Five Steps to Real Customer-Centricity

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Many companies talk about customer-centricity. They tak about it in their annual reports, they talk about it in their analyst briefings, and their CEOs talks about it all the time when they are interviewed. But talk is all they do. A recent port on Customer Centricity: Discovering What Consumers Really Think of Customer Service by customer data specialists Dunn Humby shows the majority of companies score negatively for customer-centricity.

This lack of customer-centricity is both a problem and an opportunity. It is a problem because it fails to leverage the customer-equity available to companies that become customer-centric. But it is also an opportunity because most companies are content with just saying that they are customer-centric in their annual reports, without ever actually becoming customer-centric. Customers, of course, know better than to believe all the corporate bullshit. And today they can talk to pretty much everyone about their customer service catastrophes. Who is going to choose United Airlines in the near future when they have a reasonable alternative. Any company that starts to become customer-centric benefits from their competitors’ sloth.

The move from product to customer-centricity has been widely discussed. It typically goes through a number of steps including:

  • Step 1: Internal Social Networks
    Customer-centricity typically starts with offering support to internal social networks of staff who already work together to deliver a customer-centric value proposition. No matter how product-centric a company is, there are always a few networked individuals who believe in going the extra mile for customers. Companies starting out on the journey towards customer-centricity should start by finding out who these people are and supporting their efforts.
  • Step 2: Cross-functional Teams
    The next step is cross-functional teams that formalise the collaboration of the internal networks. Once an informal network establishes itself, the company should allow the network to formalise the relationships by forming a cross-functional team and giving them the resources to drive more effective collaboration around delivers the customer-centric value proposition.
  • Step 3: Customer-Centricity Coordinator
    The next step involves appointing a Customer-Centricity Coordinator who takes on formal responsibility for driving customer-centric collaboration across different teams. Things start to get serious now. Collaboration isn’t just about organising meetings, but about establishing a common view of the customer, crafting a shared customer strategy and developing a coherent customer experience that pulls all the customer-centricity levers.
  • Step 4: Matrix Reporting Organisation
    The next step develops a matrix organisation with nascent customer segment teams reporting to both product and customer management. This is often where things go badly wrong. Matrix organisations are notoriously difficult to manage effectively. However, if companies have carefully followed the step-by-step development path outlined in the first tree stages, developing their customer-centricity along the way, the chances are that they will already have learned how to avoid death by matrix management. And finally,
  • Step 5: Customer Segment Managers
    The final step creates bona fide Customer Segment Managers responsible for all aspects of customer experience delivery. As my earlier blog post on How Customer-Centricity Drives Profits pointed out, customer-centricity is not about being nice to customers. Far from it. It is a hard-nosed approach to creating a reliable delivery system that provides value to those customers that are economically profitable. Customer Segment Managers give profitable customer segments someone who will organise the whole company to deliver the right products on their behalf. The ones that help them get important customer jobs done better. For the most economic profit, naturally.

Congratulations, you are now a customer-centric company. And if you have taken the time to develop all the capabilities and micro-foundations
required to support each stage of the journey, you will be highly adaptable company too. Today’s profitable customer will not necessarily be tomorrow’s profitable customer. Just ask all those companies whose customers changed their behaviour during the current recession and who are now bankrupt.

What do you think. Are you developing the capabilities for real customer-centricity? Or are you just moving the pieces around the organisational chess board.

Graham Hill
Follow me on Twitter
Customer-centric Innovator

Further Reading:

Dunn Humby, Customer Centricity: Discovering What Consumers Really Think of Customer Service

YouTube, United Breaks Guitar

Graham Hill, How Customer-Centricity Drives Profits

David Teece, Explicating Dynamic Capabilities: The Nature and Micro-Foundations of Sustainable Enterprise Performance

11 COMMENTS

  1. Read a lot about customer-centricity, but not much focused on the people aspects of it (yes, people changes demand systems and processes – right?).

    This is a very interesting model. Maybe too early for me to brandish it as brilliant, need to take it to task and figure out where it goes and the caveats and gotchas inherent to it (you know they all have them – right?), but at first light is very good.

    Will take it for a mental spin and see what happens.

    Thanks

  2. Hi Esteban

    Thanks for your comment. It is always nice to hear what you are thinking.

    Much of what I learned about building customer-centric organisations in the early days I learned from Prof Jay Galbraith. See Jay’s excellent workbook ‘Designing the Customer Centric Organisation’ for more details.

    Designing the Customer Centric Organisation
    http://bit.ly/2oC5Do (Google Books)

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  3. Graham,

    100 days is not the answer 🙂

    Very interesting indeed, but there is a time, resource and cost element. In the wonderful economic state we are in, when you mention terms like cross functional and matrix organization to bean counters, they roll their eyes. You did offer a bit of warning on the matrix organization piece, but it is a pretty big hurdle in many organizations today – unfortunate, but reality.

    The steps depicted make sense to me, but how long to suspect the journey is to realize the vision? What are the characteristics of the organizations where you see this as being successful? Finally, is it an all or nothing? Meaning, what happens if you get stuck at step 3?

    In fairness, if some of these answers are in the links you have already provided, telling me to RTFM is fair game.

    Best,

    Mitch Lieberman
    @mjayliebs

  4. Hi Mitch

    Thanks for your comment. And your question too.

    You are right. You are not going to go from a product-centricity to a customer-centricity in just 100 days. But you can get started and lay the groundwork in that time.

    Like SocCRM, customer-centricity is a journey. The knowledge your learn, the skills you develop and the experience you gather along the way are every bit as important as arriving at the destination. And every bit as valuable.

    Each step along the way provides a guide to what you should be doing. For example, Step 1: Internal Social Networks is about improving what is already being done by self-organising groups of staff within the company, despite any difficulties unwittingly placed in the way by management. As Robert Cross has shown, for example, in driving innovation at Masterfoods, social networks can be energised through the intelligent application of Social Network Analysis.

    But this is only part of the big picture. Companies should look to develop all the capabilities and micro-foundations required at each step along the journey. Even at Step 1, this may mean making making subtle changes to communication systems, information sharing, collaborative work processes, roles & responsibilities, performance measure, the working climate, and other assets and resources. It is these changes together which enables you to get the most out of the internal social networks and to decide whether to move to the next step.

    Each step of the customer-centricity journey could in principle be carried out in 100-days or less. And each step should create tangible value for the company, its customers and its partners, by improving business productivity. Just where each company stops on the journey is up to management. The five steps are not mandatory. Just don’t stop to admire the view too long at each step on the journey. You might find customers, partners and staff bunching up behind you, pushing you on, eager to make progress.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  5. This post was very informative.

    I especially like step #1: internal social networks. It is crucial for companies to recognize the importance of creating open communication amongst their employees to not only learn which employees are shining stars but also to take note of which ones need to follow suit. More importantly, communicating with one’s employees highlights ways to make the customer service experience more plentiful and positive.

    In my opinion, employers should administer surveys to their employees so to gain insight on their opinions about the customers’ needs and moreover to illuminate some of the best customer service practices. This is a full-proof method to not only empower your employees to have a say in the organization but more importantly to gather information from the people who know your clients best!

  6. Amazing that with now so many years of people building software that it still is not being made for the customer needs.. Software should be 1 easy for end user, and 2nd do what it is supposed to do.. not so much bells and whistles

  7. This lack of customer-centricity is both a problem and an opportunity. It is a problem because it fails to leverage the customer-equity available to companies that become customer-centric. But it is also an opportunity because most companies are content with just saying that they are customer-centric in their annual reports, without ever actually becoming customer-centric. Customers, of course, know better than to believe all the corporate bullshit. And today they can talk to pretty much everyone about their customer service catastrophes. Who is going to choose United Airlines in the near future when they have a reasonable alternative. Any company that starts to become customer-centric benefits from their competitors’ sloth.
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  8. Best part of this post is “saying that they are customer-centric in their annual reports, without ever actually becoming customer-centric. Customers, of course, know better than to believe all the corporate bullshit. And today they can talk to pretty much everyone about their customer service catastrophes.”

  9. Customer service should not just be a department but an atitude and a way of doing business, having a Customer-centricity coordinator taking the responsibility for driving collaboration is a good idea to be implemented not just across different teams but the entire organisation.

  10. Totally agreed that customer-centricity is both a problem and an opportunity. But customer-centric is a way of doing business with your customer in a way that provides a positive customer experience before and after the sale in order to drive repeat business, customer loyalty and profits. And a customer-centric company is more than a company that offers good service.

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