What is Customer Centricity? 5 core pricniples
Organization & Management
May 31, 2021
Why would you want to put your customer, and not, say, revenue, at the heart of your product?
Customer centricity is a tricky term, and wherever you go, you will find a different definition of it. I'm sticking with the easiest one: making sure that you put the customer in the middle whenever you create software or any other product or service.
In practice, it means that at the beginning of the creation process, you take the customer's insights, needs, pain points, and delight moments into consideration.
Then, while creating your SaaS, you test it and validate it with the customer. You iterate it, change it, and validate again.
And on top of it, you make sure that you're getting feedback, during and at the end of the process and include it in the next creation.
But why would you want to put your customer, and not, say, revenue, at the heart of your product?
In this article, you will learn:
- What is Customer Centricity, and why is it a must and not nice to have?
- What is the biggest misconception about it?
- What are the 5 principles that support you on the Customer Centric journey?
Why is Customer Centricity important?
The core for Customer Centricity is to understand that being focused on the customer has a clear business value. If your users are happy with the product they recommend, they are more likely to be up and cross-sold and less likely to churn. At the same time, your employees spend less time on the phone, solving issues, or listening to complaints.
To summarize, in the long run, Customer Centricity results in more significant revenue and profit and decreased business costs.
A big misconception about Customer Centricity
Many industries, mostly traditional ones, grew up from a school of thinking where the (low) price is the first and foremost factor to build the company around. However, as much as price optimization is undoubtedly important, it's not the only factor driving overall customer satisfaction.
According to McKinsey & Company studies, 4 major factors matter: the service, the brand, the product, and the price. And in many cases, the price is the least important!
Let's take the airline business as an example. Such carriers as Lufthansa or Emirates Airlines are optimizing their business for the customer experience and not for the price. They're aiming for their services to be quick, easy, friendly, on time, with good food and spacious cabins.
However, even cost-oriented carriers, like RyanAir, started addressing their customer pain points. A couple of years ago, there was no ticket reservation, and travelers had to run for their seats. Currently, you already have a booked seat on your ticket, and you don't have to print it either, as the whole booking process takes place in the app.
The lesson is that even if you have price-sensitive customers, you should be also optimizing the core (and most important for those customers) parts of the journey and experience.
5 principles of customer centricity
Customer Centricity doesn't happen by itself and not overnight. It's a process that needs to be well thought and consists of many elements. Luckily, it's not rocket science either. It's a set of simple day-to-day processes and attitudes that every company can put to life.
Let's break down the critical components of a successful Customer Centricity approach.
Step I: Vision
You need to make sure that you have a clear vision of where you want to be in a specific timeframe, say a year, two, or ten years. The vision should be co-created by your core stakeholders from core departments and cascaded across the organization.
Precise measurement for your vision will come in handy, too, so you can check if the company is getting closer to the checkpoint or not. When we're talking about Customer Centricity, the most common metric you can use is the NPS (Net Promoter Score) or CSAT (Customer Satisfaction). Still, you can and should align it with other critical KPI's such as churn rate or profitability.
A couple of Vision examples to get inspired from:
Amazon: "Be earth's most Customer Centric company; to build a place where people can come to find and discover anything they might want to buy online."
Zappos: "To live and deliver WOW."
Disneyland: "We create happiness."
Step II: Innovate the product and services
We've already mentioned that for the successful Customer Centricity implementation, you need to:
- gather customer insights
- validate the product
- get feedback
- include it into the next version of your software
To successfully capture this principle in your product strategy, I recommend using the design thinking process, especially in tech companies. It will allow you to capture your customers' needs from start to end.
On a more day-to-day basis, your main force to capture customers' insights is your front-line teams, who interact with clients directly. Support team, salespeople, project managers; make sure they understand the importance of gathering feedback and have proper tools to do so.
Feedback surveys, triggered by specific actions, will come in handy too. A survey as simple as "how did you like our platform, and then tell us more about your experience" can be an absolute goldmine of customer insights.
Don't forget about your app store reviews, Google, and social media reviews. Spontaneous feedback often is of the highest value.
Step III: Break silos
Ensuring that your vision is cascaded is about breaking silos, too; it's essential that your employees work together and communicate openly. Not just inside their teams but also across departments.
It's quite common for bigger companies to have several teams with their inside structures. They tend to be working on their own, in isolation of whatever is happening in the other.
When creating a Customer Centric company, you need to ensure that they communicate and optimize experiences for the customers together.
In small companies, regular cross-group meetings are easily doable. But what if the customer journey is long and complex, and there are dozen different teams, each consisting of tens or even hundreds of employees?
Many companies have the owner of the journey, whose role is to ensure that all departments communicate and work together towards achieving that excellent customer experience.
Step IV: Measure
Every team in your company needs to know if they are moving towards achieving your goals, achieving your vision, and understanding the most significant pain points across the customers' journey. And to make it happen, you need to measure.
You want to capture and quantify feedback from different sources and different steps of the customer journey. It's critical to understand not just the overall customer satisfaction but also break it into smaller, more tangible pieces.
For instance: if you think about a digital product, you want to understand the overall NPS or CSAT. But you can break it into understanding satisfaction for different steps of the journey and cascade these customer satisfaction metrics into other teams. It helps to understand and address customers' pain points related to their field, be it the product or the marketing journey.
Collecting the feedback and measuring the satisfaction is crucial from another standpoint, too; you can move from being reactive to being proactive. Suppose you marry the collected data with your customers' profiles. In that case, you will be able to predict their behaviors better and, for example, react by offering a different package right before they churn.
Step V: Culture
Peter Drucker, a legendary management consultant, and writer, once said that "Culture eats strategy for breakfast."
And I couldn't agree more: not that the strategy is unimportant, but that if you don't create the right culture in your company, you will have a much harder time making your vision or strategy happen.
Customer Centricity should be your and your company's way of thinking. It would be best to make sure that every employee understands what it means to think customer first from day one. The culture has to be embedded in the language of the leadership, in the company meetings, and all day-to-day operations of leaders and their teams.
What we have learned
- Optimizing customer experience brings tangible business results;
- The company's vision needs to be clear, and you need to measure it and cascade it across the organization;
- You can't have Customer Centric company without listening to your customers' voice and implementing the feedback in the new version of your product;
- Breaking silos and teamwork of all departments is vital;
- To make the changes possible, you need to measure customer satisfaction and establish metrics. Not just for the whole organization but individual teams too;
- The company's culture binds all the above together and is a fundament for changing employee's behaviors