Starting with the customer and working backward works

Oddly enough, “working backward” was Jeff Bezos's and Steve Jobs's guiding principle. To many, it sounds like hyperbole. But the reality is that Jobs turned around Apple and Bezos created one of the most successful companies in history by doing it.

Jan Carlzon, the former CEO of Scandinavian Airlines, is a testament to the power of a customer-centric approach. He turned around SAS in the 1990s by focusing on the customer, famously saying, “If you are not serving the customer, your job is to serve someone who is.” His success is a clear demonstration of the impact of this strategy.

There are dozens of examples, like Bezos, Jobs, and Carlzon.

Isn’t it odd that these leaders came to the same conclusion independently?

Isn’t it striking that nearly every major product innovation over the last decades has, in some way, originated from the customer and worked backward?

The fact that this is so common shows how important and effective it is to focus on the customer.

This brings us back to Michael Porter’s “Value Chain,” which taught us that everything a company does adds value to customers at a margin. That is why your company exists.

It's not about blindly following every customer's demand.

Understanding customers' needs and preferences is vital to creating a product or service that truly serves them. You must also understand how your engagement with the customer impacts the customer.

Customer-centricity means something other than brainlessly doing what the customer wants.

Companies that successfully implement customer-centricity programs do not sacrifice business performance for customer worship. Instead, they find a way to work around business constraints to optimize their market position.

The goal is not simply making customers happy at any cost; it is adding value to customers while growing at a margin within your capabilities.

Does it work?

• Deloitte found that customer-centric companies are 60% more profitable than companies not focused on the customer.
• Bain & Co. found that a 5% increase in customer retention rates can equate to 25% to 90% increase in profits.
• McKinsey found that customer-centric companies have 5% to 10% higher sales and reduce costs by 15% to 25%.

McKinsey also uncovered one of the most interesting findings: a high correlation, circular relationship between high levels of employee and customer satisfaction.

Why does this work?

My simple answer to the question “why it works” is that it changes the focus from internal conflicts or an internal lack of direction to uniting around a common cause.

Without an external perspective, companies are wasting energy battling over what to do next. Customer focus provides that perspective.

Pretty soon, you start seeing:

• Eliminating non-valuable processes can lead to cost savings.
• By everyone having a common viewpoint, internal conflicts are reduced.
• Anticipating customer needs increases win rates.
• Happy customers buy more from you.
• Better use of technology, based on the value that the technology provides.
• More impactful marketing campaigns focused on customer needs and pain points.

What is amazing is that the change can be instantaneous.

Companies that change their focus from internal orientation to the customer see changes almost instantly.

For example, alarming customer satisfaction survey results or a loss in market share create a “shock” and a call to action.

The problem is that that wears off over time and the habit of being internally focused starts again.

But when leadership nurtures customer-centricity, the “shock” becomes lasting change.

It is not about restructuring, shifting people, adding processes, or anything complicated. Customer-centricity is an attitude, and attitudes can change rapidly.

Once a good employee realizes they impact the customer, they should immediately change their attitude. If they don’t change, then are they adding value?

Most people want (deep down inside) to add value.

The question is, how do you link what the employee does to the customer? How do you link each department to the customer?

It starts by understanding the customer.

Over time, knowing how the customer works reduces internal conflicts, improves decision-making, and even improves employee satisfaction. Everyone participates.

Do you want to improve something in your business? Start here.

1. Deloitte, "Customer-centric companies are 60% more profitable than companies not focused on the customer," available at:?https://www2.deloitte.com/us/en/insights/focus/industry-4-0/customer-centric-digital-transformation.html.
2. Bain & Co., "A 5% increase in customer retention rates can equate to 25% to 90% increase in profits," available at:?https://www.bain.com/insights/closing-the-delivery-gap/.
3. McKinsey, "Customer-centric companies have 5% to 10% higher sales and reduce costs by 15% to 25%," available at:?https://www.mckinsey.com/capabilities/operations/our-insights/the-ceo-guide-to-customer-experience.
4. McKinsey, "A high correlation, circular relationship between high levels of employee and customer satisfaction," available at:?https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-boss-factor-making-the-world-a-better-place-through-workplace-relationships.