What Should "Customer-Centric Business" Mean to the CEO?

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In June 2007, in Aptos, California, 16 of CustomerThink’s global advisors gathered for our annual Retreat. Each year we get together to discuss the top industry issues, how we can collaborate with each other and how to add value to this wonderful community.

In one exercise, the advisors broke up into groups, based on their field of expertise, to define how leaders viewed customer-centricity, based on their job function. How, for example, should CEOs view a customer-centric business? And what are the key activities and measurements needed to ensure that their organizations become customer-centric and achieve business goals?

Here’s an outline of how one advisor group at the Retreat defined customer-centric business, from the CEO’s perspective.

Definition:

A customer-centric business defines its mission as creating meaningful value for customers, leading to sustained competitive advantage and both short-term and long-term organizational success.

Key Activities:

Be a listening organization
Respond to the information
Be innovative and creative
Anticipate—ahead of the curve
Lead by example
Align business processes and technology

Measurements:

Short-term operational measures
Mid-level customer satisfaction
High-level loyalty/relationship measures
Measure all three

This is just a draft, open for discussion in our community.

What’s your take on what is a customer-centric business, including the activities and measurements needed to be successful?

Please add your thoughts below, and together we’ll make this a meaningful and useful definition for business leaders.

Thanks!
Bob Thompson
CustomerThink Founder


Jonathan Narducci
June 20, 2007
Principles

If a CEO is serious about creating a customer centered company then they have to develop principles that their company has to live by and to which they have to hold their enterprise teams accountable.

Principles like:

The CEO focuses company activities, those defined cross-functionally and those defined by each individual’s job, on how the activity impacts the customer’s success. The CEO uses this mechanism to tie the company’s business success directly to their customers’ successes. Successful customers make for successful suppliers.

Related to this, the CEO should make sure that the company’s value propositions are aligned with the goals that their customers are trying to achieve.

Value propositions are the promises a company makes to its customers about the performance of its benefits. Execution is the way the company keeps the promises. The CEO makes sure that value propositions are broken down into their “parts” and that each part is of sufficient quality to meet the goals of customers.

Because jobs start with the customer in mind, the CEO must direct its company departments to intimately learn about their customers’ businesses, for the knowledge gained is the real source of new value – customer needs, wants, issues, etc. Innovations and improvements should be developed with the goals of the customers in mind. Unique requirements are best discovered through acquiring this knowledge.

Related, the CEO relies on customers perpetually buying their goods and services to grow their businesses. So they make sure their departments learn why customers can fail, even if it has nothing to do with their products and services, and does what the company can do to prevent the failures. Failing customers have a hard time buying.

The CEO doesn’t ignore the competitions’ value but focuses on how they find “value” not the “value” itself, which usually points back to focusing more on intimate customer or market knowledge.

The CEO segments customers into groups defined by their “goals, problems, and/or issues.” And they further segment them into “best” customers, industry leading customers and loyal customers so they can target value propositions accordingly. Point is, value propositions are not centered around products and services but customer criteria.

The CEO must define and implement strategies so that they help institutionalize the concept of customer centered throughout the organization, making it “natural” for the enterprises to act with “impact on the customer” in mind.

To that end, the CEO has to recognize that a customer centered company needs to embrace new management skills, processes and tools as well. These “new” capabilities include:

Collaboration – with customers, suppliers, partners etc. so activities and value is defined from the same customer perspective.

Innovation that starts and ends with everybody, not just R&D – each employee, from top to bottom, has to be able to innovate and improve their jobs with the customer in mind.

Empowerment – see above.

Change management – because innovation and improvement is constant change, change management has to be integrated into the fabric of jobs.

Business process management – integrating processes with those of their customers will become prevalent in a customer centric environment.

I hope these ideas help continue the conversation.

Jonathan Narducci

CornerStone Cubed
Building Customer Powered Value


Francis Buttle
June 20, 2007
Organizational culture

It sounds like the global advisor assembly in Aptos was thought-provoking. Sorry I couldn’t be there.

There’s a lot of work that has been done on market-orientation in businesses and this can be very instructive for companies that want to become more customer centric, Essentially, this work suggests that market-oriented businesses collect and analyse customer- and competitor-related information and use it to design and create value propositions that have greater customer appeal than those of competitors. The keys are data, analysis and application.

Meanwhile, back at the office, the leadership behaviours of the CEO (does s/he ever get into the front line and serve customers?), formal systems (does the appraisal system reward customer-satisfying behaviors) and internal relationships (are sales and marketing talking to each other and sharing information?) are critical. The Groucho model of customer centricity , so called because it was developed over a series of meetings held at the Groucho Club in London, suggests that those 3 factors – leadership behaviors, formal systems and internal relationships – have a major influence on employee experience which in turn affects employee behaviors towards customers which in turn influences customer experience. Measures are available for each of these components of customer centricity.

Dr. Francis Buttle
www.buttleassociates.com
[email protected]


Jonathan Narducci
June 21, 2007
Comments Part II

Bob,

Here’s my attempt to define “customer centric:” Businesses have developed company-wide procedures, policies, and activities to ensure they are constantly researching and learning about each customer’s performance needs and matching them to the business’ value propositions and execution abilities to meet them, resulting in market success for both the business and its customers. It also means know your customers’ businesses as well as you know your own.

Also, “being a listening organization” isn’t enough. Organizations need to be a “questioning organization” as well and then listen carefully to the responses. And the questions can’t be focused on their business – i.e. “How do you like our products?” – but on their customer’s business – i.e. “Who’s your competition?” CEOs have to change their belief that they know what customers need. They have to reverse their belief that customers will (even be able to) tell them what they want. Questions are important.

This helps with “anticipate – ahead of the curve” as well. While companies keep up with technology, industry information, market shifts, etc. it’s still the customer who can give a “heads up” to the future by divulging their plans, exposing hidden issues, etc.

Concerning value – CEO’s have to convey, as a principle, “Our customers rely on our companies – its entire set of benefits and activities – to be an integral part of their value propositions used to advance their business.

Looking forward to reading what you and your readers think about these concepts.

Jonathan Narducci

CornerStone Cubed
Building Customer Powered Value


Michael Lowenstein
June 22, 2007
“Customer Centric Business”

Bob –

I was disappointed not to have been able to attend the retreat. My employee advocacy webcast occupied a lot of concentrated prep time, as well as very tight management; however it was highly successful.

Your list of activities and measures looks both well thought out and comprehensive, but I have a suggested addition for both components of how customer-centricity should be defined.

Activities – Build and leverage employee ambassadorship, i.e. attitudes and actions which reflect high commitment to the brand value promise, to the organization, and to the customers. This concept is very different than employee satisfaction, engagement, alignment or loyalty, yet it also incorporates the most actionable elements of these more traditional employee research techniques. Employees are pivotal in creating and sustaining customer centricity, and ambassadorship is directly linked to customer loyalty behavior.

Measures – Identify drivers of dissatisfaction, and eliminate them. Overall, as we’ve discussed many times, I’m less focused on creating high satisfaction as an end result, which has little proven correlation with customer loyalty behavior; however, dissatisfaction (in the form of poor transactional experiences, perceived lower performance over time, unexpressed or unresolved complaints, etc.), does correlate to negative customer behavor, including word-of-mouth. Dissatisfiers should receive a great deal of attention, given their undermining impact on the processes and culture of an otherwise customer-centric organization.

Michael


Doug Leather
July 18, 2007
“Customer Centric Business”

If we recognise that Customer Centricity is about the way an organisation designs and delivers a unique and distinctive experience to acquire, retain and enhance the value of targeted customers in a cost effective way (i.e. invest or spend appropriately according to customer value, both current and potential) for the benefit of customers, employees and other stakeholders then a CEO should ensure that businesses functions are suitably ‘joined up’ in order to deliver the desired experience. This requires a systemic approach grounded in the delivery of sustainable business performance, both short term and long term. We all know ‘intuitively’ that ‘managing customers’ – or should we say ‘managing the experience that we deliver to customers’ makes good business sense. The challenge then is to create competitive advantage that enables the sustainable business performance that we look for.
In order to deliver the business performance the organisation needs to build the capability to influence customer behaviour, i.e. encourage customers to become customers, ensure current customers remain as customers and have sufficient brand trust in order to have customers be open to utilising more service or product offerings from within the product and service portfolio.

To be able to influence customer behaviour an organisation must have committed customers. Customer commitment is more than customer satisfaction.

In order to have committed customers the organisation must deliver a unique and differentiated experience – if not the business is another ‘me too.’ We live in an increasigly commoditised world in which it is unlikely that an organisation can build sustainable competitive advantage through product, price, distribution or communication. It will be the experience (i.e. the blend of the physical use of the product and/or service as well as the emotions evoked in engaging with the organisation) that becomes the differentiator.

To successfully and proactively design and deliver a consistent experience across all customer touchpoints requires employees who are fully engaged with the brand promise and the brand values.

The organisational foundation must be able to support the elements previously mentioned so a customer centric business needs to be structured accordingly (if not able to be structured around specific customer types then measurements and KPI’s can be used to create the outcomes required to deliver the experience) needs to have the right level of business intelligence, needs the right leadership and culture, requires end to end process that is reviewed for continuous improvement etc.

When an organisation has a clear line of sight – as per the above then we have the foundation of customer centricity


Clement Kapp
August 8, 2007
CEM and CRM

I have studied every article and comment and downloaded the white papers that has been presented on CRM and CEM and it is regrettable that I must say that our industry in South Africa has not even got the basics in place. Although the automotive brand leaders do their best the dealership networks and role players do not understand or do not want to accept the changes.In our specific field of business which is Mechanised agriculture the concepts of CEM, CRM and basic acceptable Custmer service are foriegn ideas that is frowned upon and treated as some horrible plaque. CEM needs to supported by the CEO of any organisation and if his / her buy in is confirmed every single employee of the organisation needs to understand the purpose as well as the operational goals – Why are we doing this ?
CEM goes beyond the correct data in a file and needs to be a living concept that is permeated troughout the entire organisation and must be embedded in the enterprises KPI’s as well as every strategy in practice or in development

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