Is your company “customer centric?” Of course it is. The term is like motherhood and apple pie—everyone agrees it’s a good thing and can claim to be customer centric to some degree.
The problem, of course, is that customer centricity is such a vague expression. Last week I organized a meeting in London with CustomerThink authors — all industry thought leaders in (as one person put it) “Customer Everything.” We had a spirited debate about customer-centricity but there was no consensus about what exactly it meant.
Furthermore, as a group we found it difficult to come up with more than a handful of companies that we believed were customer centric. Still, companies like First Direct, O2, giffgaff and Burberry were thought to be good examples of UK-based companies. And globally, Amazon.com, Southwest Airlines, and Zappos were mentioned.
Maz Igbal did a nice job summarizing the discussion in this post — I encourage you to read it and the comments. Maz personally sets a very high bar when he defines being customer-centric as “authentic care” which is exhibited as follows:
“when you are confronted by the choice of doing what is right for you at the expense of the customer or doing what is right for the customer even if it costs you, then are customer-centric if and only if you do what is right for the customer and take the hit.”
Other points of view
Some think customer-centricity is like buying a boat. You know, that hole in the water where you pour all your money, never to see it again! Because you can never satisfy all customer demands, and should not even try.
CEM expert Sampson Lee goes so far as to say: “Customer centricity is not the solution of the problem. Customer-centricity is the problem. Customer-centricity is wrong and must fail.” Why? Because: “Trying to satisfy most needs of customers, you and your rivals make yourselves more like each other.”
Sampson is right. Just reacting to every request that customers make of your business, without consideration for the brand you want to build and the customers you wish to serve, is a recipe for disaster. Fortunately, I’ve yet to run into a business leader who takes such an extreme position.
OK, what about CRM? I used to position CRM as a customer-centric business strategy and some still do. But get outside the guru circle and you’ll find most business people think CRM is about tools to enable more targeted marketing, selling, and cost-effective service. All of this more accurately defined as Technology-Enabled Relationship Management (TERM) by Gartner, before CRM caught on as the industry buzzword in the late 1990s.
More recently, IBM defined CRM as “the technology, the tool, the process of extracting value from customer relationships.” What the market now thinks of as CRM is really just an evolution and integration of direct/database marketing, SFA and service optimization. That’s not a bad thing — when we study top-performing companies, they all do CRM really well. But if your CRM project is only about maximizing the return on your customer base, it can leave customers asking, “What’s in it for me?”
In the past few years, CEM has stepped into that void, and for me it’s a welcome step towards delivering value that customers care about. And yet, mindlessly trying to optimize every touchpoint in the name of a great experience makes no sense, as Sampson correctly points out. CEM leaders also need to practice CRM, which means focusing resources and understanding the ROI.
What, then, should we make of “customer-centricity?” One retail executive recently told me he hated the term because it was just a platitude. We’ve all seen phrases like “The customer is always right” or “The customer is King.” Looks great on posters, sounds great in a speech, but is that all there is to be customer-centric? I certainly hope not.
Four stages of maturity
My point of view, honed with nearly 15 years of research (and countless debates), is that companies tend to fit in one of four stages of customer-centric maturity.
As you can see from this diagram, I see the customer-centric journey like climbing a mountain, because the terrain is more difficult, the air is thinner and the competition more scarce as you reach for the Summit! You’d better be strong and really committed to make the journey.
In my research I’ve found the vast majority (roughly 70%) of companies at the bottom two levels. Most companies try to focus their marketing/sales/service on customers to extract the greatest value. Some ask feedback so they can fix customer service and other problems.
But despite all the rhetoric about customer experience, delighting customers and innovating, it’s rare in practice. That’s why there are so few great examples in the upper stages — Customer-Engaged and Customer-Inspired.
Here’s how I define each of these maturity stages:
- Customer-Focused: “We know our customers and what they buy, and can optimize marketing, sales and customer service activities to generate more revenue and profit for the company.”
This is where most CRM efforts start, and end. It’s not really about the customer, it about the customer’s money! A classic example of this is Ryanair, which by all accounts is successful with a low-cost strategy aimed a very specific segment of the European market. Yet, passengers have little good to say about their experience. Goes to show that price can and does matter, and knowing your target market is crucial.
- Customer-Driven: “We regularly get customer feedback, prioritize key issues and work to improve customer satisfaction with the products and services we sell, to minimize customer attrition.”
In the past few years we’ve seen a rush to gather feedback and fix customer problems, with Voice of Customer initiatives using Enterprise Feedback Management (EFM) technology. In part to differentiate, but let’s be honest, the emergence of the social customer has made customer satisfaction a mission-critical issue. Just ask United Airlines.
Unfortunately, I find most companies stuck in “fix it” mode, and haven’t figured out yet how to innovate experiences and create a real emotional bond. One example is Sprint, which struggled with quality of service (e.g. dropped calls) and customer support issues that caused customers to churn. They eventually fixed both and it’s brought them back to a competitive position, but just that. “Not screwing up” is not enough.
- Customer-Engaged: “We focus on a long-term relationship and strive to make an emotional connection with customers, by providing delightful experiences that create advocates.”
When I think of long-term relationships, my mind wanders back to my days at IBM. While products were not always great, customers trusted IBM to stick with them over the long term, and there was two-way dialog especially with larger accounts. Cisco has a similar mindset. In a recent discussion with an executive there, I learned they regularly assess what drives customer loyalty and make adjustments.
For B2C, Zappos is the oft-quoted example because founder/CEO Tony Hsieh has made amazing customer service a differentiator and integral to their culture. To the point that I once bet someone $100 that if they contacted Zappos about a problem, they would be happy with how it was handled. I didn’t lose my bet!
- Customer-Inspired: “We think deeply about what customers are trying to accomplish in their business and personal lives, and create new ways to add value before they ask!”
In my research, I found that less than 10% of companies reach this stage. Those that do earn outsized returns. Of course Apple is the quintessential example. Despite the folklore that Steve Jobs didn’t do customer research, the fact is that Apple worked very hard to understand what customers needed and desired, then innovated to produce a string of hits starting with the iPod more than a decade ago. Meanwhile, Nokia, Sony, RIM and many other former leaders missed opportunities to integrate consumer electronics and mobile devices.
Another great example is Homeplus — Tesco’s attempt to enter the South Korean grocery market. Tesco researchers found that busy South Korean workers viewed shopping as a chore to be done at the end of a long day — in other words, they just wanted the goods, not the in-store shopping experience. So Tesco created a virtual store in subway stations where consumers could view and order groceries to be delivered straight to their home.
Now, you may not agree with my labels, and that’s OK. What’s important is the progression from being a customer-focused but company-centric organization to delivering customer value based on a deep understanding of your customers needs, wants and desires.
How do your customers view your business?
All of this, of course, is still looking at customer-centricity from the company’s point of view. Customers only care about what they receive and perceive.
Companies at stage 1 — Customer-Focused — are generally not perceived as customer-centric by their customers. So while it’s a necessary “base camp” for companies to reach, treating customers as targets doesn’t engender real customer loyalty.
From a customer point of view, you have to at least reach stage 2 — Customer-Driven — to be perceived as customer-centric. It’s been amazing to me how many CRM projects claim to be about customer loyalty, but they don’t include a Voice of Customer initiative. It’s telling that VoC / EFM is most commonly associated with CEM, not CRM.
To sum up, please keep in mind that:
- Customer-centricity is a vague expression, so be sure to define it and what the stages or milestones mean to your business.
- Being customer-focused is a start, but to create real customer advocates you’ll need to listen and move beyond fixing problems
- Your customers won’t tell you exactly what you should do to lead your industry. You’ll need to figure that out for yourself.
In short, let your customers inspire you to greatness!