Customer-Centricity Maturity – A Spectrum
Globalisation and technology have unleashed forces of change that demand more agile organisational responses to this shifting competitive landscape. While Forrester Research and others proclaim the Age of the Customer is here, the type of response and the degree of challenge in transforming organisations to develop and strengthen customer-culture will differ.
Simple Centricity Yardstick
To illustrate the point, consider the table below: Organisation Focus: Product –Centricity v. Customer-Centricity as a simple yardstick. If we utilise the McKinsey 7-S Framework which focuses on key elements that influence an organisation’s capacity to adapt and change in pursuit of organisational effectiveness, we can observe significant differences between a product centric and a customer centric organisation.
Historically, the emergence of customer-focus strategies roughly parallels the major ages of strategic dominance, (see Blog 2 insert link) reflecting differing sources of strategic competitive advantage. In the first half of the last century companies achieved economies of scale in mass manufacturing of products. This gave way to distribution and marketing advantages. In the new millennium digital technologies have underpinned competitive advantages of leaders in the information economy. The accelerated development of data gathering techniques and analytics have enabled detailed tracking of customer interactions to improve all aspects of the customer experience. This has been an important pre-cursor to development of customer-focus strategies.
Today, customer-centricity maturity ranges from narrow or limited customer focus in product centric organisations, to increasing focus on customer experience. In the extreme, customer-obsessed organisations subscribe to immersive, laser focused, customer centricity, enacted through the activities, skills, processes, systems, structures and culture of an organisation, aligned with its business strategy. The customer is at the core of everything companies like Google, Amazon and Virgin do.
If Product-Centricity and Customer-Centricity are at opposite ends of a continuum, reflecting levels of customer-centricity maturity, using the table below, what characteristics are evident in your organisation? Where does your company currently sit on this spectrum? Are you at the product-centric end, at the pointy end of customer-centricity, or is there a mix of observable characteristics with a foot both camps?
Now more specifically, consider elements of marketing, sales, service delivery, and the performance measures that drive behaviour and reward performance. What are you doing well? What needs to change? What’s the ONE thing you could do right now to protect your most important asset? (Hint – without them you don’t have a business!)
The significance of these sorts of questions is at least two-fold:
Are You Paying Attention?
If you are not paying attention to your customers and listening intently to them they may not be your customers near, or long-term. The most recent US research suggests that in global B2B companies the full value of the relationship is being tapped in only 29% of customers. The other 71% are either indifferent toward your company or actively disengaged.
How many millions of dollars’ worth of business are you leaving on the table because you are not close enough to your customers, and don’t fully understand their business and extent of the mutual opportunities afoot?
Secondly, companies that do not get good at customer growth strategies (acquisition, retention and advocacy) will become vulnerable to external forces of change, and risk dis-intermediation from customers, takeover or even extinction. Don’t believe me? Then look at the world-wide trend. According to Forrester Research, the number of companies on listed stock exchanges has almost halved in the last 20 years. Globalisation, digital disruption and takeovers are making a corporate meal of it all. If, as Peter Drucker says, “Culture eats strategy for breakfast,” what’s for lunch? Make sure it’s customer culture and customer-centricity, not product strategy left-overs!
Food for Thought
If you could find a way to increase your customer-focus by strengthening your organisation’s customer culture, and for every 10% improvement in customer-centricity it delivered a 4% improvement in your company profitability, why wouldn’t that be worth having a conversation about right now?
To learn more about strategies to increase customer engagement, improve relationship quality, and strengthen your customer culture, download our CustomerWise Whitepaper on “Customer Focus: How to drive superior performance and profit growth through customer-centricity.” Or perhaps let’s just have that conversation.
Author Note: Jane McIntosh is a Partner at CustomerWise, a company dedicated to delivering customer-centricity diagnostics and strategies, and innovative change management programs to drive and support customer-culture transformation. Projects and initiatives are designed to assist organisations in achieving sustainable competitive advantage and superior performance and profits. email@example.com, or +61 438 802 246 Nov. 2016
Product Centricity v. Customer Centricity