President Global CEM
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Customer-Centricity Is Not the Solution; It’s the Problem

20th Jan 2014
President Global CEM
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This article originally appeared on Customerthink.com.

I read a blog post by Bob Thompson titled “Starbucks is customer-centric, because it listened… to ME.”

To summarize the post in a few sentences: Bob is a regular customer of a Starbucks store near his house. He had an unsatisfactory experience with that store. He then wrote to Starbucks to voice his dissatisfaction. Starbucks responded and satisfied his needs. He felt good and expressed this in his blog – “Starbucks is customer-centric, because it listened… to ME.”

“Listening to me and satisfying my needs”

As customers, we all share Bob’s view. When a company listens to me and satisfies my needs, that company is customer-centric. Consultants and academics suggest numerous definitions, but no one is more suitable, more authoritative than the beholder – the customer – to tell us what customer-centricity is all about. Fair enough, isn’t it? To the customer, customer-centricity is listening to me and satisfying my needs.

Satisfying my needs echoes the “self-interest” idea proposed by Adam Smith over two hundred years ago. Self-interest drives every individual. “When you satisfy my needs, you’re customer-centric; when you don’t, you aren’t.” It is that simple and direct. Customer-centric companies can’t afford not to satisfy my needs.

But “my needs” are different from yours. Different customers, like Bob, like you, like me, each of us has a different set of needs: more product features, better service, lower prices, shorter queuing time, longer opening hours, more convenient locations, the list goes on and on.

When a company wants to be customer-centric in the eyes of their customers, the company has to satisfy various and different needs. Satisfying these needs consumes tremendous resources.

Customer-centricity is not the solution

Over the last decade, customer-centricity has been the most significant development and trend within customer management. It has become the sacred belief of many companies. This trend has continued to grow as more and more companies join the camp of customer-centricity. I predict that customer-centricity will continue to grow in popularity in the coming years until it hits a tipping point. The tipping point, in my opinion, will arrive very soon in developed countries.

Customer-centricity brings companies two distinct advantages. First, if a company delivers poor or unsatisfactory experiences, such as Telco operators in developing countries, they can listen to their customers to improve unacceptable service and fix the basics. Second, if most of your rivals are not customer-centric, and you are the first company listening to your customers and satisfying their needs, you can stand out and differentiate. The marginal gain is huge.

However, companies in the developed world no longer enjoy these two advantages. Today, the marginal gain for being customer-centric is small and becoming negative. There are three reasons why I say this.

Number one: Satisfying the sophisticated needs of a mature customer base in developed countries takes much more effort than satisfying the basic needs of a relatively immature customer base in the developing world. This consumes a substantial amount of your limited resources.

Number two: When you try to satisfy most needs of most customers, you dilute your resources and attention. You spend less and focus less on what you do well. This reduces customer happiness created by your branded pleasures.

Number three: When you are just like every other company in your market trying to satisfy most needs of most customers, you make yourself more like you rivals. This homogenizes your brand.

Customer-centricity IS the problem

For the coming decade, the most pressing concern of the companies in the developed world, especially the United States and Western Europe, is how to survive and continue to make a profit. A stagnant economy and thin profit margins place strong pressure on resources. Knowing how to put limited resources to best use will distinguish winners from losers in the coming decade.

I am not a Christian, but I know a famous story in Bible, the loaves and fish, in which a few loaves of bread and a couple of fish feed five thousand people. It is a miracle when we put the story in a religious context, but it becomes ridiculous when we consider it logically. Do you really think two fish and five loaves can feed five thousand people? Do you really think you can use the limited resources of your company to satisfy the seemingly endless needs of your customers?

The issue we face now and in the foreseeable future is how to put the limited resources to best use. Customer-centricity demands more resources, reduces customer happiness and homogenizes brands. Customer-centricity is not the solution to the problem; customer-centricity IS the problem.

Stop deluding yourself – there’s no such thing as having it all

The solution to the problem of putting limited resources to best use is simple but not easy. The solution to the problem is definitely not customer-centricity. May I suggest an alternative approach? Stage a Resource Revolution!

Allow Pain, Be Yourself, and Unleash Your Full Potential

To kick off the resource revolution: 1) allow imperfections and pain to release resource constraints; 2) be yourself by identifying your own Branded Pleasures and Good Pains; and 3) unleash your full potential by maximizing the gap between Branded Pleasures and the Good Pains. Customer-centricity is wrong and will fail. Wake up! Stop deluding yourself – there’s no such thing as having it all.

Allow pain, be yourself and unleash your full potential. Customer-centricity is wrong and will fail. When I was teaching my ideas in the United States, a woman exclaimed, “Sampson, you’re either insane or you’ll be very successful!” I am not sure about being very successful, but I am sure I’m not insane!

The current direction of customer management – customer-centricity – is wrong and won’t last long. As I said, it consumes too many resources, reduces customer happiness and homogenizes brands. Sooner or later, as the external environment worsens, when the destructive impact of customer-centricity becomes obvious, the management of your company will stop listening to you.

You need to change course and shift direction. My suggested alternative is not the only solution to the problem, but it is a better approach than customer-centricity for deciding how to put the limited resource in best use.

Face the Problem. Face the Reality. Abandon Customer-centricity

Consultants and academics may argue that the definition of customer-centricity is not satisfying most needs of most customers; they offer hundreds of different definitions. This reminds me of the arguments over the definition of CRM. CRM may be defined as a business strategy supported by technology. A decade ago, if you asked an average businessperson “What is CRM?” the response might be, “Do you mean Siebel?” If you ask the same question today, the answer may have changed to “Oh, you mean Salesforce.com.” CRM is software is the common belief and often the reality; CRM is a business strategy is the academic definition. Common belief – reality – always wins out over the book definition.

The same applies to customer-centricity. The common belief, the reality of customer-centricity is listening to me and satisfying my needs. If your company does that, you are customer-centric; if you don’t, you aren’t. Let’s cut the hours and days spent arguing about the definition of customer-centricity. Let’s save that time for problem solving. We cannot solve the problem if we don’t face reality. The problem is simply how to put limited resources to best use. The reality is this: customer-centricity is not the solution to the problem; customer-centricity IS the problem. “

"Sampson is right. Just reacting to every request that customers make of your business, without consideration for the brand you want to build and the customers you wish to serve, is a recipe for disaster. Fortunately, I’ve yet to run into a business leader who takes such an extreme position,” said Bob Thompson in his blog.

Bob is right. No business leader takes such as extreme position because the common belief of customer-centricity is unrealistic and unattainable for all companies. No company is able to meet this expectation. Pure customer-centricity does not make customers more satisfied with you than with your competitors and it creates waste by allocating resources ineffectively.

Face the Problem. Face the Reality. Customer-centricity is wrong because it's ineffective; it reduces pleasures, wastes resources and homogenizes brands. Customer-Centricity Is Not the Solution; It’s the Problem.

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