November 2013Strategy

Wharton Online: Making the Case for Customer Centricity

customer-centricity

When coming up with innovative products or new brand messages is no longer the most viable growth strategy, how do companies create a competitive advantage? Some are turning to a relatively new solution: customer centricity. But, says Wharton marketing professor Peter Fader, there is a lot of confusion about what exactly the strategy is, as well as how, when, and with whom to apply it. Wharton@Work recently spoke with Fader about a new program — Wharton Executive Education’s first online offering — that aims to find answers.

Wharton@Work: There is a lot of interest in customer centricity right now. Are many companies using it — and are they getting it right?

Peter Fader: There is a lot of interest, but there is also a lot of confusion. Some of that confusion is at the vocabulary level, and it can put up a wall between marketing and the rest of the organization. When you talk about retention, attrition, churn, satisfaction, and loyalty, you need others to understand what you are talking about. You need to be very clear about what these concepts mean and how they work together.

W@W: So communication is part of the problem with getting a more customer-centric strategy in place?

PF: Yes. In Strategic Value of Customer Relationships communication issues will be woven into every session. It is imperative to have someone, or a team of people, focused on bringing clarity. You need to be able to speak clearly to those who might be skeptical, because there may be resistance. You need to be able to explain what it is, why you need it, and how it can dovetail with a more traditional product-centric view.

W@W: It’s not an either-or choice between customer and product centricity?

PF: Right. It is especially important for large organizations. A great example is Cisco. They have some big accounts that bring in a lot of revenue. That is where customer centricity kicks in. It is inefficient to give every account special treatment; you have to prioritize. For most accounts, it’s not just putting them at a lower priority level — it’s not being customer centric at all. Create an automated process for some of your customers. But where do you draw the line? And for those who will get a personalized process, how do you manage it?

You need to strike a balance between customer centricity and product centricity. But we are still so early in this revolution, and there are so few companies doing it right, that the rules for striking the balance are not well established. Many people are just becoming aware of it.

W@W: Why offer the program online?

PF: The subject is evolving, and the rules for applying customer-centric strategies are evolving too. I see the challenge as an opportunity. Through the diversity of the participants and their companies, and multiple ways of interacting with me and each other, we will discover which firms are further along in the process, and which firms are lagging behind. We will identify the best early adopters from among our participants — not just some abstract case study — and we will all learn from what we see is working and what isn’t. As the program nears an end, we will start to write the rules.

The online platform means we can bring together a larger number of participants with greater diversity than we can assemble in a traditional classroom. That diversity will be critical, and we are really capitalizing on technology and finding ways to spark conversations. In this unique social learning environment, the participants will be able to genuinely pursue these issues together.

We are also able to stretch out the learning process over eight weeks instead of a couple of days. Participants can watch the lectures, discuss the learnings with each other, bring ideas to their companies, and then come back to the classroom. That dynamic is unusual. You will be able to start testing the concepts as you learn them, and then share your experiences with the group.

It’s a wonderful setting for this topic in particular, because companies are feeling their way around these concepts, testing the waters. It can be pretty radical for many because it runs against the product-centric mindset. Here you can try out ideas, come back to our group and say, “That idea didn’t float, but this other one really worked.” In other, more well-established, business areas we can say, “Read the book.” Here, it is an organic process. I am looking forward to learning more from teaching this program than from any other program I have been involved with.

W@W: What is the role of your recent book [Customer Centricity: Focus on the Right Customers for Strategic Advantage, Wharton Digital Press, 2012]?

PF: The book lays an important foundation, but the business environment is changing rapidly and the concepts are still evolving. I’m excited to get this opportunity to continue to go beyond what’s in the book, and the online format is the right way to do that.