Customer Centricity Link to Customer Experience ROI

What do you think of this theory: As customer-centricity of an organization increases, customer experience management return on investment also increases.

Exploring the Theory
This theory originated as an observation of my own experience as a customer and results of studies that contrast top management’s ratings of their own customer-centricity against the perceptions of those executives’ customers. Typically five times as many executives think theyre customer centric relative to the number of customers who agree.

Recently I explored this theory with customer centricity experts Jeanne Bliss, Jill Griffin, and Dick Lee in a roundtable discussion that was recorded live on Focus.com. Here are the highlights of our conversation:

Defining Customer Centricity
How do you define customer-centricity?

• The orientation of a company to the needs and behaviors of its customers rather than internal drivers such as short-term profit, cost-cutting, operational metrics, etc. (Griffin; Wikipedia)
• The degree of alignment between the company’s metrics (what people are rewarded and recognized for) and processes with official statements about customer focus. (Bliss)
• Creating new value for customers in a way that creates value back for the company. (Lee)

Challenges of Customer Centricity
Why is it hard to be customer-centric?

• Companies build competencies by operating areas, also known as silos (because they stand alone without interfacing with other operating areas). So the work is to connect the silos to deliver a customer experience. (Bliss)
• It’s hard to convert to cross-functional thinking that aligns process to strategy and then technology to process unless the organization focuses completely on strategically creating new value for customers – then the old ideas can be readily shed. (Lee)
• Context is essential, reminding people why they’re measuring what they’re measuring. For example, the reason for focus on operations or employee satisfaction is the fact that customers pay paychecks, and if the customers stop buying your products and services, you won’t have the revenue to measure or operate by. (Hunsaker)
• It’s easy to get preoccupied with satisfaction results and regression analysis – it becomes more about a statistical exercise rather than recognizing that at the end of the day, it’s a living, breathing customer who chooses to do business with you, or not, based on what you have done for them. (Bliss)
• You have to believe in your gut that if you do the right thing for customers, they’re going to do the right things back for you. If you don’t believe that core proposition, you can’t go forward. (Lee)

Breaking Customer Centricity Barriers
Among the companies that have good ROI on CEM investment, how did they become customer centric?

• Most of the customer-centric companies were founded that way, such as FedEx, Nordstrom, Amazon, Zappos. Fewer companies have made the transition to customer-centricity, for example Procter & Gamble and USAA. The transition is very difficult and it takes a lot of work to get a company out of an inside-out state to cross over to outside-in. (Lee)
• CEO-led initiatives and talking about silo connections will not cause customer-centricity until the front-line employees truly believe that the company is really there for the customer; otherwise it doesn’t snap into place. I’ve seen a seven-year transition that ultimately made that happen last week. (Griffin)
• Companies that are customer-centric are typically the ones that have been successful in integrating strategy, process, and technology. Some companies believe that if they hire and train people well, they’ll be customer-centric, but employees’ work, along with technology support, must also be changed before it all pulls together. (Lee)
• The executives in the middle of the organization really need to be engaged to understand that the purpose of the business is to grow their customer assets, and attach that to the delivery of an experience. It’s best to break this effort into 90-day plans and then work the plan, engaging people throughout the organization to build this thinking. (Bliss)

Necessity of Paradigm Shift

• Organizational design and change management are critical components of getting to customer-centricity; a disruptive element is necessary to acknowledge that the company is organized to do business in an internally focused way, and to address the prevalent attitude: “Well, I know we have to change, but we can’t stop doing what got us here.” (Lee)
• As I’ve conducted training for many corporate boards of directors, it’s been interesting how little I’ve heard the word “customer” used by them. And I’ve certainly been surprised by the absence of customer metrics that would be propelled from top management into the board room. They typically have a great deal of financial measurement, but not a lot of it applies to customers. (Griffin)
• Quarterly orientation can lead to abandonment of customer-centricity efforts. This is a long path of transformation and it’s not about immediate quarterly change. Persistence is necessary to stay the course. (Bliss)
• One of the challenges is to step away from the day-to-day activities to allow big-picture thinking. (Lee)
• Pre-occupation with value in the here-and-now hinders customer-centricity; appreciation for value migration on the next horizon, and preparation for it, is essential. (Griffin)
• This can’t be done by a single operating area; people have to align themselves across the current process, improve it, and take it to the next level by re-thinking the experience and all of the different parts involved in it. For example, billing isn’t just billing – it’s also communications, process, operations, marketing, customer service, and IT; so all of those operating areas need to collectively re-think the experience and align the process to the desired experience. (Bliss)

False Understanding of Customer Experience Management!
From today’s discussion, it appears that if companies are defining customer experience management primarily by marketing, sales and service, they’re missing what will drive customer-centricity and ROI on CEM, as the focus of our conversation has been actionability, operational improvement, holistic view, structure and accountability. (Hunsaker) Do you think there’s a disconnect in industry today about exactly what customer experience management is?

• I absolutely do; I think that people still equate it with something like customer service, and it’s much bigger than that. I am meeting very few companies right now that really see customer experience in the totality that it truly is. (Griffin)
• If a customer experience program is aimed at public relations, advertising, and marketing then you’re trying to shape what the customer does; however, outside-in thinking is the reverse: it’s about letting customers shape the company. (Lee)
• Think about the evolution of it: we had customer service, TQM, customer relationship management, and at every stage people have nibbled and haven’t stayed the course, and as a result, have abandoned it and haven’t seen real change. Customer experience is a discipline. It’s a way of re-thinking the business, but you need to do the hard work of re-aligning how you work, aligning the silos, changing the metrics, connecting the processes of the operation, and making it relevant and do-able. To make it work, you have to commit. You have to stay the course and be there for the long-term transformation that’s involved in making it work. (Bliss)
• The vast majority of barriers are in the flows: work flow, information flow, communication flow, data flow, and that’s where the faults occur. If you fix that, everything comes along with it. (Lee)

A Way of Life
In summary, what we’ve described today is a way of life.

• Customer-centricity is a way of thinking and doing that puts the customer at the center of all you do; it’s the way you operate in your organization, enterprise-wide.
• Customer experience management is more than a journey, more than an initiative, but a way of life.

If you are striving for higher ROI on your customer experience management efforts, we hope your organization adopts the tried-and-true principles and techniques we have discussed here. We welcome empirical data to prove our theory, and your comments as well. (Hunsaker)