Customer Centricity
More Revenue through Satisfied and Loyal Customers
Optimizing customer centricity means aligning a company in a holistic way with the needs of its customers and optimizing their buying experience. Today, we speak of customer centricity in this context, but what does it actually mean for companies?
Introduction
The way in which customers are addressed is still in a state of transition. As a result of digitization, consumers have many more opportunities to compare offers and also gain insights into the experiences of other buyers. Through customer surveys, market research, and other sources, companies can understand what issues their customers are concerned about and what is important to them. The challenge, however, is to also carry these insights back into the company and use them as the basis for actions and strategic decisions—with all departments on board. Among other things, this can be summarized under the term customer centricity. But how exactly can companies achieve this?
Table of Contents
Definition: The Meaning of Customer Centricity
Understanding the concept of customer centricity in a comprehensive way can be challenging at first. However, many leading companies have readily embraced it, which is why the following quotes provide a helpful introduction to the topic:
„The most important single thing is to obsessively focus on the customer. It’s our job everyday to make every important aspect of the customer experience a little bit better.”
– Jeff Bezos
„Some people say, “Give the customers what they want” But that’s not my approach. Our job is to figure out what they’re going to want before they do”.
– Steve Jobs
„There is only one boss: the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
– Sam Walton, Founder and former CEO, Walmart
„True customer centricity is a cultural movement at its core. If you’re able to truly understand your customer, you can anticipate future needs and proactively meet them in the overall user experience at every touchpoint.”
– Mike Corak, Digital Marketing Executive, VP, and General Manager, DAC Group
„A company develops with its employees. The better our employees keep an eye on the customer’s needs and meet them, the more successful the company is.”
– Götz Wener, Founder, DM Drogerie Markt
As can be seen from these quotes, customer centricity is a fundamental, corporate cultural attitude that focuses on customers and their experiences as well as wishes and needs. The prevailing goal of this attitude is to build proximity to the customer base. If the distance between the company and the prospective customer is reduced, e.g. the supplier is closer to the customer, he also sees him better, can assess him more accurately, and respond to him more competently. This personal level is important for turning a potential into a loyal business relationship. In a nutshell, customer centricity means aligning a company holistically with customer needs without neglecting economic interests. It, therefore, includes, among others, the following elements:
- See customer centricity as part of the corporate strategy
- Focus on the needs and wishes of customers
- Optimize all relevant processes
- Establish greater proximity to customers
- Aiming for customer identification with own brand
- Establish honest business relationships
Customer Focus, Customer Orientation, and Customer Centricity—What Are the Differences?
Now that it is known what constitutes customer centricity, one might think that customer orientation and customer focus are practically the same things. However, the three terms differ in their influence on corporate culture and strategy and can therefore be clearly distinguished from one another. Customer centricity is the final step in the process and influences the entire mission statement of the company.
- Customer focus: Customer focus the beginning of the paradigm shift in corporate culture toward a customer-centric company, but it is still a long way off. Customers are placed at the center of consideration, but decisions are ultimately made on the basis of many different aspects. In addition, customer focus is a rather static, almost passive strategy: although taking a close look at customer requirements, the insights gained from this do not have the same wide impact as with actively designed customer orientation or customer centricity.
- Customer orientation: Although the term customer orientation is sometimes used as a synonym for customer focus, orientation goes one step further and thus stands between customer focus and customer centricity. In this case, customers are no longer just the focus point but are directional and decisive for all market-relevant measures. Nevertheless, the fundamental, cultural integration that constitutes customer centricity is missing.
The Path to a Customer-centric Company
Sounds good? Then you are probably wondering how exactly companies can build a customer-centric culture. Unfortunately, there is no step-by-step recipe for success, but there are some factors and measures that can help to find the right way.
1. Create a Cultural Framework and Training Employees
Since customer centricity is primarily a cultural aspect, it is essential to roll out this way of thinking and acting throughout the entire company. Factors such as transparency and opportunities for participation play a major role here, but these cannot be created overnight if they are not already in place. This process can take time and often the change in thinking must first be enabled and exemplified by the management level.
If an open, transparent. and inclusive corporate culture is already in place, the key is to educate employees about the importance of a focused mindset and create guides to enable employees to work in a focused manner. Interactive presentations, workshops, and case studies, among others, can be of great help here.
2. Create a Customer Journey Map
One of the first steps for better customer understanding is to track the customer journey. When do prospects and customers come into contact with the company and what do they want and expect at each point of contact? This is best illustrated by a customer journey map. If companies understand when customers come into contact with them and what their needs and expectations are at each point in time, they can successfully meet them. As a result, companies are more closely connected with customers throughout the customer journey, enabling them to target interventions at key points and are more likely not to lose them along the way to closing a deal.
3. Obtain Customer Feedback
Once the contact points of the customer journey have been defined and an overview of the path from interest to purchase has been created, it is now important to understand the customer experience at the respective touchpoints. By asking customers about their experience at key touchpoints, any pain points that cause them to break off their customer journey can be uncovered and remedied. Likewise, companies learn what is already working well and delighting customers and should therefore be continued. To gain these insights, short and precise surveys such as the Net Promoter Score® are particularly well suited, as they achieve high response rates and collect both quantitative and qualitative data.
4. Analyze and Evaluate Customer Feedback and Use It as a Basis for Action
After collecting customer feedback, the next step is to evaluate it. This should determine whether the ratings and comments received are positive, neutral or negative, and what the topics are in each case. With feedback software and platforms such as zenloop, this process can be automated using features such as sentiment and impact analysis and prepared in clear dashboards. Alternatively, a manual evaluation can also be carried out, but this becomes increasingly difficult, especially with a high survey volume.
5. Bring Customer Feedback into the Entire Company and the Individual Departments
If customer feedback has been collected and evaluated, it is now important not to let it disappear in a document or to share it only within a specific department. Therefore, all employees from all departments should be given insight into the general feedback and the insights gained from it. This should not only happen passively but rather the management level or responsible department must take action here and actively share insights. Good options for this are, for example, regular meetings or live dashboards that can be placed at various locations in the office and online. Department-specific feedback should also be provided to the respective teams so that processes can be optimized and team members trained on the basis of the received feedback.
6. Establish a Dedicated Customer Experience or Voice of the Customer Department
To clearly define responsibilities and ensure that customer feedback is communicated and used within the company, it can make sense to set up a dedicated department for this purpose. The task and goal of this department is to listen to customers and share insights within the company in order to initiate strategic decisions and courses of action. The department thus exists as the superior, first and final authority on the subject of customer experience, largely holding an advisory role rather than an implementation role. This approach has slowly become established in recent years and is still only successfully implemented by a few pioneers. However, these companies benefit massively from it and are praised by their customers for their outstanding customer experience management.
But beware: If you want to do everything right, you always run the risk of making mistakes: Some people overshoot the mark in a highly motivated manner, others miss the mark unprepared. A healthy self-perception is important in order to question the company’s internal actions and to optimize them if necessary. Self-perception and external perception of customer centricity are not always congruent. For example, around 75 % of companies may see themselves as customer-centric and yet only 30 % of customers share this perception.
Nevertheless, it pays to build on customer centricity because
- Satisfied customers spend up to 140 % more money
- Highly retained prospects are three times less likely to switch to the competition
- Good customer retention increases the chance of further purchases fivefold
- Happy customers recommend the brand five times more often
Customer-centric Culture: Dos & Don’ts
1. Of course the conversion rate should always be in focus, but it should not be the first and last key performance indicator (KPI). What is the benefit of successfully converted customers who have been channeled through a funnel that is not designed for long-term retention and loyalty? For example in such a funnel that is purely revenue-oriented—the real value of customer centricity gets stuck.
2. The optimization of existing processes and models is not always in the interest of the customer. Sometimes a completely different approach or something completely new is needed to meet customer needs. For example, those who only conduct A/B tests to improve the customer experience are only addressing what is already in place. A meaningful centering, on the other hand, measures all variables and also allows innovations.
3. It’s all a question of consistency. Just “a little customer centricity” does not work. It is all or nothing: the importance of embedding it in the company’s strategy cannot be emphasized often enough. Half-hearted commitment is quickly exposed by prospective customers—good customer centricity leaves no questions and takes place holistically at all points in the company. All responsible employees must therefore be able to consistently assume the customer perspective. This is the only way to understand the customer and tailor content to their individual needs.
4. Contact with the customer should be neither top-down nor groveling. A company should always appear professional, both in direct and indirect contact with customers. This does not mean that the exact answer must always be at hand, but helpful information and, in the best case, solutions should be presented for every problem.
Luise Hübbe (Chief Digital Officer at Geometry) sums up the dos. She sees customer centricity as “a holistic marketing and innovation management that doesn’t get lost in the nitty-gritty of optimization, but thinks and analyzes journeys along all possible touchpoints.”
Customer Centricity as a Requirement for Sustainable Customer Relationships
If you want to be successful in the market, you should not focus solely on your own product world or range of services. It is important to shape the offering in such a way that the request is met, but also nurtured. Customers do not want to be dispatched, they want to be involved. If you involve the customer, you automatically retain their loyalty to the company.
In context with the term customer relationship, we usually talk about customer relationship management (CRM). Which processes stabilize and expand customer relationships? This question is the focus of the CRM department of companies, which is not infrequently located in marketing. Customer relationships have to be documented, managed, and maintained in order to build a long-term relationship that ultimately pays off in terms of holistic success and is therefore also part of the corporate strategy.
The Impact of Digitization
Anyone searching for “customer-centric” on Google currently finds over 88 million results. This enormous number of hits is no coincidence. On the contrary, it is proof of the massive impact of digitization and, at the same time, of the importance of customer centricity in the digital age. The balance of power between supply and demand has shifted as a result of new technologies—and customer centricity is one of the most important responses to this.
The possibilities of digitization are manifold—for the enterprise side and for the customers. Rating portals are a dime a dozen on the Internet. With just a few clicks, a company’s rating is online—visible for everyone. In Google searches, feedback also appears high in the Google rankings if the respective portals have high click rates. And it is precisely this search that precedes almost every purchase decision today. The so-called Zero Moment of Truth describes the phenomenon of digitalization: customers do research before they buy. For companies, this means that they have to reach their target group much earlier, otherwise they will sometimes receive negative reviews. In a nutshell: digital customers are critical and informed, they generate a strong opinion on the internet, they research and compare, and they disseminate and multiply their experiences. These customers, therefore, expect companies to provide:
- Simplicity and clear communication
- Outstanding service
- Short response times to requests and complaints
- Fair prices
- Absolute transparency
Customer-centric Working for Successful Digital Marketing
Expertise in marketing is often fragmented. There are the email professionals, the social media specialists, and behind them the content marketing staff. In general, that is fine, because what company can employ all-rounders exclusively? But with customer centricity, in particular, it is important that the links in the process chains are tightly connected. In other words, customer centricity without silos.
Today, companies reach their customers primarily online: Digital marketing is one of the key factors in this process. Customer relationships are not only cultivated through linear retention tactics but are managed psychologically. There is a change of perspective—from the market to the customer. The centering is changing because it is no longer exclusively about analyzing the market, but taking the time to get to know the people who are in that market. To offer them an all-around experience, in other words, a customer experience that is based on appreciation and does not stop at any point of contact between the company and the customer.
Now, if you’re still looking for practical examples of how other companies have built or strengthened a customer-centric culture, you may find the answer in the following case studies:
- Case Study with Internetstores: Internetstores Strengthens Customer Centricity with NPS®.
- Case Study with kartenmacherei: Using NPS® to Center and Focus on the Customer
- Case Study with Otto Wilde: Using NPS® for Customer Centering and Transparent Feedback
Establish customer centricity with zenloop
