Developing Customer Obsession During Times of Accelerated Change

To get our best Revenue Room? content delivered to your inbox monthly, subscribe for free here .

Defining Customer Centricity

Customer centricity refers to a business strategy that prioritizes the needs, preferences, and experiences of customers at every stage of the business process. This approach involves understanding the customer journey, providing personalized experiences, and ensuring that every aspect of the business aligns with delivering superior value to the customer. A customer-centric organization consistently seeks to create a positive experience before, during, and after the sale to drive repeat business, enhance customer loyalty, and improve overall satisfaction.

“Client-centric companies are 60% more profitable compared to companies not focused on the customer.” Deloitte Consulting

Emphasizing customer-centricity is often presented as a universal solution for a company's challenges, yet many only pay lip service to it without taking action. This term is prevalent in business dialogues and strategic frameworks, but its frequent use has diluted its significance.

To be fair, moving towards a customer-centric strategy where the customer is "the center of everything” isn't without its risks and problems. This couldn't be more true for multisided business models. I will discuss the pros and cons below.

If you are in NYC on June 18th, you should attend LunchLab NYC at The Yale Club from 12 to 4 PM. We will explore this very important topic in depth.?You can request your invitation here .

Benefits of Customer Centricity

Customer-centric organizations enjoy several key advantages, often leading to improved profitability compared to their less customer-focused counterparts. Here are some compelling facts and statistics that highlight the profitability and performance improvements of customer-centric businesses:

Increased Customer Loyalty and Retention:

• According to a study by Bain & Company, companies that excel in customer experience grow revenues 4-8% above their market average.
• Temkin Group found that companies with strong customer experience initiatives have a customer loyalty rate 2.1 times higher than those that lag in customer experience.

Higher Customer Lifetime Value (CLV):

• Research by Deloitte indicates that customer-centric companies are 60% more profitable than companies not focused on the customer.
• Adobe reported that businesses prioritizing the customer experience generate 1.6 times higher CLV than companies that do not.

Improved Customer Satisfaction and Advocacy:

• A PwC study revealed that 73% of people consider customer experience an important factor in purchasing decisions.
• The same study found that customers are willing to pay a premium of up to 16% for excellent customer service.

Enhanced Revenue Growth:

• McKinsey & Company highlighted that improving customer satisfaction can lead to a 2-3% increase in revenue.
• According to Forrester, companies that lead in customer experience outperform laggards in revenue growth by nearly 80%.

Reduction in Customer Churn:

• The Temkin Group found that companies that excel in customer experience have 1.5 times more engaged employees, which correlates with lower customer churn rates.
• According to the Harvard Business Review, increasing customer retention rates by 5% increases profits by 25% to 95%.

Customer Centricity Starts From the Top

Becoming truly customer-centric takes time, skills, grit, and investment. Most importantly, it requires leadership. It starts from the top.?

“If your CEO talks a big game about customer-centricity but doesn’t visit with customers, attend your events, actively engage with attendees and audience members, or take customer feedback seriously, I don’t think you can say your company is truly customer-centric. That’s a very quick litmus test.” Heather Holst-Knudsen (me)

Customer-centricity starts from the top because leadership sets the company's tone, vision, and culture. When executives and senior management prioritize and embody customer-centric principles, it influences the entire organization in several key ways:

1. Vision and Strategy: Leaders define the company's strategic direction. Emphasizing customer satisfaction and loyalty aligns the company's goals and objectives with customer needs.
2. Resource Allocation: Top management controls the allocation of resources. A customer-centric approach ensures investments are made in areas that enhance the customer experience, such as customer service, product development, and marketing.
3. Cultural Influence: Organizational culture is significantly shaped by the behavior and attitudes of its leaders. When top executives model customer-focused behavior and decision-making, it permeates the company, encouraging all employees to prioritize the customer in their daily activities.
4. Accountability: Leaders are responsible for setting performance metrics and holding the organization accountable. By establishing key performance indicators (KPIs) that measure customer satisfaction, loyalty, and engagement, leaders ensure that the entire organization remains focused on delivering value to customers.
5. Empowerment: When top management prioritizes customer-centricity, it empowers employees at all levels to make decisions that benefit the customer. This can lead to more innovative solutions and a proactive approach to addressing customer needs and concerns.
6. Consistency and Alignment: A top-down approach ensures that all departments and functions within the organization are aligned in their customer-centric efforts. This alignment is crucial for delivering a seamless and consistent customer experience across all touchpoints.
7. Change Management: Organizational change often requires strong leadership to drive and sustain it. For a company to successfully transition to a customer-centric model, leaders must champion the change, communicate its importance, and guide the organization through the process.
8. Single Source of Customer Truth: Becoming customer-centric requires a deep grasp of the customer, providing valuable insights at each point of their journey. Enhancing engagement involves understanding customer interactions across brand portfolios, channels, divisions, regions, and segments. You must understand where customers intersect and engage in a multisided business environment and you need to know where the intended intersections are falling short of expectations on each side of the fence.

The Complexity of Building a Customer-Centric Organization in a Multisided Business Model

Creating a customer-centric organization is challenging in any context, but it becomes especially complex when dealing with a multisided business model. These models serve multiple interdependent customer segments and require a delicate balance to ensure all parties receive value. In B2B media, events and trade shows, marketplaces, and professional communities, understanding and integrating the diverse needs of buyers and sellers is critical. Leveraging data analytics and insights from customer interactions can significantly enhance this process, leading to a more nuanced understanding of customer needs and preferences.

Misinterpretation and Misuse of the Term

The concept of customer-centricity is often misinterpreted and misused. If your CEO, or worse yet, your CRO/SVP of Sales, is not meeting with customers and engaging with audience members and attendees, you are not truly customer-centric. The words “customer-centricity” become meaningless, and the term is dismissed internally.

All Talk, No Action

Many companies claim to be customer-centric, but actions do not follow suit. For example, huge amounts of effort go into collecting survey responses at events and generating NPS scores, yet those responses and feedback go unanswered, and no one is responsible for taking action on critical items that require attention. And I will go back to point 1: if a customer has a glaring issue, does the CEO personally reach out to discuss how that problem will be resolved? How is data being used to dive deeper into these issues' root causes, action resolution, and track progress?

Overemphasis on one Customer Segment over Another

Yes, you heard me. You can put TOO much emphasis on one segment at the expense of the other. I see this often in media and events. It can be an advertiser-led or audience-led business approach each with its own philosophy. Bring in the dollars; we can get the audience. Bring in the audience, and advertisers and sponsors will come. Unfortunately, it doesn’t quite work that way. There must be a balance between customer segments to ensure you are responsive to the evolving needs of all sides and identify unspoken needs in time to action them.?You can't have a successful multisided business if one side isn't being addressed equally to the other.

Misunderstood Complexity and Ignoring Required Investments

Implementing a true customer-centric strategy is complex and challenging. Customer-centricity requires a data strategy that generates a single source of truth, provides trusted and meaningful insights, and democratizes data and insights across the organization daily. It requires deep customer understanding, cross-functional alignment and collaboration, new forms of KPIs and compensation, and changes in processes and culture. It’s a marathon, not a race, and capabilities are built over time. Without this, you cannot be customer-centric in a sustainable, scalable, and measurable way.?

Embracing a customer-centric approach may seem daunting, particularly if you attempt to tackle everything at once without first comprehending your present position compared to your desired future state. Achieving success is about finding the delicate equilibrium between fulfilling customer demands and meeting your business's prerequisites for sustainable competitive edge, enterprise value creation, and delivering on stakeholder expectations.

And never, ever try to boil the ocean. Take it one step at a time using experiments and pilots.

Where to Start

Join us in New York City at LunchLab NYC on June 18th from 12 to 4 PM at The Yale Club NY, where we will take a deep dive into Mastering Customer Obsession in Accelerated Times of Change.?

• Rapid learning for executives in revenue-critical roles
• Focused on the unique complexities of multisided business models
• Specialized in media, events, data, and business information
• Actionable takeaways include: Customer-Centricity in Multisided Business Models Playbook, Viability Matrix and Planning Templates for Pilot Programs, and The Eight Capabilities of Customer-Centric Organizations Framework

We have the capacity for 40 executives so please reserve your seat today .

If you can’t attend on June 18th but would like to discuss customer-centricity in a multisided business environment, please don’t hesitate to contact me on LinkedIn.?

*********************

H2K Labs is a tech-enabled value creation specialist focused on multisided business models such as media, events, data, business information, and marketplaces. We help clients accelerate revenue, improve profitability, and increase enterprise value using their single most valuable asset: data. Please visit us at www.h2klabs.com

*********************