Amazon. Apple. Nordstrom. How many organisations can you think of that deserve the label customer-centric? A few years ago, customer-centricity was all the rage. But enthusiasm seems to have waned recently. Why?
Try this experiment with your colleagues. Ask them separately what they think “customer-centric” means and lay your collected definitions side by side. I bet you get at least two or three different interpretations. Here are a few examples.
Some organisations believe they have always been customer-centric. “We want to sell as many products as possible,” they argue. “So therefore it’s a good idea to make products our customers want to buy. We work very hard to identify and deliver the product attributes that customers want. Therefore we are customer centric.” In this case, they are merely repackaging old wine in a new bottle (which, by the way, isn’t necessarily a bad thing).
Other definitions take you in a completely different direction, however. For some, being customer-centric is all about culture and leadership. They believe truly customer-centric company is one where employees are motivated to go that extra mile for customers. Closely connected to this is the “happy staff, happy customers” thesis: if managers can get their staff bubbling with enthusiasm, they will pass it on to customers, who will return the complement with increased loyalty and word-of-mouth advocacy.
So already we have two interpretations of customer-centricity that take us in completely different practical directions. One focusing almost entirely on what companies bring to market, the other on internal organisational issues such culture, leadership, recruitment, incentives and so on.
But there’s more. Another school of customer-centricity focuses on consumer data. “You can’t be customer centric if you don’t know who your customers are, what their preferences are, and how they behave,” it states. “So therefore you need to gather as much data about customers as you can, profile, mine and analyse it to bits, so that everything you do – the offers you make or the communications you send – is driven by this data.” Here, the secret of customer-centricity doesn’t lie with offers or culture, but data.
Here’s another version. For many organisations, the real challenge of customer-centricity is not what the customer buys, but how they buy it. “We go to market via a wide range of different channels. We have branches that we own and control. We have distributors or authorised re-sellers. We have an online presence. We have a salesforce. How do we organise these channels so that customers can choose the channel that suits them – and can switch seamlessly from one to another? Instead of trying to organise the customer to fit our predetermined processes, we need to organise our processes to fit the customer’s. That’s the real meaning of customer centricity.”
This is yet another agenda with yet another set of priorities, this time focusing on process redesign – supported perhaps by a data project. Without the right data processes, including a single view of the customer, businesses probably can’t recognise when customers are switching channels and give them the seamless service they want.
But still we aren’t finished, because there’s yet another school that defines customer-centricity in terms of personalisation and customisation. Every customer is different, goes the argument, so organisations need to customise products and services to fit their particular preferences and priorities. This creates yet another set of priorities, this time digging deep into the organisation’s core operations.
The same arguments for personalisation and customisation are also being applied in the world of marketing communications: the challenge of tailoring messages and media to the particular interests and media consumption habits of particular audiences to create “customer-centric communications”.
So which one is it to be? When we talk about customer-centricity, what’s our real focus? Products? Culture and people? Customer data? Customer-facing processes? Operations? Communications? Depending who you speak to, you get a different answer.
One glib riposte is that to be truly customer-centric you have to do the whole shebang. But it is a glib riposte because practically and operationally speaking, you can’t drink the ocean in one gulp. Even if you choose a mix of three or four of the above items, you still have to prioritise. Also, crucially, everyone involved needs to agree on these priorities. If they are using the same words to mean different things, you have a recipe for confusion.
The real problem with the glib riposte, however, is that it’s usually based on a glib business case. Take the assumption that happy staff make happy customers. There’s virtually no empirical evidence for this claim. Some managers breathe the fear of God into staff who know that if they don’t run that extra mile they face the sack. Miserable staff; happy customers. Sometimes, staff spend so much time having fun they forget the customer. Happy staff; miserable customers.
Now the Harvard Business School professor who first invented the happy staff, happy customer thesis – James L Heskett – is backing down from his claims. The direct cause-and-effect relationship between employee loyalty, productivity and customer satisfaction “was never as strong as we hoped,” he admits.
Ditto with theories that more satisfied customers are more loyal, leading to greater lifetime customer value. Things haven’t turned out that way. The latest issue of Harvard Business Review even carries an article which states the opposite with apparently absolute confidence: “The biggest opportunity for profitable share gains comes from focusing on your disloyal, not your loyal, customers.”
So, without a proper understanding of that “direct cause-and-effect relationship” between actions and results, the chances of customer-centric initiatives bearing fruit are slim. So much so that some large organisations are now travelling in the opposite direction. “Forget trying to delight or even satisfy customers,” they are now arguing. “Instead, focus all your efforts on fixing things that put customers’ backs up and drive them away.” This approach of stopping doing dumb things to customers (as Peter Massey, of customer experience business Budd, puts it) doesn’t fit most definitions of customer-centric. But the direct impact on business results may be much easier to find.
The real challenge of customer-centricity is not which flavour you choose, it’s the business model behind it. We must move beyond plausible-sounding but flawed fairy stories to properly understanding those direct cause-and-effect relationships. Almost certainly, these cause-and-effect relationships are highly specific to particular industries, market conditions, customer segments and so on.
In other words, customer-centricity is not a “strategy” to be picked off the shelf and “implemented”. It’s a complex, difficult, ongoing research project. No wonder so few companies have actually cracked it.