Wednesday 24 August 2011

What does it mean to be Customer-Centric?

In theory, customers would be at the heart of every business. In practice, there’s a real tension that between business interests and customer needs and wants. All customers want great quality, service, and functionality at the lowest possible price, but businesses exist to deliver a return to their shareholders. So although most businesses start out with a focus on customer needs, bit by bit their attention shifts to profitability, operational efficiency, what their competitors are doing, etc, etc, etc. Over time they become less customer-centric and more company-centric or competitor-centric.

The rub, of course, is that for every business that does not pay close attention to customer needs, there is a competitor who does. And no matter how efficient a business is, unless it produces what customers want to buy it will not be successful over the long term.

Businesses that recognise and respect that tension, however, improve their profitability by adopting a customer centric strategy. By looking at every problem or opportunity from the point of view of the customer, the business gains new market insights and is better able to compete. They remember that the customer always has a choice.

Today’s renewed focus on being customer-centric is due to globalization and the internet, and the increased choice that customers now have as a result. Power has shifted away from the salesperson having all the knowledge, to the customer. An hour’s desk research now produces a list of suppliers in any given market, as well as a host of unbiased, real-life consumer reviews of how well the company or product performed when used in anger. When customers make an important purchase, they can spend as much time as they want researching their options and are quite likely to know more about it than any salesperson. The company that wins their business will offer the best value for their particular situation – whether they are looking long term or short term, whether they want something cheap and cheerful, or something they expect will last a lifetime.

So being customer centric means putting the customer at the heart of decision making and planning; being aware of different customer needs, and catering to a specific segment. Apple has done this to stunning and profitable affect.