There are countless articles and viewpoints on what constitutes customer-centricity. I find most of the published viewpoints simplistic, confusing, contradictory, lopsided or simply self-serving. Which is why I am pleased to have rediscovered Professor Mohan Sawhney. I urge you to watch the following video.
Here are the key points that I have taken away from this video and others (by Prof. Sawhney) when it comes to customer-centricity:
To grasp customer-centricity it is important to visit product-centricity
A product-centric organisation is one that thinks in terms of products. Focusses it efforts on making and selling products. Organises itself around products e.g. product centred business units. And it measures and defines it success in product terms including product sales (units), product revenues, product market share etc.
There is a good reason for product-centricity. Many great companies are founded on a great product e.g. Dyson and Apple. The downside is that product-centricity lures the company into building better mousetraps rather than looking at it from the customer's perspective: no mice.
Customer-centricity is founded on a belief and rests on 3 pillars
The foundation of customer-centricity is a belief. The belief is that the organisations reason for being (existence) and it's success if based on three pillars:
- Superior understanding of customers needs, wants, desires, motives and behaviours;
- Converting this customer insight into superior (compelling) value propositions; and
- Crafting and delivering a superior customer experience.
A customer-centric organisation puts customers ahead of it's products and priorities
What are the defining features of a customer-centric organisation? Prof. Sawhney highlights three features:
- Values and actively solicits customer input - to get better understanding of customers, to co-create better value propositions and to improve the customer experience;
- Puts customers ahead of the organisations products and priorities; and
- Continuous focus on improving the experience that customers have with the organisation and its partners.
The challenge of being customer-centric comes down to leaders being customer-centric
So what does it take to be customer-centric? This is what Prof. Sawhney says:
- "Ingraining these beliefs and acting and thinking on this central mission is what customer-centricity is about";
- "But perhaps what is most important .... is a culture and a leadership that really puts the customer first";
- "And believes that the customer is at the centre of what we do"; and
- "And if it ever comes to a choice between what is right for the company and what is right for the customer you will always choose and put the customer first."
What does this kind of leadership look like?
In March 2003, with a flip of the switch the Zappos leadership team terminated a part of the business ('drop ship') that accounted for 25% ($16m) of revenues and was "easy money". What makes this amazing is that Zappos was fast running out of money and this 25% of the business was the bit of the business that was easy money! It was easy money in the sense that it did not tie up Zappos cash because Zappos simply took the order and the shoe suppliers fulfilled the order. What was the immediate impact of making this move? In Tony Hsieh's words: "Now we had to figure out how to make next week's payroll". If you are interested that sentence is on page 124 of "Delivering Happiness A Path to Profits, Passion and Purpose"
Taking this decision did not deliver ROI. It took guts to flip that switch and make a bleak situation that much more difficult. So why did the Zappos leadership team do that? Because of their commitment to a bold vision of having Zappos be the brand that is renowned for the very best service. The drop-ship business whilst keeping Zappos afloat was also the business that resulted in unhappy and disappointed customers.
Customer-centric businesses are rare
Prof. Sawhney points out that customer-centric businesses are rare - they are the exception. Why? Because people like Tony Hsieh (the CEO of Zappos) are rare.