How to know if your organisation is customer-centric?
Today’s economy is becoming increasingly competitive. With the rapid growth of technology and the overall liberalisation of consumer markets, the barriers to entry are coming down at a very rapid pace.
What used to take years of development and huge amounts of capital, can be achieved today in months or weeks with a ridiculously low amount of capital. This trend led to two distinct effects in the business world — the consolidation of the “experience-based” businesses such as the Big Tech GAFA, Google, Amazon, Microsoft and Apple and the feudalisation of a balkanised commodity business, such as was the case in retail and consumer goods.
This all-time consolidation of business, if it brings definite competitive advantages and economies of scale, put the organisation at risk of losing its velocity and innovation drive. It is a known fact that the bigger an organisation, the slower and more conservative it becomes. After all, the faith of many large corporations wasn’t that different from that of the many fallen empires that littered our history.
The same way an empire’s unavoidable demise is triggered by its disconnect from the people it serves, a corporation’s meteoric decline is triggered by its disconnect from the customers it serves. It is crucial for any corporations to transform into a more customer-centric organisation at all levels, or it will soon find itself squeezed out of its dominant position by a new-entrant that went above-and-beyond for the same customers it was supposed to serve. However, building a customer-centric organisation or transforming into one is no easy task.
So what is a customer-centric organisation?
Customer-centricity has been a hot topic and a buzzword in a lot of C-suite conversations and investor reports, however a small fraction of large businesses (500 employees and more) are truly customer-centric. It is estimated that only about 20% of companies are customer-centric, with a large discrepancy between industries. Most leaders in the field tend to agree that in order for an organisation to be customer-centric, it must tick all the boxes below:
- Customer-centric practices are the norm across all the organisation’s functions rather than the exception
- The customer journey and their pain points are central to the business competitive differentiation
- The organisation R&D and innovation teams “get out of the building”
- Customer-centricity is at the heart of employee performance at all levels
Customer-centric practices are the norm across all the organisation’s functions rather than the exception
A lot of my work happens within product and R&D organisations. I have the rare opportunity to rub shoulders with some of the brightest and most innovative people in the world. However, more often than not, their daily work routine is not about the customer. The technical and engineering teams are driven by problem solving and intellectual challenges, while the product teams have all their attention tunnelled on budgets, timelines, historical data and internal politics.
Very often, even the functions that are closest to the customers, marketing, sales and after-sales, are measured based on metrics that reward forcing existing solutions on the customers, rather than listening to their feedback and their evolving needs. After all, it is only human to seek comfort and status-quo. And as we all know, status-quo is the biggest innovation killer. And without innovation there can be no customer-centricity.
A customer-centric organisation would have a shared understanding of customer needs and how the company’s solution(s) are addressing those needs. In addition to their own function’s metrics, all the value chain would have a common north star and measures of success that link directly to customer value and success.
The customer journey and their pain points are central to the business competitive differentiation
Customer journeys have been around for a while and one would think that they are a ubiquitous part of most companies’ toolbox. But as most tools, customer journeys are only effective if properly used. Which might be why, according to Salesforce, less than a third of the organisations using this method say they see the benefit of it.
A lot of organisations have not adopted customer journeys or have only used them as part of isolated experiments. A customer-centric organisation would have a shared understanding of customer experience from the moment they discover the brand to way after the actual act of purchase. In addition to their revenue and profitability metrics, all the value chain would have a shared vision of that journey and would prioritise making the customer’s experience at major touchpoints the very best experience customers can get in their market.
I was myself in a similar situation with a technology product team that has been struggling to grow their customer base and was suffering from a very high churn rate. After a couple of days of discovery, the weakest link was obvious. It became salient that the product function was virtually nonexistent in the organisation. The “product managers” were reduced to copywriters serving as conduits for customers’ complaints to the sales and support teams. Self-determined as an “agile” team, those complaints were transcribed as-is in Jira tickets and shipped to the engineering teams to work on a who-shouts-louder principle. With the company losing more customers than it was gaining, it was critical to address that situation fast and shift the focus from deliverables to outcomes.
Shifting that paradigm can happen in several ways. One method that I chose then, is to apply the principles of design thinking to the whole value chain. The challenge was to align the whole organisation on a common vision of the problems to solve and the way ahead. Out of the design thinking method’s toolbox, I picked the customer journey map to be the main visualisation and collaboration tool for all the organisation’s functions. A customer journey map is a diagram of the different states a (prospective) customer goes through before buying from you, with all the touchpoints they have with the company. The map did not only help everyone involved understand how the customers interact with the product but it also gave a very visual aid to pinpoint major pain points in both the sales and product. By focusing on those two points for 3 months, the team managed to not only reduce the customers’ churn threefold, but it also grew new customers’ acquisition by 250%.
The organisation R&D and innovation teams “get out of the building”
Needless to say, there is no customer-centricity without … customers. We’ve seen in the two previous points how it is important to have customer-centricity central to all the organisation’s functions and how the customer journey tool can help bring all those functions together to a common vision of the customers’ pain points and the priority solutions to focus on. However, for those two points to exist, the organisation needs to have a way to efficiently communicate with customers.
What really went wrong is that General Motors has had this philosophy from the beginning that what’s good for General Motors is good for the country. So, their attitude was, ‘We’ll build it and you buy it. We’ll tell you what to buy. You just buy it.’
Michael Moore
The more distance there is between a function and the customer, the more removed it becomes from customers’ needs and the more inward-focused it becomes. In most large organisations, we are often met by the same picture depicted by Michael Moore where the organisation tends to start assuming what the customer wants.
Often justifying their strategy, if it is a conscient one, by claims that the customers often don’t know what they want. Very often quoting Steve Jobs who’s quoting Henry Ford.
Some people say give the customers what they want, but that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, ‘If I’d ask customers what they wanted, they would’ve told me a faster horse.’ People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.
Steve Jobs
A customer-centric organisation would have laid bridges and opened channels with the customers at all levels. In addition to sales and support functions, who are typically customer-facing, all the other organisation functions should make a point of talking to customers on a recurring basis to confirm the assumptions they will make about their needs and also add their own perspective to the shared picture of the customer journey and the common north star and measures of success that link directly to customer value and success.
Customer-centricity is at the heart of employee performance at all levels
Customer-centricity at its heart is a profound organisational transformation. Therefore, it cannot be limited to the previous points where the focus is more on processes, methods and tools. The key element to the success of any organisational transformation is people transformation. I would argue that the reason for the high rate of inefficiencies in applying customer-centricity is due to the failure to factor people transformation in the organisational transformation.
In the previous points, we touched on how aligning measures of success that link directly to customer value is important to customer-centricity. Indeed, the same way as in our empire examples, history have taught us that many empires crumbled because of the rotting in the government’s apparatus, corporations cannot really implement their customer-centricity strategy without a clear buy-in from their employees at all levels. So, switching out lense from the macro to the micro level, the strategy’s translation into tactics should also make sure that the organisation is investing in building employees’ engagement with that strategy. In addition to giving all employees access to the right data and access to the customers themselves, directly or by proxy, any employee’s own performance should be directly and unequivocally tied to solving customers’ pain points and serving their needs. and success.
A customer-centric organisation would have a system in place that rewards customer-centricity and encourages focus on outcomes rather than deliverables. Only then an organisation of several hundreds or thousands of people can all work in concert towards the common north star and keep the customer at the heart of the millions of micro-decisions that are made throughout the organisation on a daily basis.
How to transform your organisation into a customer-centric one?
In this article, we’ve seen that customer centricity is key to a company’s success and sustainable growth. It can serve as an audit model to define an organisation’s level of maturity when it comes to customer-centricity. The outcome of which can be used as a roadmap to either adopt customer-centricity in an organisation or improve it when it was inefficiently adopted. In a future article, we will explore several ready-to-use solutions to address common issues in each of those maturity levels and increase the chances of success of a customer-centricity strategy.
