A step-by-step guide for becoming a customer-centric organisation
This article outlines the meaning of customer centricity in today’s economic environment and provides guidance on how to become a customer-centric organisation.
Customer centricity has been around for a long time, but has never been that relevant or intensely discussed as today. Businesses are challenged to stay competitive in today’s global market. They are looking for ways to retain their customers, attract new ones, and to distinguish themselves from their competitors. It is therefore no surprise that ‘customer centricity’ appears 9’500 times per month on the global Google search; ‘customer-centric’ even makes it to 18’000 global Google searches per month.
Customer centricity has become a buzzword and is one of the top agenda points for many business strategies. Businesses need to do a balancing act from having, historically, a product- or solution-centric purpose, to adopting a customer-centric approach for the future. This article outlines the meaning of customer centricity in today’s economic environment and provides guidance on how to become a customer-centric organisation.
Definition of customer centricity
Customer centricity by definition is a self-explanatory term. Accordingly, customers are being placed at the centre of attention in order to deliver a positive customer experience, which in turn leads to great customer satisfaction. In reality however, it is much more complex than that. Customer centricity needs to be approached from two different perspectives. One perspective makes the customer the focus of all activities an organisation engages in. Every step serves the customers’ satisfaction, increases their loyalty, and attracts new customers. The other perspective first identifies the company’s most relevant customers and then builds products and services around them. It’s about solving the customers’ problems and identifying their needs and wants.
The north star: four strategies to guide a customer-centric organisation
1. Defining customer centricity as the priority in the organisation
Customer centricity must be lived by the whole organisation. A customer-centric strategy has to be led and fully supported by chief executives. If this is not the case, it signals that customer centricity is not the company’s top concern. Consequently, it is likely to disappear in everyday business agendas and evaporate in organisations’ silos. Also, if leadership support is not fully given it is likely that necessary funding is being compromised.
Once leadership support is given, an organisation will have to adopt agile working in order to be truly customer-centric. Agile working optimises the way teams work together and jointly create added value for the customer. This means that customer needs should be at the centre of what every team does in the company. Business agility helps organisations to adjust quickly to rapid change, shift priorities if required, and increase the collaboration with customers.
2. Becoming a loyalty leader
Loyalty leadership means focusing all business efforts on customer loyalty, by ranking existing customers according to their loyalty and business opportunities. It also means that incentives for new customer acquisition need to be modified towards loyalty and employees should be rewarded for acquiring lasting customers. Marketing investments and other resources need to be carefully considered and shifted towards campaigns that likely bring loyal customers. Loyalty leadership does not only work on customers, it also applies to employees, suppliers, dealers, etc. This includes training and support, incentives, and more. Hence, besides focusing marketing investment, loyalty leadership requires leaders to be heavily invested in customer service tools and skills, in order to deliver superior service.
3. Collecting and evaluating data
Activities need to be measured, or customer experience cannot be improved. It is a challenge for many organisations to directly connect customer centricity to business performance. The reason being that customer centricity is viewed as a qualitative measure, whereas KPIs are quantitative. However, measures will follow if a company fully focuses on resolving customer pain points. Using customer satisfaction metrics at all touchpoints helps to detect issues and allows organisations to solve them quickly.
Besides this, however, a measurement for loyalty and emotional engagement should be used, to understand whether a customer loves the product and is loyal towards the brand. With the help of a Customer Relationship Management (CRM) system, the company can find out who the right customers are and how to increase their value in order to find further customers like them. A key measure of customers’ perception of your organisation is the Net-Promotor-Score (NPS). Customers rate a service or product on a scale from 0 to 10:
- Detractors: 0 - 6
It’s worth finding out why, in order to improve their experience with your brand.
- Passives: 7 - 8
There is no need to focus on the average, although many companies still do so.
- Promotors: 9 - 10
Promoters should get the companies’ highest attention, as they might be advocates, potential new customers, and most likely loyal to a brand.
4. Establishing a customer-centric culture
All of the above are very important strategies to help achieve a successful customer-centric approach and optimise customer experience. However, the organisation will still fail if there is no customer-centric company culture. According to a HBR’s survey, a customer-centric culture is a vital base for superior customer experiences.1
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Breathing customer centricity: how to build a customer-centric culture
Being perceived as a customer-centric company has roots in every corner of the organisation, not only in the client-facing departments. Every employee needs to live customer centricity, hence it needs to be part of the organisational culture and the corporate mindset and values. Customer centricity is rooted deep within, strongly supported by leadership, and willingly brought to life by every employee. Historically, most company cultures are sales or product driven. It will need a conscious decision to opt for a customer-centric culture. But what makes a company culture customer-centric? According to an article published on the Harvard Business Review, there are six ways to build a customer-centric culture.2 These include:
Every employee needs to live customer centricity, hence it needs to be part of the organisational culture.
1. Operationalise customer empathy
What stands behind this buzzword is ‘the ability to identify a customer’s emotional need, understand the reasons behind that need, and respond to it effectively and appropriately’. Organisation leaders need to fully support and live empathy themselves in order to fully establish it as a core value.
2. Hire for customer orientation
Customers need to be in the centre of all actions of an organisation, including the hiring process. Potential employees’ customer-centric attitude and thinking should be assessed.
3. Democratise customer insights
Employees need to fully grasp the companies’ customers, to consequently develop a customer-centric mindset. Adobe Systems, for instance, set up listening stations for employees who are not customer-facing so that they could listen to customer calls and better understand the customers needs and pain points.
4. Facilitate direct interaction with customers
Even if not obvious, every employee has an impact on customer experience. Hence organisations need to assure the opportunity for employees to directly interact with customers, for all functions, not only client-facing ones, by attending support and sales calls, customer visits and event participation, to name just a few options.
5. Link employee culture to customer outcomes
Businesses are recommended to establish and evaluate the relation between culture and customer effect. Once managers and employees understand the value of following the customer-centric culture, companies start to incentivise employees to live the organisation's customer-centric culture. When IBM created this link, they noticed that two-third of the company’s client experienced scores are generated through employee engagement.
6. Tie compensation to the customer
Tying customer centricity to a compensation programme underlines its importance to the business and besides that ‘an element of risk’ amplifies that importance.
Examples: best practices used by customer-centric companies
How can a customer-centric strategy be executed? Here are some examples of how the different aspects of customer centricity can be put into practice:
Amazon is also called the earth's most customer-centric company. One of their strategies is to work with personalised recommendations, based on past purchases, recently viewed items, or items in the customer’s shopping cart. Using this, Amazon delivers enhanced customer experience and increases the convenience for existing customers. These efforts result in great customer loyalty. The 2019 Amazon Consumer Behavior Report states that ‘Amazon is the go-to destination for search and purchase’. 66% of customers first search for their products on Amazon, 95% of which are happy with their search results and 74% also buy there.3 Besides that, the Amazon Prime Membership is a strong factor for customers, using Amazon as their first purchase choice. 73% of daily online shoppers check on Amazon besides other pages and 83% of which actually purchase at Amazon. Hence, Amazon managed to be important in the customer’s journey. With listening to customers and serving their needs, they earn customers’ loyalty in return. That’s a great example on how customer centricity can pay off.
Mercedes-Benz focused their strategy for the North American dealership on their finding of a correlation between customer satisfaction, loyalty, and profitable dealers. After listening to their customers, they eventually also started listening to their employees, understanding their needs and providing them with relevant training where needed. They started measuring the engagement of their employees and found out that their dealers were lacking skills on employee interaction and leadership. As a consequence, they set up a leadership academy. In a next step they were tackling emotional connections at their dealership, by establishing an ambassadors’ programme.
McDonald’s is a good example of asking customers what they want, and then listening to feedback. As a result, they introduced healthier meals and extended their opening hours. In addition to this, they put extra effort into social listening to find out what their customers really wanted. Thus, selected restaurants offered breakfast all day. From then on, they have consistently been working on their products and services. They also used technology in many ways, to connect on social media with customer-centric messages indicating ‘if you ask, you might get’ as well as leveraging kiosks for easy ordering, which reduced waiting times, and in some markets they are partnering with UberEats, to tackle further customers’ needs.
Sherpany lives and fosters a value-based, customer-centric company culture. All employees are gatekeepers and jointly focus on customers by closely listening to their problems and pain points. Each team member fully contributes and has responsibility for maintaining customer satisfaction. We have established a number of projects and programs to develop our customer-centric approach. These give customers an insight into our company and products, and offer them the opportunity to meet our employees. This helps us to get to know our customers better, which we are very excited about. Here are a few examples:
- Sherpany’s software allows customers a glimpse into our next development steps and if that is not enough, customers are able to share their opinion and even vote for new features and product improvements, and thereby have a say in the future development of the software.
- Sherpany employees regularly meet their customers for review and planning meetings. Pain points and needs are addressed with each customer and the feedback is reflected in Sherpany’s software and services.
- Sherpany has recently launched an Ambassador Program to cultivate Sherpany ‘fans’. It gives customers exclusive insights into meeting management and science, supports them to become a thought leader to their peers, and it gives them special access to events.
- With the Sherpany Pioneer Program customers get early access to new features and are the first ones to try them out before everybody else.
The impact of customer centricity
Why is it worth becoming customer-centric or maintaining customer centricity? Well, here are some advantages that make it worthwhile placing customers at the very heart of a company:
1. Increased customer retention
Focusing on a high or increasing customer retention is key, that happens by focusing on the right customers. According to a study by Frederik Reichheld, the inventor of the Net-Promoter-Score, increasing customer retention rate by 5% results in a profit increase of 25% to up to 95%.4
2. Cost savings
It might not be obvious at the first glance, but loyal customer relationships keep costs down. The reason being, long-term customers often buy more from a business they trust and they are often willing to pay a premium, while operating and acquisition costs decrease. They less likely switch to a competitor and they often spread the word and refer new customers. Customer-centric companies are 60% more profitable than those not focusing on customers, according to research by Deloitte.5
3. Reduced employee turnover
A customer-centric culture as discussed above, will also create satisfied and loyal employees, due to trusting relationships, fair performance feedback, two-way communication, and training and support when needed. If employees are happy with their workplace, they don’t have a reason to change. That, in return, reduces hiring costs.
Customer centricity: not just a buzzword
Today’s fast changing VUCA world - our environment shaped by volatility, uncertainty, complexity, and ambiguity - with its fierce global competition and increasing customer demands means that companies are left with little choice but to adapt. Organisations need to embed customer centricity into their culture in order to remain relevant and be successful. However, this requires dedicated leadership and strategies to enable every employee to really breathe customer centricity.
Becoming a truly customer-centric organisation is, indeed, a great opportunity, as customers will reward brands with loyalty, retention, and their word-of-mouth recommendations. A customer-centric culture is the basis for a flourishing and healthy organisation with happy and engaged employees. Customer centricity – the guarantor for a true win-win. Before all that, however, an organisation must identify the right customers for themselves.
1 'Closing the customer experience gap', Harvard Business Review Analytics Services, April 2017.
2 'Six ways to build a customer-centric culture', by Denise Lee Yohn, Harvard Business Review, October 2018.
3 'The 2019 Amazon Consumer Behavior Report', by Feedvisor, March 2019.
4 'Prescription for cutting costs: loyal relationships', by Fred Reichheld, Bain & Company, 2001.
5 'Wealth Management Digitalization changes client advisory more than ever before', Deloitte, July 2017.