With the explosion of transparency in how brands manage and treat their customers (price comparisons, quality of service, brand reputation on social media – to quote only a few), more and more corporate have recognized that winning a customer is less and less about price competition and product differentiation, and more and more about providing an amazing customer experience – which encompasses the value proposition, the quality and relevance of interactions and the relationship over time. Brands that offer superior customer experience bring 5.7 times more revenues than their competitors.
Today, many companies – traditionally organized around product lines and sales channels – are launching transformation programs to pay more attention to their customers. We hear about customer focus, customer centricity, customer mindset … Many use these notions interchangeably. Are they all the same? In this article, we will be addressing the differences of these notions and how they shape the change efforts in the organizations.
Customer Focus as a new lens on the Customer
Customer Focus programs aim at increasing the attention of the organization on customers. It starts by talking more about customers at all levels in the company, listening more as well, developing measures of customer satisfaction to complement the traditional internal measures of efficiency. It is a push movement, pushing internal resources to look outside.
Such programs are attempting to understand how to sell better the existing solutions and adapting them to fit better with customer expectations. The collection of information from customers is often bounded by the existing business model and organization. For example, insights gathering is primarily about listening to existing target segments with the perspective of selling more to them (starting with a hook product and harvesting the relationship through upsell and cross sell).
Most often, experience design initiatives are included in Customer Focus programs: at a minimum, it relates to upgrading the processes sustaining the interactions with customers, based on the level of complaints and dissatisfaction or internal bottlenecks – a great legacy of lean programs. Typically, transactional Net Promoter Scores (tNPS) reveal a low satisfaction at certain touch points and an internal team is mandated to fix the issues. More advanced approaches will map end-to-end customer journeys and redesign part of the cycle while removing main pain points – still within the constraints of existing systems.
Evolving metrics is another key element of Customer Focus – starting with selecting a new set of indicators related to customers and elevating them to collective goals. When top management – including functions which are not directly in contact with customers – sees part of their compensation tied to customer satisfaction, this represents a major shift in the governance practice that cannot be underestimated. One of the necessary arbitrages is to define the weight of those metrics as part of the reward system. If the share is set low, Customer Focus might remain at the level of Best Efforts.
Customer Focus as a program including strong communication from the top, increased and shared knowledge about existing customers and pain point fixing practices can certainly improve the company culture and the customer experience to a certain degree – related to the usual speed of change and the burden of legacy systems and processes. Appointing a customer-focused advocate – the Chief Customer Officer – is a great idea: its role is to be the voice of the customer and ensure that customer focus is maintained throughout your organization.
If launching a customer focus program might be a good way to engage behavioral changes, it shows some limitations in fundamentally modifying the culture and the processes in an organization.
Customer centric as corporate DNA
Customer centric companies put the customer at the heart of their organization to the point that, when it comes to hard decisions, customers’ interest prevails. A great example of this is Johnson & Johnson whose famous credo states “We believe our first responsibility is to the patients, doctors and nurses, to mothers and fathers and all others who use our products and services”. It is very clear: patients come first. Placing Customers as a superior priority among other stakeholders helps shape the employee mindset and facilitates decision making.
Customer centric companies spend extra efforts in understanding their customers, segmenting them based on lifetime value rather than one-time transactions and focusing their efforts on building relationships. This has implications on systems and organization. While 78% of customers say they expect consistent interactions across departments, their expectations are falling short: 59% say it typically feels as though they’re communicating with separate departments, not one unified organization. Accurate Single Customer View and robust Customer Relationship Management systems represent the backbones of IT architecture.
Metrics around customer satisfaction, loyalty and lifetime value are core measures of performance at the same level than financial performance metrics. Employees think Customer First and new hires are recruited based on their higher level of empathy, listening skills and problem-solving mindset. A customer centricity council is a critical pillar of the company governance and any investment decision is filtered through the lens of the customer benefits.
The most customer centric companies are well known as they make up the top ranks of annual customer satisfaction reviews. It is interesting to see that industry sector is not a show blocker – brands in retail (Trader Joe’s, Costco) and also banking or insurance (USAA) make up the ranks next to the Apple’s of the world.
It’s time for Customer Led
Customer-led corporates are built for and with the customer. These companies live and breathe their customers and are obsessed with providing incomparable experiences.
They think of their customers as people and not simply customer numbers to process. It starts with how they develop their solutions. I would like to refer to Harvard’ Professor Clayton Christensen’s “Jobs to be done”. This approach is about getting under the skin of consumers to understand what their specific goal is and the thought process that would lead them to spend money on the solutions to do that job. Instead of developing solutions internally and in isolation, they would solicit consumers in co-creation models or crowdsourcing. As an example, for almost a decade now, Coca-Cola shifted its model to be more open, working with customers to enhance communications and even rely on consumers for product development.
Customer Data is key: many consumers are prepared to pay a premium for personalized, differentiated, first-to-market products and services. With high-tech success stories such as Amazon making customers acutely aware of what is possible, 75% of customers now expect companies to use new technologies to create better experiences. This might mean using a customer’s browsing and purchasing history to make personalized recommendations, or sending notifications and communications based on life events, leveraging chatbots to collect and qualify information, so that each interaction is more relevant.
Customer-led companies embrace new ways of working: shared vision and impact goals throughout the organization, collaboration and team work, customer experience permeating everything, autonomous data-driven decisions, focus on trust and learning,… Agility is the way to be – from agile teams to deliver customer value and innovation to leadership who actively supports a learning organization and mobilize brainpower. Avanza (Swedish bank) has divided by 6 the number of teams involved in product development; increased time to market and employee satisfaction by deploying an agile way of working.
Another feature of Customer-Led companies is about customers to the table. When sustainability and brand reputation are more and more important in preference drivers, some companies (only 1 in 3 B2B companies in the US) invite a customer on their board of directors. This helps shift some of the focus from internal topics (risks and audit, finance and results) to external dynamics, consumer insights and real-life stories. Based on a Survey from the Journal of Marketing on 329 B2B firms from 2007 to 2015, it appears that having a customer on the board increases firm performance by 11.7%. Whilst Customer on Board is one option, another model is to build a Customer Assembly, made up of a group of dedicated customers focused on working with the company to improve their products and services, strengthening the links between customers and management to ensure that customer views are listened to and implemented at the highest level.
Rather than thinking systems, customer-led companies thrive in eco-systems. They have the ability to consider the customer in its entirety and build solutions in alliances with others. Operating in an ecosystem can transform how companies engage with customers, by creating multiple and diverse touchpoints, by developing solutions that meet more comprehensive customer needs, and offer frictionless experiences that reduce customer loss and churn. Google or Alibaba are examples of grown or acquired ecosystems. In the insurance world, Nationwide Insurance is a recent example of how curated technology ecosystems can deliver a differentiated customer experience: its Spire2 digital insurance platform, designed to give millennials a simple auto-insurance experience, is based on an outsourced and closely integrated ecosystem of established and emerging technology providers, including Microsoft, Socotra, Cambridge Mobile Telematics and many more.
It’s a journey
Deciding to be a customer-led company is a strategic choice with many implications – where customer always comes first, before shareholders or even employees, although all stakeholders will enjoy the benefits from executing on that choice. It takes a great deal of efforts, persistence and change management to shift from a product and distribution mindset to a customer-led organization. Engaging in that journey requires clarity, courage, and commitment!
Forbes.com – 50 Stats That Prove The Value Of Customer Experience – Blake Morgan.
Salesforce.com – How to Improve Your Company’s Customer Focus – Vala Ashfar