Customer Centricity is the new black
Customer Centricity is the new black for retailers. Everyone is talking about it, everyone says they’re doing it, but few - if any - really are. Many retailers define customer centricity as putting the customer first. Others will say it’s all about the high level of service provided, while many hail back to that old adage about the customer always being right. Nope. Your most valuable customers are always right. The rest are just customers with an opinion.
It seems quite the anti-customer centric thing to say when you call bullshit on a saying like ‘The customer is always right’. But why would they be? And what about that sentence makes you customer centric? If anything, it may just make you unprofitable if you keep letting customers dictate your policies. The role of your customers in your business is to make you money and when they are doing that, then they are right. That might not sit well with some of you either but that’s how the retail world keeps turning. And being customer centric leans into that concept, not away from it. Ultimately, the aim of customer centricity is the same as as that of your business - to make as much money as possible. It’s also the same goal held by product centric businesses, but the difference comes down to the focus and structure of the entire organisation. Customer centric businesses flip the script on product centricity.
Product centric businesses stop to think “Are we selling our product to the right people?”. They’ve developed a product or service, and now their main challenge is finding the right customers to market and sell to. They need to find customers with a need for their product and a want to purchase it. They of course can never be entirely sure they’re targeting the right people, and so there is inevitably a wasted spend when it comes to acquiring customers as the net needs to always be cast wide, even if when cast in the right direction. Customer centric businesses have identified their right customers, and never have to stop to ponder that question of who to target. They’ve developed a product or service with not only their customers in mind, but their customer’s data in front of them to support their product development. They already know their product meets their needs, and they continue to evolve it knowing what those customers want.
Product centric businesses see their customers as one group of people collectively referred to as ‘the customer’. They are simply the end of the supply chain that goes: ‘design product’, ‘build product’, ‘market product’, ‘sell product’ and repeat with the next version or model. They rely on the belief that consumers want the latest, shiny new product. They set about convincing new groups of consumers to buy for the first time and in the case of a new model, ‘the customer’ widens in scope to include previous purchasers. In this case they need to convince them that the ‘new and improved’ version is better than their existing model to deliver growth. It’s a tried and true method and it works reliably. It ostensibly grows profits through increasing the value of the brand and not that of the customer. The customer wants the brand. The brand doesn’t much care for what the customer wants. They don’t need to.
Or do they? We’re spoilt today. We want what we want, when we want it, in the format we want it. As more digital natives grow up and become consumers the pressure builds to deliver to their needs in a more personalised, faster and easier way. Our loyalty to a brand is becoming less and less solid as more and more options avail themselves to us and present with more alluring offerings, and consequently we’re more demanding than we’ve ever been before. And we have every right to be.
Technological advances mean we as customers have accessibility to businesses and products in the palm of our hands and with the touch of a screen. Shopping was once something we went out and did. Now it’s just something we do. And where we used to only have access to those stores in our neighbourhood or the mail order catalogues that found their way into our letterboxes, globalisation means we now have fast access to stores and products from around the world. While product centric businesses that nailed technology and globalisation were previously ahead of the game, deregulation and the rise of the demanding customer have put them on the back foot. Technology can now be, and often is, replicated quickly and globalisation has meant every business has lost their geographic advantage. We can now reach every store, in every location, from wherever we are on whatever internet enabled device we have.
Customer centric businesses see the opportunity in this new world. Consumers understand that in making a purchase, they may need to give over certain details about themselves. Even before digitalisation, buying through catalogues set the tone for information exchange. We sent the order form in with our names, addresses, sizes and products we wished to purchase. We readily handed over that information in exchange for the convenience of having products delivered to our door, and access to items we may not otherwise be able to find in our neighbourhoods. With the rise of digitalisation, our expectation for services in exchange of information has grown. The more information we provide online to our retailers, the higher the level of service and experience we expect to receive. And while many experiences aren’t living up to expectations, customers will still more often than not say that they are willing to provide additional information if it means they get a better experience as a result.
Some product centric businesses know this and use the information provided by their customers well. Customer centric organisations know this and use it to their advantage. Whereas product centric businesses will use their data to find some demographic patterns to define what “the customer” looks like, customer centric businesses use their data to understand the individual behaviours of their customers. They see their customers as individuals and each have their own level of value to the business. Those with behaviours that show they are advocates, and demonstrate loyalty through high recency, frequency and spend represent ‘high value’ customers. Those that once displayed these characteristics but have decreased in one or more of these areas are ‘at risk’. Those that have never displayed these characteristics fall into the category of ‘the rest’.
While ‘the rest’ make up a large portion of customers in volume, it is the high value customers that are often responsible for a higher proportion of revenue and profit and therefore deserve a higher value experience in return. Customer centric organisations recognise the patterns and behaviours that make up these customers and reward them individually with personalised incentives. They can make recommendations based on preferences. They can see when one or more of their key indicators of behaviours (recency, frequency and monetary), begins to slide out of their norm and effectively incentivise them to come back and shop. They can develop products and services to suit the needs and wants of their high value customers, essentially giving them what they want before they even knew they wanted it.
It’s that last sentence that really defines why truly customer centric businesses have the competitive edge. Products and services are devised with the customer in mind and defined by the needs and wants of their most valuable customers making them already highly desirable. And giving a customer what they want before they even knew they wanted it is the epitome of staying ahead of the market.
Product centric businesses by contrast may develop great products based on the recognition of a need in the market, and by then the customer may know they want it, but they still need to find those customers, and they still need to beat their competitors who no doubt are privy to the same gap in the market. No one is privy to the first party customer information held by a customer centric business and no one already has that relationship with their customers, and that is a very powerful tool in a highly competitive industry.
So how does a product centric company become customer centric? Well it’s not easy. It requires a fundamental shift in the way the entire organisation thinks and behaves and involves a seismic like cultural shift that extends well beyond providing better customer service. But the good news is it is possible and with a bit of help from an expert CX consultancy, any business can start to put the foundations in place to put their customer data at the centre of every business decision.
And that’s what it really comes down to when it comes to being truly customer centric. Don’t just provide great customer service, or think about what will sell your services or products to a customer, or even concentrate on putting the ‘customer first’ in your experiences. Start with your first party customer data you already have, recognise the patterns, plug the knowledge gaps, find the behaviours of your most valuable customers and start using this data effectively to make smart, cost effective and profitable business decisions.