Don’t Confuse Customer-Centric with Customer-Focused
Being good is no longer good enough — it is merely the entry fee. Traditionally product-centric companies are struggling to grow their market share for one simple reason: Their products are rarely better than those of their competitors. In yesteryear, competitive advantage came from doing something — anything — demonstrably better than your competitors. You could win on quality, convenience, proximity, taste, speed, color, freshness or “truly listening to your customers.”
Today, those differentiators are table-stakes. Quality is pervasive, availability is a click away and options are seemingly endless. As the lines between good and good enough become blurred, a product that is good enough, at a better price point, is often too strong a pull for cost-conscious consumers.
The commoditization brought about by the internet and other leveling factor, is not simply the widespread availability of products and access to services, but the universal raising-of-the-bar in terms of quality. Today, quality is widespread because the lesser players are weeded out — if not quickly, then eventually. Put more succinctly, the internet “outs” under-performers. With the growth and common utilization of review sites such as Yelp, TripAdvisor, Rotten Tomatoes, GlassDoor and more, lesser players and even overt offenders are publicly “flogged” in the virtual public square for all to see.
The errant thinking by company leaders goes something like this: “If we just focus on quality, better quality, increasing our quality — the rest will take care of itself.” This presupposes that quality is the major driver for consumers or clients. In Salesforce.com’s recent State of the Connected Customer report, 81% of business buyers and 79% of consumers agreed that the experience a company provides is as important as the products and services themselves. So what happens when quality is the norm; when quality is the commoditizing factor? Is an incremental increase in quality truly a purchase-driver, or is it merely an enhanced solution looking for a problem?
CEOs and other company leaders stand in front of their organizations every day, admonishing their people: “At the end of the day, it is about quality!” they assert. The markets suggest otherwise. In an eleven year ROI study of stock performance (2007 – 2017) Watermark Consulting found that CX market leaders outperformed the broader market, generating a total return that was 45 percentage points higher than the S&P 500 Index.
The reality is at the beginning the day it’s about quality. Quality is the entry-fee. Quality gives you permission to compete in your category. At the end of the day, it is about preferability. At the end of the day it’s about competitive advantage.
So, when it is increasingly difficult to compete on the superiority of the product or service itself, where does the next generation of growth come from? An increasing number of company leaders are recognizing that future revenue growth lies in envisioning, crafting and delivering a superior customer experience.
Throughout history, merchants have been “product-centric.” Even in recent decades, the key to business success was to create great products or services, know everything about that product and sell it to as many people as possible. Increasing market share was the tangible goal and was driven by quality products and a superior sales apparatus. As the quality of products and services from competitors increased, customers became far more cognizant of the options available to them and cynical of the superiority claims. The pressure to lower prices to achieve sales volume in turn, shrank margins as more and more categories devolved into commodity.
So, with the products, having achieved virtual parity in the marketplace, and the costs-of-goods themselves being optimized, attention has turned to the other party in this transactional relationship — the customer themselves. The growth of a “customer-centric” mindset and culture has propelled some to new heights, while others have struggled to reap the benefits of this new internal paradigm.
The challenge for many is that the concept of “customer-centricity” has been overly-simplified. By assuming that centricity is simply a matter of encouraging your team to be more focused on the customer, it is easily dismissed with a nod of the head or a roll of the eyes. The reality is that customer-centric is to customer-focused, what customer experience is to customer service. They are different, distinct and require a different mindset and appreciation to extract the promised benefit. The customer centric organization prioritizes understanding their customers on a deeper level. It’s not simply satisfying their wants, it’s anticipating their needs.
For decades we have looked at customers through a demographic lens. Customers were segmented based on sex, age, ethnicity, religion and location. The value of that information was important though suspect, as the predictive behavior from a demographic group was highly speculative.
Today, the explosion of available data is allowing for more accurate segmentation based on the tracking and analysis of previous behaviors — buying and otherwise. Though far from perfect, predicting buyer behavior and preferences based on previous activity is far more indicative of future trends than simply relying on demographic data and assuming that all 33 year-old Asian-American women would prefer the same dress style or menu choice.
The product-centric company has its expertise in their product or service, as they attempt to sell it to as many customers as possible — hoping to gain market share. The customer-centric organization by contrast, has its expertise in the intricate lives of its customers, and prioritizes serving them, impacting their lives and meet their needs, wants and desires — in as many ways as possible — for as long as possible. But success comes from more than tracking their customers’ past purchasing habits, but from understanding more about them as individuals. “Share-of-customer” is not merely your share of their pocketbook, it is your share of their life — over the course of the relationship.
Understanding our customers on a deeper level allows for greater alignment of our processes, systems, interactions, transaction and communication and R & D to their preferences and habits. We produce what they want. We deliver it in the way that they want to receive it and we allow them to buy in ways that they prefer.
Your brand promise is who you say you are. The customer experience is how it is received and evaluated by your customers and clients at every point of contact. It’s far more than customer service with a smile. CX is designing how you do business to align your customers’ journey and expectations, with a far greater understanding of how and why they buy. The greater the understanding of the customers, the great potential alignment of your offerings to their preferences. It starts with shifting your focus from the products or services you sell to the customers or clients you sell them to.
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