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Re-centering on customer centricity

There is a lot of talk, and even more writing, about the importance of being a "customer centric" or "customer focused" company (quite a lot of it on this blog alone!) This idea of customer centricity has been around since the 1950s but has really come to the center of business strategy in the last 10-15 years.

Whenever an idea becomes a hot topic in the corporate world, you can guarantee it will get written about A LOT and talked about even more. When this happens, I like to go back to earlier, foundational research on the topic and re-center myself. I recently did that by re-reading an article by a host of eminent marketing professors (see reference below). The article is titled "The Path to Customer Centricity" and was published in 2006, which shows how much this field has grown in the past few years.

Here are some of the things that struck me as I re-read this article:

There are 5 trends reinforcing the need for companies to become more customer centric:

  1. Intensifying pressures to improve marketing productivity: E.g., the continual drive toward cost-effective "one-to-one" marketing.
  2. Increasing market diversity: You can’t treat all customers or potential customers the same. Customer segments are becoming more numerous and more specialized in what they demand.
  3. Intensifying competition: The barriers of entry are quite low in many markets and the ability to create vastly differentiated products is becoming harder.
  4. Well-informed, demanding customers: Just look at how you shop for consumer electronics now versus 10 years ago.
  5. Advances in technology: I believe this trend is actually increasing the importance of each of the previous trends. 

So, how do companies become more customer centric? The authors give a few good suggestions:

  1. Change the culture. Create a culture where and all employees are "customer advocates" and believe true success comes from knowing the customer and gaining customers’ loyalty. Anyone who has tried to change a culture knows how difficult this can be. So here are a few practical tips:
    1. Remember that cultural change follows from behavioral change
    2. Get senior management commitment to do things differently, not just a verbal commitment to the concept. Seeing senior management spending time with customers is a powerful signal to the company.
    3. Be persistent. The change won’t happen over night. Don’t let the initiative fall by the wayside as another corporate fad.
    4. Communicate intensely to overcome initial skepticism.
  2. Create a horizontal organizational structure organized around customers instead of products. An initial step involves restructuring core functions like marketing, strategy, and human resources but should quickly move into key or strategic account management functions to have a more noticeable impact on customers.
  3. Create a centralized repository for customer intelligence.
  4. Focus processes on sustaining customer relationships instead of just efficient execution of transactions. This was a big learning for many companies when they begin moving customer support centers off-shore.
  5. Include at least two or three key customer metrics in your corporate KPIs. I believe each of these metrics should either be stated in financial terms (like customer lifetime value) or have proven financial implications. These metrics are harder to get but are necessary to a customer-focused company.
  6. Focus on continuous learning and improvement. Having a forum for sharing customer insights and success stories will continuously fuel your company’s efforts to become more customer focused.

I think it is interesting that creating a Customer Experience Competency Center can help an organization accomplish nearly all of these strategies, and it definitely signals senior leaders’ commitment to the transformation.

I hope this review has helped center some of you on this topic. There have been interesting new thoughts on these topics in recent years – like balanced centricity – and I hope to bring some of them to this forum in the near future.

Troy Powell, Ph.D.
VP, Statistical Solutions

Reference: Shah, Rust, Parasuraman, Staelin, and Day (2006). "The Path to Customer Centricity," Journal of Service Research. 9(2):113-124.
List of all posts in this series:

  1. Re-centering on customer centricity
  2. A broader orientation for being customer-focused
  3. Characteristics of a customer-focused company
  4. The focus of customer-focused companies
  5. The moderation of customer focus

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