Let’s face it. There is very little new about the concept of customer-centricity. There is however, plenty of room for improvement in both strategy and execution.
What creates the problem?
- The traditional functional and product silo design of organisations creates serious problems. In these instances it’s almost impossible to operationalise around ‘the customer.’ Each silo invariably has its own operational structure, own processes, sometimes its own technology, its own distribution model and very often its own ‘sales’ team. Joining up these silos to deliver a unique and distinctive experience is often a ‘step too far.’
- ‘Slash & Burn’ cost-cutting is not a solution. Customers are not all created equal and shouldn’t all be treated in exactly the same way. Customers are a finite resource and their value lies in their business and value today, as well as their business and value tomorrow – referred to as Life Time Value. (LTV). It’s not in any organisations interest to engage in activity/behaviour that results in the reduction of LTV.
- Developing and implementing organisational capabilities that enable a customer-centric business model creates structural and integration challenges. Many leaders do not have the guts to commit to the required transformation. Furthermore, personal incentives are often in conflict with the effort and investment needed to develop customer-centric capability.
- Many organisations are unable to evolve from the mental model of ‘having’ customers to ‘being’ a customer. As such they’re unable to recognise that they need to provide value that addresses the ‘customer need’ – rather than ‘selling them’ what they have. They are unable to emphasize ‘customer well-being’ in ALL decision making
- Customers are a finite resource and the source of all revenue and profit, today and tomorrow. They are therefore the most valuable asset of any organisation. In most cases there is no-one with the responsibility of managing that asset. There is no one responsible for knowing and understanding the value of the customer today and tomorrow. There is no one who is able to provide a comprehensive and authoritative view of the customer. There is no one who is responsible for creating customer strategy at the highest level of the organisation in order to maximise the drivers of customer value management viz REAP – Retention, Efficiency (cost-to-serve understanding), Acquisition and Penetration (customer development, cross-sell & up-sell)
- ‘Customer Management Illusion.’ Living in a fool’s paradise. Research regularly proves the chasm that exists between what senior executives believe customers think of them and their companies versus what customers actually think. An Accenture study highlighted that 75% of CEOS’ believed that their organisations were customer-centric yet 59% of customers said customer service was somewhat to extremely dissatisfying. (NB: Customer Service is not customer management or customer experience – it is only 1 attribute of a customer-centric business). In a study by the CMO Council 50% of CEOS believed their organisations were extremely customer-centric. Less than one tenth of customers agreed.
Operationalising a customer-centric business model is complex and time consuming. Developing a deep understanding of customer needs, breaking down silos and developing the capability to enhance the customer experience is a good place to start.
Please add your inputs & comments
Filed under: 21st Century Organisation, Change Management, Competitive Advantage, Customer Centricity, Customer Efficiency, Customer Experience, customer management, Customer Relationship Management, Customer Retention, Customer Strategy, Innovation, Leadership, Sustainable Business Performance | Tagged: 21st century organisations, Big Thinking, business innovation, business performance, business strategy, capability development, customer centricity, customer experience, customer experience management, customer strategy, organisational alignment, Sustainability, thinking customer | Leave a comment »