Is Your Business Customer Centric?

Is your company customer centric? Does your leadership team know what that means? According to Peter Fader, “Customer centricity is not really about being nice to your customers. It is not a philosophy. It is not something that can be fostered through a company handbook or mission statement. Customer centricity is a strategy that aligns a company’s development and delivery of its products and services with the current and future needs of a select set of customers in order to maximize their long-term financial value.”

In his book, Customer Centricity, Focus on the Right Customers for Strategic Advantage, Peter Fader reminds us of the famous Nordstrom tire story. In 1975, a customer walked into an Alaskan Nordstrom outpost and asked to return a set of worn-down tires. Despite the fact that Nordstrom did not sell the man the tires – and did not sell tires at all – Nordstrom honored the request.

While this story has become the standard for Nordstrom customer service, Fader believes that the store was wrong to take back the tires. The reason is simple: not all customers are created equal. To put it bluntly, “The right customers are always right. And yes, there is a difference.” In the world of customer centricity, “There are good customers, and then there is everybody else.”

Consider the tire customer: Was he a regular customer at Nordstrom? How often did he shop there? How much did he spend? Was he a brand loyal Nordstrom shopper?

Contrast the tire story with how modern day airlines, hotels, and Amazon treat their best customers. Airlines and hotels have loyalty programs and, as a result, know customer preferences in order to welcome back repeat guests. Even Amazon’s recommended items sent via email or strategically placed on their website for users to see upon login leads to increased sales from repeat customers.

Despite being known as companies that provide superior customer service, Fader argues that Costco, Apple, Walmart, Starbucks, and yes, even Nordstrom are not customer centric. Neither Costco nor Walmart collect data about their customers. While Nordstrom took back a famous set of tires, how much does the store know about each of its customers? Why doesn’t Nordstrom try to have a conversation that reflects a history of transactions with its regular customers? According to Fader, each customer is nameless and faceless when it comes to Nordstrom.

While your local Starbucks barista may recognize you, what would happen if you visited a Starbucks in a different state? According to Fader, ordering “I’ll have the usual” will get you a funny look. While there is a smartphone app, there has yet to be a customer-centric approach that will immediately alert a barista you have never met with the details to create your favorite drink. And as for Apple, while it has designed, manufactured, distributed, and promoted amazing products, how does the company apply any data about its customers to know them better? For Apple users of the iPhone 5, did you receive a personal email telling you about the iPhone 5S or 5C and asking you to upgrade? I didn’t.

Here are the four tenets of customer centricity:

[1] Understand the fundamental differences among your customers.

[2] Understand there is quantifiable value to be found in individual customers so that you can focus your marketing efforts on customers who will generate the greatest long-term value.

[3] Learn how much you should spend to keep an existing customer vs. how much you should spend to acquire a new customer.

[4] Leverage customer data to serve customers in a more personalized manner than any competitor can.

“Customer centricity gives you an advantage. It creates opportunity. It opens new doors.” Above all, customer centricity provides you with the understanding of customer data to create better customer experiences for the right customers, which translates into long-term financial success.

What companies do you think are customer centric?

_____________

Image Credit: Keerati via FreeDigitalPhotos.net.

via Business 2 Community http://www.business2community.com/customer-experience/business-customer-centric-0634144?utm_source=rss&utm_medium=rss&utm_campaign=business-customer-centric