5 Questions a CEO should ask their business

Whatever your business size, putting your customer at the heart of your decision-making is vital to making your organisation more relevant and responsive to your customer base. Across sectors, many businesses that are market-leading are those who commit to this, demonstrating a sound knowledge of who their customers are and adapting their proposition to serve their needs.

Based on our experiences, we have created a series of questions to help you understand where the customer sits in your business and how you can make some changes to help you become customer-focused.

1.  Does your business have one common way to describe your different types of customer?

The first step in becoming a truly customer-centric business is to recognise that there is no such thing as an average customer. Your customers will fall into distinct behavioural groups with different needs and expectations and these should be recognised by your business and communicated in consistent, common language between functions and levels.

Market-leading brands take this a step further, by bringing to life these different groups so that from the Board to the shop floor, every person within the business understands the key customer types and their requirements. For example, Best Buy has five customer segments with profiles such as "Experience Seekers" and "Budget Conscious". Each store knows who their key segments are and are adapted to serve the needs of that kind of customer. For Best Buy, this approach has led them to a 22% share of market and +3% year on year growth.

2.  Do you know who your best customers are?

Out of all these types of customer, your business should also know who your best customers are. These ‘best’ customers may often be the smallest group, but they usually drive the majority of revenue and upsetting them represents a significant risk to the business. Equally, recognising who are your least profitable customer types, such as ‘Cherry Pickers’ who only come to you for promotions, allows you to make easy savings by reducing investment in promotions or communications to these groups.

Applying this principle, Tesco identified that 32% of its promotions had no impact on its more valuable customer groups and were only bought by ‘Cherry Picker’ customers. In removing these promotions, Tesco made a saving of £300m in the first year alone.

3.  Does your board review key business KPIs and performance by your different customer groups?

You can’t expect your store managers to be customer-centric when their performance is being reviewed on financial measures alone and this is true at all levels of the business. Make the Board measure performance by customer KPIs, however, and this will filter down through the business – encouraging the right behaviour at every level.

Measurement is a key part of this, and it is vital that there is robust measurement and tracking of customer group performance, creating a ‘closed loop’. This is the step many businesses fail to take successfully – for example, one of our clients was spending over £7 million a year on direct mail but was unable to put a robust figure for the return against this investment. However, by putting measurable customer-focused KPIs at the heart of their activities, they were able to reduce wastage and save millions. 

4.  Does the business have regular communications and training around the customer?

Although face-to-face experience is vital, what staff assume they know about their customers may be very different from the reality of different customer types or behaviour. Helping staff to understand the needs and behaviours of these customer groups, and what the strategy is for each, will allow them to support the business and deliver the ‘customer focused’ vision.

In the Best Buy example outlined above, their success was driven partly by aligning staff with the needs and aspirations of the target groups at their store, helping to create an experience that matched the store re-design.

5.  Do you have access to regular and relevant customer insights?

The right insights need to be delivered to the right areas of the business at the right time to enable and empower your staff to make the right decisions. Customer insight is a vital part of this and we often find that this information has either become ‘trapped’ - used only by those who created or commissioned it even when it could be of great use to other functions - or it is not the right information to help that decision-maker.

If the information delivered to your business does not reflect the different requirements between functions and levels of organisation, you may be wasting considerable time and effort in producing something that has no meaningful purpose.