Many companies talk about being a customer-centric business. For example, 80% of digital strategy professionals say customer centricity was a top priority prior to COVID-19, and 72% say it has become an even higher priority in a post-pandemic world.
Yet, only 14% of executives say that customer centricity is a true hallmark of their companies, and only 11% believe their customers would agree with that characterization. In fact, brands have been struggling to deliver positive engagement with their customers in a post-pandemic life, with Forrester reporting a fall in customer experience quality across industries for 2022 — the first decline since 2017.
Caring About Customers: Baseline Expectation
Demonstrating that you really know your customers is now becoming a base expectation. In the most recent Salesforce “State of the Connected Customer” report, 88% of customers said the experience a company provides is just as important as its product or services — the highest level in the study’s history. Great experiences also improve the bottom line: 87% of customers report that a good experience positively changed future buying behavior, from recommending products/services to purchasing or using more of them, and customer-centric companies are 60% more profitable than those without a similar customer focus.
Case in point: the fast fashion brand Uniqlo, which saw a 49.7% increase in operating profit through the first half of 2022. CEO Tadashi Yanai’s top management principle is this: “Respond to customer needs and create new customers. Only because we have customers are we able to have a business. Therefore, customers must be at the center of what you do.” Uniqlo maintains all product planning, design, manufacturing and distribution capabilities in-house so it can stay close to customer needs and respond quickly based on what customers are buying in its stores.
To truly evolve to a customer-led way thinking, companies need to shift from a share-of-market mindset to one that focuses on increasing the share-of-life they occupy in their customers’ lives. Increasing share of life happens when brands consistently deliver more and more relevant value across the daily lives of the customers they serve. If this is done well, customers will believe the goods or services provided are worth more than they cost — and drive retention and attract new users. For example, 65% of consumers would pay a premium of at least 5% to buy from brands that delivered outstanding experiences.
To live up to the promise of customer centricity, several elements of a business—including strategy and insights, products and experience, and key enablers of data, operations, and culture — must work synergistically.
3 Key Dimensions for Achieving Customer Centricity
1. Where to Focus: Develop Rich Insights
To begin, companies must deeply understand the daily lives of customers through robust qualitative and quantitative research and data — and use these insights as a cornerstone for setting business goals and strategies. “Deep understanding” means knowing the goals, needs and wants, attitudes, behaviors and pain points across the life of your relationship with your most valuable customers. This insight allows you to identify the moments that matter most to customers, and work continuously to improve these moments through products and experiences. Give priority to the moments most likely to delight customers and distinguish your organization from competitors.
What does this look like?
Hyundai begins tracking customers from the moment they search for the company, quickly building long-term relationships early and often. This creates vast amounts of data and insights that allow Hyundai to follow customers through their entire buying journey and offer a personalized car shopping experience.
And with over eight million products offered, Wayfair relies on predictive analytics and artificial intelligence to create detailed buyer personas that help identify needs and personalize the shopping experience for each unique customer. Further, by democratizing the insights from more than 40 billion customer actions each year, every department can be responsible for reshaping and executing Wayfair’s strategy.
2. What to Do: Build Insight-Led Products and Experiences
The insights you develop should inform the strategies for all products and experiences that touch your customers. Your goal should be to meet the goals and exceed the needs and wants of customers, aligned to your brand’s core promise. Experiences must be dead simple, minimize friction, be seamless across all channels (live or on a screen), and be tailored to the personal desires of each customer.
Products and experiences must also be iterative, responsive to customer expectations — using on-going measurement of outcomes to continuously improve and elevate them. In our own soon-to-be-published human capital management study, we found that 80% of digital leaders encourage iterative work. Iterative improvement can help ensure customers’ engagement with a brand, drive greater willingness to spend and limit their consideration of competitors.
Amazon reports that 90% of Amazon Web Services product is driven by what customers say matters most. Further, Amazon deploys a new software change every 11.7 seconds. By deploying more frequently, Amazon teams can constantly provide iterative value, learn more quickly and deliver changes that are less disruptive to the customer experience. The remaining 10% of innovations arise from needs that Amazon’s customers may not be articulating. Because it remains close to customers and relentlessly focuses on their needs, Amazon can read between the lines and invent on their behalf.
3. How to Do it: Leverage Data, Business Operations and Organization and Culture
Data: The fuel for the customer engine is data. Data — be it qualitative, survey based, or first/third-party data — is the source of the insights that enable you to meet customer needs. Continuous data experiments should guide your efforts, using a test-and-learn approach to constantly refine insights and keep up with ever changing customer demands and expectations.
To give viewers what they want and shape the culture of modern media, Netflix collects data on more than 25 million users, 30 million plays per day (including rewinds, fast-forwards and pauses), 4 million ratings, 3 million searches and much more metadata. Running these numbers allows Netflix to place winning bets and develop widely acclaimed hits such as “House of Cards” and “Arrested Development.”
Business operations: A customer’s experience is in part enabled by the end-product of organizational processes. Maintaining a strong customer experience requires effort in behind-the-scenes areas such as reducing cycle time, ensuring workflows are connected and synchronized across disciplines, and driving repeatability so each experience is consistent.
Starbucks utilizes a set of artificial intelligence (AI) initiatives called “DeepBrew” to keep operations efficient, free up time for partners, engage customers and improve sales. By using AI in its mobile app to understand individual customer preferences and buying patterns, Starbucks can both provide a highly personalized experience and reduce cycle time from order to pick-up.
For example, if a store receives a digital order for four iced lattes but the customer is still 10 miles away, AI can analyze traffic patterns to determine when the customer may arrive. Baristas can then decide when to make the drinks to ensure freshness. Improving workflow efficiency not only improves the customer experience but also eases workforce stress and enhances employee satisfaction.
Organization and culture: These are perhaps the most critical elements. ALL employees — not just the product development and marketing teams — should be focused on meeting and exceeding customer needs and desires. Teams must move away from silos and collaborate horizontally across functions, with each team member focused on how their function contributes to creating more value for the customer. The most advanced companies organize teams aligned to different portions of the customer journey — from acquisition to retention — and align incentives with the successful delivery of customer value-based objectives and outcomes.
The culture of a company should also encourage exploration of ideas. In West Monroe’s recent human capital management research, we found that 87% of digital leaders claim to have a fail-fast culture where experimentation is both expected and rewarded. These organizations delegate decisions, allowing employees to act more autonomously so they can move at the pace of customer expectations.
DoorDash instituted a program that requires all non-delivery employees — from engineers to senior executives and the CEO — to make a food delivery at least once a month. The founders want everyone to experience different parts of the customer journey to understand customers and the product. "By engaging as a Dasher, supporting a merchant, or shadowing a customer experience agent, employees learn first-hand how the technology products we build empower local economies, which in turn helps us build a better product," the company said.
Zappos moved its headquarters from San Francisco to Las Vegas after experiencing a local shortage of dedicated, high-caliber customer service personnel. Phone representatives at Zappos are encouraged to stay on with a customer until all issues are addressed. But because most phone representatives were temps, rather than people who want to make customer service a career, Zappos did not feel it could deliver the “wow” experience for which it strives. By moving to Las Vegas, it was able to tap into a larger supply of workers who considered being part of the customer service team for a fun, growing company to be a viable and attractive career choice.
Related Article: Providing Customer Experience In Times of Crisis — Again
Start With a Share-of-Life Mindset
Moving an organization toward customer centricity doesn’t happen overnight. But adopting a new mindset — focused on increasing your share of a customer’s life — can help spark and drive real change. Once you begin thinking about that goal, then back it up by:
- Setting up a customer insight learning agenda.
- Using customer insights to inform development of products and experiences.
- Finding new ways to embed customer obsession into your organization’s operations, structure and culture.
As has been the case for the customer experience leaders highlighted above, tangible results will begin to follow.