Customer Centric Strategy
Customer centric strategy is simply putting the customer first in all major business decisions. A more academic definition could be creating a positive customer experience, at every stage of the buying process, including post sale.
Historically, this thinking was the basis for quotes like “the customer is king” and “the customer is always right”. Today, many successful business leaders have customer centric quotes such as:
“There are so many new ways to serve customers. Technology, data and information are opening new doors for us to lead through. Our purpose of saving people money will always be relevant, but we’ll do it in new ways”
Doug McMillon (CEO, Walmart)
“If you make customers unhappy in the physical world, they might each tell six friends. If you make customers unhappy on the internet, they can each tell 6,000”
Jeff Bezos (Founder and CEO, Amazon)
Due to changes in technology / how businesses operate the quotes have changed but the same logic still applies. Customer satisfaction is the key to a successful business.
Why use a customer centric strategy?
The reasoning behind using a customer centric strategy is that by achieving customer satisfaction your business will maximise long term financial results. Simply put, happy customers become repeat customers / brand loyal, which maximises your sales / profit in the long term. Customers that are not satisfied during the buying process are firstly less likely to buy your good or service. If they do buy your good or service and are not satisfied, then they are less likely to buy again. Unsatisfied customers are also, more likely to inform other people about their negative experience with your product or service.
There is a lot of research supporting that a customer centric strategy will maximise your businesses long term financial results. Some general points include (Polaczyk):
“loyal customers are worth up to 10 times as much as their first purchase”
“it is 6-7 times more expensive to acquire a new customer than it is to keep a current one”
“the probability of selling to an existing happy customer is up to 14 times higher than the probability of selling to a new customer”
Other more detailed research from KPMG in their ‘Customer First’ paper highlights:
“Customers penalize those who under-deliver twice as much as they reward companies who over-deliver”
“66% of consumers have stopped doing business with a brand due to a poor customer service experience”
These statistics support using a customer centric strategy to maximise the long term financial results of your business.
How businesses implement a customer centric strategy
Businesses implement a customer centric strategy by putting their customers first in all decision making.
All employees clearly understand what the customer wants, at each step of the buying process (including post sale). All employees then work towards the common goal of customer satisfaction. To achieve this understanding staff training is vital. To discover what the customer wants research / data analysis is normally undertaken. Some of the data analysis will be of the data stored in the company’s CRM (customer relationship management) system. The customer feedback is then used to quantify the level of customer satisfaction and identify any problems that need to be addressed.
Due to the internet changing how customers shop businesses have changed how they implement a customer centric strategy. A 2014 Deloitte study (The Growing Power of Consumers) found that 81% of people read online reviews and check customer ratings during the buying process. So now businesses use online reviews / comments as another data source to track customer satisfaction.
A more detailed explanation of how businesses implement a customer centric strategy is made by Deloitte in their paper ‘The Business Case for a Customer-Centric Culture’. The 4 key points are:
- Collective Focus
“Employees across all functions and departments – virtually everyone, from product developers and designers to sales staff and service agents – see customers as the company’s number one priority.”
- External Orientation
“In a customer-centric culture, an external orientation means understanding the company through customers’ eyes.”
- Change and Innovation
“Customer-centric companies must innovate continuously to respond to fast-changing customer needs and expectations.”
“Customer-centric companies empower employees with information and give them the autonomy to make decisions that can improve products and services.”
- Shared Beliefs
“Employees share a common ideology and commitment to core values. When employees’ beliefs align with a company’s values, an emotional connection forms. In the case of customer-centric companies, these beliefs often include a strong service mentality and a desire to help others.”
Businesses are able to successfully implement a customer centric strategy by firstly clearly understanding what their customers want in every stage of the buying process. All employees are trained to understand what the customer wants and how to deliver customer satisfaction. Finally, customer satisfaction is tracked via metrics including internal systems (CRM) and external data sources (online reviews).
Customer centric strategy may be a relatively new term but the reasoning behind the strategy has been used by businesses for some time. Simply put by maximising customer satisfaction your business will maximise their financial results. Due to changes in how customers shop businesses have had to evolve how they deliver their customer centric strategy.
Personally, I believe your relationships with your customers are your most important asset. Why? If you have no customers, then you have no cashflow. This is why I recommend businesses use a customer centric strategy.
The information provided in this blog post was general in nature. If you require more information I offer a free initial consultation by completing a contact us form.