The Real ROI Of Being Customer-Centric
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No business will survive long without satisfying its customers. That much should be evident to any company whether it is established or just starting out. Yet, there is a big difference between being customer-focused, in the traditional sense of supply meeting demand, and placing customers at the very heart of everything you do. While one is surface deep, a promise made in glib marketing statements such as ‘our customers always come first’, the other is a strategy that permeates to the roots of a business and engages every employee. And, that is what we are looking at today.
The reason is that it is easy to fall into a trap of falsely thinking you have made the switch to putting customers at the heart of your strategy. As Jay Galbraith points out in Designing the Customer-Centric Organization, "the product-centric mindset is an entrenched one and, like the pit bull, does not relinquish dominance easily." He warns against "a cosmetic gloss of customer focus."
So, it is a case of having the right approach because every business is now publicly monitored and judged as never before. In our current climate, consumers are more demanding, informed and vocal than at any other time. Consumers, not providers, now call the shots and expect on-demand services tailored to their precise needs. No longer is it possible to compete on price or product alone. Genuine success –the kind you can measure– depends on customer experience and how it is transmitted in a global all-seeing all-hearing marketplace.
But, let’s start with bad news – and what happens when it all goes wrong.
What happens when your customers are unhappy
According to Gartner, 89% of companies now expect to compete largely on the basis of customer experience, and it predicts that in 2017, 50% of consumer product investments will focus on innovations to improve customer experience. But sometimes it just falls apart.
Take United Airlines’ recent PR disaster. When a passenger was forcibly dragged from his seat, the world looked on aghast. The result: reputation, and share price, plummeted. Twitter, Facebook, YouTube, blogs and other social media spare no company –no matter how deep the pockets of the business in question. In The Reputation Society: How Online Options Are Reshaping The Offline World, the authors argue that power and influence continues to shift away from people with money and nominal power. While consumers’ offline personal networks are small, their online worlds are wide and deep, with lines of trust established depending on a person's connections. The result: a bad review can reach thousands if not millions.
But the power to break is also the power to build, and digital technology not only puts consumers in control, it also gives companies sophisticated tools to get closer to their customers. Big data and analytics help businesses to better understand customer needs and circumstances, affording insights that provide levels of attention and care that were not previously possible. All of which improves operational efficiency, reduces costs and boosts revenue.
The ROI of being customer-centric
How do you place customers at the heart of your business? First, let’s define what this means in the internet age. Just as a real heart won’t work properly until it is connected and supported in the right way, your customers will only become the beating and happy heart of your business when all the organisational arteries are working flawlessly before, during and after sales.
Nowadays it’s fashionable to talk of customer journeys and touch points. This is not about one call centre conversation or a single online exchange. It's about the collective experience that a customer has of your brand across all touch points, both human and digital. How committed and helpful are you when you interact with a customer? Are you plugged into social media? Do you have the right systems to monitor, analyse and react to customer needs and sentiment?
You must begin with your corporate culture, the attitudes and values that employees bring to their day-to-day dealings with customers, and how they feel about their roles in the company. This must work its way through every level of the organization, creating a shared understanding and commitment to keep customers centre stage and served at all times.
One of key benefits of being customer-centric is increasing customer loyalty and customer retention rates. Every positive customer experience has an equally positive cost value for the business. And satisfied customers not only become repeat customers, they also become advocates, spreading the word and widening the potential marketplace for a product or service.
Here we see the halo effect of social media, making reputations as much as undermining them. Bain & Company reports that customer retention is far better for profits than customer acquisition, because increasing customer retention rates by as little as 5% will boost profits by at least 25%. Moreover, according to The 2011 Customer Experience Impact (CEI) Report, commissioned by RightNow Technologies, 86% of consumers will pay more for a better customer experience.
Related: Five Ways To Improve Company Culture
Amazon sets the standard
Countless brands have mushroomed thanks to the transformative power of the internet, and many have used technology to both serve their customers and understand them better. Some have become paragons of customer service, such as Apple and Google, demonstrating that success is as much about building brand equity through customer experience as it is about innovation. Few do it better than Amazon, which is why it still tops consumer polls for companies with the best customer rating. It’s well documented that CEO Jeff Bezos leaves an empty chair at all important meetings, a space that represents the customer – an invisible presence to whom all employees are answerable.
Customers are tracked across all channels, ensuring that you have a coordinated and rewarding experience at every touch point. That includes product search, checkout, delivery, and feedback. Cultivating lasting relationships is one of the main reasons why Amazon has grown from a startup just over 20 years ago to a US$ 430bn business today – almost double the market capitalisation of Wal-Mart.
Lego: getting it right after getting it very wrong
While Amazon has been on target from the start, some brands have had to learn from their mistakes. This is what happened to the toymaker Lego, after it nearly went bankrupt in 2003. Instead of pleasing its customers, Lego decided to please itself, diversifying the business way beyond the plastic bricks that are at its core product and have been loved the world over for generations.
Lego was saved only by refocusing on its core product, and, crucially, by remembering who its customers are. In the rush to expand, Lego lost its way and became the reverse of a customer-centric business. By reconnecting with children and delivering what they wanted, not what the Lego executives wanted, the toymaker returned to profitability. The fall and rise of Lego is a classic example of the perils of an inside-out approach versus an outside-in approach where consumer needs are never forgotten. And the value of putting the customer at the centre of the business? Annual revenue in 2016 was the highest ever in Lego’s 85-year history.
How Emirates improves customer journeys
When it comes to exemplars in the Middle East, Emirates is an airline with an impressive record in a highly competitive field. As one of the world’s fastest-growing airlines, it has risen to the challenge of maintaining a consistently high standard and not only meeting but also exceeding customer expectations while the business expands.
Emirates invests heavily in customer-centric technology and makes a virtue of instilling the importance of customer experience at every touch point, from booking through to arrivals. The airline is acutely aware that its customers are making a mental journey as well as a physical one, and has developed a methodology to ensure that every step is a rewarding one that they will be happy to repeat.
The foundations for success
When you place customers at the centre of your business, you are making a huge contribution towards your long-term success and profitability. In our era of digital connectivity and social media, with consumer power greater than ever before, no business can afford to be indifferent to customer opinions and values. By the same token, today’s technology enables businesses to gather a wealth of data about what customers really want.
Together, culture and technology is the foundation for a customer-centric business. Amazon defines it, Lego has rebuilt it, and Emirates has made it its most important journey.