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What is Customer-Centricity and Why Should I Care?

Customer centricity is a hot topic. But like so many hot topics, there is little consensus on what this means, let alone how to be a customer-centric company. Let’s break this down to meaningful basics that lead to practical approaches for being successful as a customer-centric organization.

What is customer-centricity?

Customer centricity is routinely making strategic and tactical decisions that put the customer first. Think product design, customer service, support, and any other customer touchpoint. To make good customer-focused decisions, an organization must understand target customers’ needs, wants, challenges, perceptions, and expectations.

Beyond understanding these factors, a customer-centric organization must be out in front of their customers’ timing, anticipating these in advance to be able to deliver what the customer needs when it is needed.

Why bother?

The end result of pursuing customer centricity is customer satisfaction, loyalty, and advocacy. This is about prioritizing customer needs and relationships over short-term profits resulting in predictable long-term revenue streams.

Research by Bain, McKinsey, and others identifies the significant financial impact of retaining existing customers. Some compelling statistics:

  • A 5% increase in customer retention can increase revenue by 25%+

  • Loyal customers buy more often and spend more than new customers

  • It is 6 to 7 times more expensive to acquire a new customer v. retain an existing customer

  • A 2% increase in customer retention has the same effect on profits as cutting costs by 10%

Examples of Customer-Centric Companies:

USAA: Focused on providing solutions for the unique needs of their highly targeted audience of military families. Customers describe USAA as awesome, dependable, reliable, fair, and easy to do business with.

St. Jude Children’s Research Hospital: Provides free treatment for children with cancer and other life-threatening diseases.

Trader Joe’s: This whimsically themed grocery store provides unique, healthy, quality products at a great value. Customers also love their try it, love it, or return it policy.

Zappos: Relentless focus on exceptional customer experiences as a result of their customer-centric culture.

“To WOW, you must differentiate yourself, which means do something a little unconventional and innovative. You must do something that’s above and beyond what’s expected. And whatever you do must have an emotional impact on the receiver. We are not an average company, our service is not average, and we don't want our people to be average. We expect every employee to deliver WOW.” - Tony Hsieh, Founder of Zappos

At the heart of each of these companies is a leadership commitment to creating a culture that understands and serves its targeted customers.

Where to begin?

Making the commitment to becoming a customer-centric company is a big step. Here are five things to do to get started:

1) Define your customer-centric strategy

What does customer-centric success include? How will it be measured? Who will be held accountable? Be sure that the company vision, mission, values, and value proposition are all aligned to support customer centricity. Then over-communicate this strategy by a factor of 100! There should be no ambiguity about what this strategy is, why it’s important and what success looks like.

2) Ensure all employees understand how they specifically contribute to the success of the strategy

Identify what employee actions are linked to specific desired customer-centric results. Provide incentives and rewards. Celebrate successes. Empower customer-facing employees to make immediate decisions that will enhance the customer experience.

3) Hire for customer-centricity success

Create specific screening questions that will help hiring managers identify candidates that are wired for customer-centric thinking and support.

4) Foster a customer-centric culture

Help all employees understand who their customers are. Share insights, stories, successes, customer feedback, complaints, comments, and compliments. Discuss how the company listens to and responds to customer needs, and how the products and services provided make a difference in the lives of customers. Embed customer-centric skills and behaviors in what is assessed in performance reviews.

5) Measure and share results

What gets measured gets done.

Key performance indicators are essential. Measure and share these results regularly. Discuss what contributed to or detracted from success. Examples of customer-centricity KPIs include:

  • Net Promoter Score (NPS) is a measure of customer loyalty and how willing customers are to recommend a business to friends and colleagues

  • Customer Satisfaction Score (CSAT) tracks customer satisfaction

  • Customer Retention Rate measures the percentage of customers a company retains over a given period of time

  • Customer Effort Score measures how easy it is for customers to do business with your organization

  • Customer Engagement measures how engaged customers are by how often they communicate with your brand

  • Churn Rate identifies how many customers stopped purchasing over a period of time

  • Repeat Purchase Rate measures how often customers purchase

(Each of these KPI calculations is easily found online)

In addition to corporate KPIs, have all functional departments develop meaningful measures of customer-centricity success. Involve departments in measuring and assessing progress monthly.

The Bottom Line

Becoming a successful customer-centric organization requires discipline and commitment. Fostering a customer-centric company culture is a key component of success. And the rewards are significant. Check out the success enjoyed by USAA, Trader Joe’s, and Zappos.

Imagine the impact that higher customer satisfaction and retention might have on your organization.

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