Customer centricity means that retailers should align products and services with the needs of their most valuable customers 1. Said Peter Drucker more than 50 years ago: “it is the customer who determines what a business is, what it produces, and whether it will prosper.”
Although Drucker’s rationale was spot-on, until recently, adopting customer centricity was a step too far for most companies. Historically, firms have tended to be product-centric. As a result, firms were more internally oriented, with their attention focused on selling superior products rather than on being oriented toward the purchasers and users of those products 3.
However, the advent of the internet and Web 2.0 all changed that.
The digital disruption provides an opportunity to focus on customer centricity
The impact that digitization has on the retail industry is recognized by most commentators as “disrupting”. In fact, retailers have to reconsider the impact of technology on their usual business strategy and aim at implementing digital transformation; otherwise, chances to succeed are miserable, according to ELEKS writing in Medium.com.
The digital disruption is however not always bad news for the retail industry. Digital technology has made it easier to remove the friction points customers have with your business. As a result, the processes are more seamless, straight-through transaction path agnostic of the engagement medium, says Grant Pattison, Senior Manager, Marketing & Sales Technology, IAG.
Retail shoppers are treated with digital surprises when visiting their favorite stores. They ‘re overwhelmed by all the new gadgets and retail technologies such as touch screens, smart fitting rooms and augmented reality that make their shopping experience better. Indeed, data collected via IoT devices and sensors inside the store will help retailers track shopper movement, predict behavior and develop more interactive experiences that appeal to all the senses, concurs Alison Wiltshire, guest author in Internet Retailing.
However, the customers are paying for their experiences. Every time they enjoy the technology, they give something away about themselves to the retailer. The data that the retailer gathers is like gold dust. In fact, retailers are now using predictive analytics and other technologies, along with new organizational structures, to both anticipate and influence customer behavior 4.
So retailers that adopted digital technology have all the means to achieve customer centricity. Not really…
Moving from a culture of product centricity to one of customer centricity
It doesn’t make sense for retailers to use the latest technology to improve their customer’s shopping experiences when everything they are doing is centered round their products. It’s not the products that are important; it’s the customers that are most important!
The true essence of the customer centricity paradigm lies not in how to sell products but rather on creating value for the customer and, in the process, creating value for the firm 3. In other words, customer centricity is concerned with the process of dual value creation.
Your customers rather want to learn that your products add value for them instead of being suffocated about the benefits of the products. Therefore retailers need to communicate their value proposition in the omnichannel; through their websites and in social media networks and in store, suggests Douw G Steyn, Bricks2Clicks.co.za.
So how do you get your company to focus on customer centricity? Ehssan Abdallah article in Heidrick & Struggles’ blog mentioned five essentials of customer centric cultures:
- A customer-centric talent agenda. Executives need to determine how to build and sustain their company’s capacity to deliver customer service aligned with the company’s purpose.
- Meaningful customer service values. Retailers should ask the following questions to frame and define the organization’s customer service values but also better ensure that employees at all levels can understand and articulate how their actions contribute to success:
- What are our customers telling us they need?
- How can we harness analytics to drive day-to-day behaviors and processes?
- How can we connect customer service values to our organization’s purpose?
- Empowered employees. Employees should be encouraged to use their authority wisely, and thereby sending a strong signal to all the stakeholders of the company’s “whatever-it-takes” philosophy to delight its customers.
- A strong sense of accountability. In moving toward an empowered customer-centric culture that leverages talent effectively, leaders must select indicators to gauge performance and track progress for both behaviors and outcomes.
- Leaders who “walk the talk”. When executives promote customer service values, it sends a strong signal throughout the organization that management recognizes the customer as central to its existence.
Strong, customer-centric cultures offer organizations an organic, and sustainable, avenue to better results. Not according to some commentators.
Reasons why customer centricity may not be working (a different opinion…)
Jack Springman, a director at Digital Springboard didn’t make customer centricity part of his objectives this year. Here are his reasons:
- Customer-centricity is too vague a term to be useful. What does customer-centricity mean, specifically? How do you define it? How do you know when an organization is genuinely customer-centric?
- Customer-centricity is not measurable. If you can’t measure it, you can’t deliver it. So how do you measure centricity? You can’t.
- It’s a means, not an end (and one that could be counterproductive). Improving the customer experience is an end; customer-centricity is a means. So even if you could measure centricity, which should be subsidiary to what you are trying to achieve.
- Staff-centricity versus customer-centricity. There is a relationship between staff satisfaction and customer satisfaction. Unhappy employees may battle to be customer centric.
- Customer value requires all stakeholders to be looked after. Of course, no business can exist without customers, but nor can any but the very smallest survive without staff or suppliers or perhaps partners.
- Reduced prioritization in the strategic agenda. Think about the impact in other parts of the organization, especially as customer centricity is supposed to be an organization-wide commitment.
Jack suggests that in place of customer centricity, firms should create value for customers in a way that also creates value for the business.
After all of this, it’s not about the company. It’s about the customer. Jack Springman rightfully said that no company can exist without customers. So, if you want to keep your customers and get some more, you must know what their needs, wants and demands are. Of course, if you add value for your customers, then they will return the complement.
And yes, with aid of digital technology unsurmountable bits of data are collected from our customers for us to utilize. After all, customer’s first point of interaction is mostly nowadays a machine or robot…
Shouldn’t we rather have a customer/ robot focus from now on?
1 Lemon, K.N. and Verhoef, P.C., 2016, Understanding customer experience throughout the customer journey, Journal of Marketing: AMA/MSI Special Issue, 80:69–96.
2 Drucker, P.F, 1954. The practice of management: A study of the most important function in America society, Harper & Brothers.
3 Shah, D., Rust, R.T., Parasuraman, A., Staelin, R. and Day, G.S. 2006. The path to customer centricity. Journal of service research, 9(2):113-124.
4 Van den Driest, F., Sthanunathan, S. and Weed, K. 2016. Building an insights engine, Harvard Business Review, 94(9):64-74.