.
Customer-Centric or Product Centric
If you answer yes to these 7 statements, you have taken the customer-centric road!
- All your business processes are designed for helping your company to create value for your customers.
- You calculate in customer value not in boxes sold.
- You think lifetime and not quarter when you look at your customers.
- You are ready to change your business model if it is what customers want (and if it brings value to your company)?
- You are ready to build systems that are helping your customers, not your employees with your customers?
- You are you ready to let your customers defining your products.
- You don’t have a gap between what your customers say and what you say.
Levitt, T. (1960). Marketing myopia. Harvard Business Review.
Originally published at www.bouty.net on May 8, 2015.