The ultimate arbiter of customer centricity has to be the customer. Many businesses shout in their advertising and emblazon on the back of their delivery vans that they are customer-focused or customer-driven or that the customer comes first with them. Yet, their customers may experience and believe something quite different.
There are at least two problems with making a public declaration of one’s customer centricity. In the first place, you are setting yourself up for a fall — as soon as something goes wrong with service delivery or product quality, the customer will jump all over the fact that “you said you were customer-centric, well this doesn’t seem like you give a damn. If you really cared about me as a customer, you would… etc. etc.” Remember Ford’s claim that “Quality is Job #1”? It didn’t take customers long to set them straight.
Second, customer centricity means different things to different people and it’s extremely difficult to appear customer-centric to everyone. For some, all you need to do is show up on time and offer a great price. For others, you will need to anticipate their needs, keep in touch, and leave an impression that you genuinely care about them.
Truly customer-centric organizations have invested considerable time and money in gaining a deep understanding of what customers are trying to get done, what they need to accomplish, and why they are buying their products or services. In other words, they understand customer context better than other firms do. And, they constantly give the impression that they are just as interested on the outcome as the customer is. They communicate their customer centricity every day through their employees and understand that a company can’t be customer-centric — or at least not genuinely so — unless its employees are.
Just because you say you are a customer-centric company in your public pronouncements does not mean that your employees buy in. In fact, I’ve encountered situations in companies that publicly profess their customer focus where employees are downright cynical. To be customer-centric, a company has to be employee-centric because the employee experience translates directly into the customer experience.
How will you know if your customer centricity is working? You have to measure the right stuff. You can’t infer customer centricity from customer satisfaction scores or from purchasing behavior.
Customer centricity and employee engagement translate into long-term profitability. That’s generally accepted these days; but how to get there? There are a load of intermediary variables that must be examined. There’s little point asking employees if they are customer-centric, because 90% will say they are, as will 90% of executives. We have to ask the customer by posing some different questions. Most of these will relate to how they feel in dealing with the company and the impressions they get from the people with whom they deal.
If you are really committed to being a customer-centric company, then you have to involve your employees, every one of them. Customer centricity has to be internal and must be part of the DNA of the company. And, you will need to measure your performance in different ways, using techniques that will let you know just how customer-centric your customers think you are and whether they even notice your customer centricity.
Jim
Your words resonate with me a great deal.
It reminds me of the time years ago when British Rail boasted on TV of how they had put all their staff through charm school. Shots of uniformed staff helping elderly ladies onto trains only served to raise everyone’s expectations. Unknown to the public, British Rail cancelled the programme at the last minute to cut costs, thereby irritating already hard-pressed staff further and further reducing the miserable level of service.
As the old saying goes, ‘A fish rots from its head’.
Graham Hill
Independent CRM Consultant
Interim CRM Manager
I think we all have an example or two of this. Mine is Maytag, where I had a rude customer service rep who, when I asked to speak to a supervisor, told me, “My supervisor doesn’t take calls.” When I was fuming about it to my husband, he reminded me that Maytag claims only to be dependable. Because the company doesn’t expect things to go wrong, it can afford to cut corners on the customer service side!
Regardless, whenever I see the commercials showing the Maytag Man with nothing to do, I get mad all over again.
Gwynne Young, Managing Editor, CustomerThink
Jim,
I think that you raise a very interesting point. How do you and others know when you are customer centric? Most of the definitions commonly used are somewhat soft and difficult to consistently measure. Perhaps we need to turn it around and give specific examples of what a customer centric company will not do. Maybe a set of measurable standards called – And they don’t do that.
Malcolm Wicks
Jim. This is a great reading. I always preach about the employees being like the customers as they without we knowing sell the products. Here is one example. If the seat of the auto is not set properly the employees will tell the customer that this needs adjustments at times and he will be too glad to set the seat properly whenever the customer calls.
I thank you
Firozali A. Mulla MBA PhD
P.O.Box 6044
Dar-Es-Salaam
Tanzania
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Malcolm
You raise the fundamental question of how we can know when we are customer-centric or, more correctly, when we are seen to be customer-centric by the people who matter, our customers. If one starts from the premise that the customer knows what works and what doesn’t, then it is a quite straightforward process to develop an effective measurement system that will allow the firm to determine how well it is doing in delivering on a promise of customer centricity.
Virtually every project in which I am involved these days reveals that, from the customer’s perspective, customer centricity is not about great prices or even about product quality – those things are taken for granted by customers in many industries. The customer knows and feels when a company is genuinely interested in her. Customer centricity, as seen by the customer, is about how the company conducts itself, how it “behaves” toward its customers, how those customers are treated, and how they feel as a result of that treatment. The customer’s view of customer centricity is much more about the experience of dealing with the firm than it is about what that firm sells or the price it charges.
Armed with that insight, it is possible for a company or its market research supplier to devise a process of measuring what matters to the customer. My work has shown time and time again that companies that score high on a customer centricity scale as defined by the customer will reap rewards in the form of greater customer loyalty and the positive behaviours that follow.
Jim Barnes
Jim, Malcolm
An interesting question and an interesting response.
Jim’s response reminds me of the early days of CRM when Fred Reicheld published his now infamous article ‘Zero Defections: Quality Comes to Services’. The article stated that loyal customers were more likely to repurchase, to pay higher prices, to recommend to others and so on. Reinartz & Kumar refuted this a few years later when they showed that loyal customers were not necessarily more likely to repurchase, to pay higher prices, to recommend to others and so on.
The truth is that the world is much more complex than Reicheld’s simplistic article suggested. It all comes down to the return on an investment in customer management capabilities for particular customer groups. For example, it is now well established that there is often a much higher incremental return on investments in e.g. marketing to middle loyalty/middle value customers who only spend a proportion of their available income with you, than to high loyalty/high value customers who are already practically handing over their entire paycheck to you.
The same logic applies to investments in customer-centricity too (whatever it really is?). Don’t just throw money at the nebulous concept of customer-centricity, instead, spend it on those customer-centric capabilities for those customer groups that you think will deliver the highest return. And will build reusable customer-centric capabilities that can be applied to create value from other customer groups too. That may mean investing in improving front-line capabilities, e.g. the contact centre, but it may equally mean investing in back-office capabilities, e.g. in developing families of modular services. You can always pilot small scale customer-centricity experiments if you are not sure where the best return is and profit from the learnings gathered.
There is far too much demand-side fluff in customer-centricity at the moment. It feels great but it lacks rigour. It is time for a harder look at what customer-centricity really is, at the capabilities that enable it and at the economics of customer-centricity.
Graham Hill
Independent CRM Consultant
Interim CRM Manager
I think Graham’s comment is spot on, which is why CRM processes and systems exist in the first place, so organizations can attempt to measure which customer-centered policies are effective and which ones are not.
Our organization went through a painful growing period where we tried to apply the same customer service standards for all levels of customers–only to realize that the return on investment was wildly divergent. Not that we WANTED to offer different service levels (we wanted to treat customers equally), it was simply a matter of survival.
We needed to focus first on the services and values that would bring us the best return, while also maintaining our clients’ needs. Then we could reach outward by bringing more and better services to the table.
-Steve
InsideSales.com
See the MIT research study that demonstrates the value of Web leads decreases 1000 percent in the first 24 hours.
Steve, Graham, Malcolm et al
An interesting discussion, but it seems to me that, as with many such discussions, it founders on the problem of definition. What is customer loyalty? The answer, as it often does, depends on who is doing the defining.
If Reichheld can be characterized as simplistic (as he most assuredly is when he promotes his NPS), then Reinartz & Kumar are doubly so. A re-read of their widely-quoted HBR article will show that they defined customer loyalty almost entirely in behavioural terms. To them, a loyal customer is one who shops regularly at a particular store or who buys a certain brand every week. What they are talking about is repeat buying or customer retention, not loyalty (at least as I define it). Such “behavioural” loyalty as Reinartz & Kumar have discussed it is typically driven by convenience, low prices, an absence of attractive competition, and other such factors.
When I speak of customer loyalty, I am defining it from the perspective of the customer. So defined, customer loyalty implies a close connection with the firm or brand. Customers will reject the notion that they are loyal to a company just because they buy their products all the time. They may well be loyal, but they are not necessarily so. Loyalty does involve buying from the firm on a regular basis; but repeat buying does not necessarily mean loyalty.
Are all repeat buyers loyal? Certainly not. Do all customers have the potential to become loyal? Certainly not. I completely agree that a company should focus their loyalty development efforts (their customer centricity) principally on those customers who offer the greatest potential to become loyal. The problem is that most companies do not have the resources to be able to determine which customers represent the greatest potential value. Where they do have such resources, as enabled by customer databases, most firms resort to defining customer value (as Reinartz & Kumar did) in RFM terms — the recency, frequency and monetary value of their behaviour. Those who buy most often or spend the most are not necessarily the most loyal; but that is a convenient definition of loyalty.
I work closely with a large number of SMEs every year. Most of them intuitively understand loyalty and what it takes to engender it. Most lack the ability to calculate the ROI on their interaction with customers. In fact, most don’t think in those terms. They understand what it means to be customer-centric and they conduct themselves accordingly.
I worked recently on a project that involved doing focus groups with owner-managers of SME companies. During one of the groups, I asked participants to complete the following sentence: “Why can’t all of our suppliers be more like _____?” I was expecting them to answer with names like FedEx, Dell, or Office Depot. Instead, two of the owners replied in unison “US”. What can’t our suppliers be more like us? We know what it takes to please customers and to drive loyalty.
As we all know, SME owners are closer to the customer and have a greater likelihood of knowing what works and what doesn’t. The challenge is for larger companies to emulate them.
I’d like to suggest that Steve’s last paragraph should actually be turned around, in the name of customer centricity. Rather than focusing first on the products and services that give US the best return, I would think that a truly customer-centric company would start with understanding customer needs; not a simple task in itself. Focusing first on what delivers the best for us suggests to me a rather company-centric view of customer centricity.
Jim Barnes
Jim,
Thank you for clarifying that in your reply, I think my response attempted to say that, I may have worded it poorly.
I 100 percent agree with your statement that instead of focusing on return, focus on the customer and the return will follow.
I think my point was that for some organizations, the first step is the harsh reality that in some cases they cannot “give” every single segment of their customers exactly what they want, at least initially as they align their business practices.
I think your follow-up asks the question, “Is that really true? Can you really not give every segment of your customers the service they need and deserve? Or is that just a cop-out by a management team that has not truly centered their business on the customers’ interests?”
Only the corporate management teams can really answer that question, but I think your follow-up very rightly points out that if you’re not building the company from the ground up to handle that question–and then make every practice of the company follow those principles–you may have larger issues to begin with. And if that’s the case, as you stated in the original article, just because you say you’re customer-centric doesn’t mean you really are.
-Steve
InsideSales.com
Customer-centricity will be the building block of successful enterprises of tomorrow. It will be one of the key levers that will drive their business growth and allow them to outperform competition.
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