November 2018 | Reading List
In a legendary 2005 study by Bain & Company, 80 percent of businesses surveyed said they delivered a superior customer experience. But their customers disagreed, saying only 8 percent of them were really delivering.
You might think 13 years later, with customer centricity front and center in the strategies and mission statements of many organizations, things would be different. It looks like they’re actually worse. In their new book, Wharton’s Professor Peter Fader and Wharton Interactive’s Executive Director Sarah Toms argue that companies that think they’re customer centric not only aren’t delivering, but they don’t even have a clear idea about what customer centricity is or how it should be executed effectively.
As they write in The Customer Centricity Playbook (Wharton Digital Press, 2018), “Many organizations assume they’re already customer centric, because they believe customer centricity is all about perfecting customer service or shifting corporate strategies to better align with the needs of their overall customer base. The term certainly sounds like it has something to do with making the customer the central focus of your organization. But it doesn’t.”
After defining what it really is, Fader and Toms argue convincingly that the move to a customer-centric strategy isn’t just good for business — it’s vital to survival. Witness the resurgence of Best Buy, which just a few years ago was expected to go the way of CompUSA, Circuit City, and Radio Shack. The rare success story of a big-box retailer thriving in an Amazon era can be attributed to a number of customer centric moves made by CEO Hubert Joly, including offering what its highest-value customers want: better staff expertise, service, and installation.
The Customer Centricity Playbook then offers tactics and insights for customer acquisition. Fader and Toms explain the right and wrong ways to think about customer lifetime value (CLV, a key building block for customer centricity) and share powerful new methods for acquisition (hint: they deem personas and demographics as “archaic customer acquisition approaches that should be retired”).
After acquisition the book focuses on fine-tuning retention and development activities, including customer relationship management (CRM), by leveraging CLV, data analytics, technology tools, and processes. They get specific about which data elements are most mission critical, first to calculate CLV properly and then to fully leverage CRM to create and measure enhanced value for the strategically important customers (and by extension, the customer base as a whole).
The Customer Centricity Playbook concludes with the piece of the puzzle that’s often missing from the box: once customer centricity is embedded in an organization’s strategies, how can it be sustained? Like other organizational changes, it takes the alignment of mission, culture, leadership, structure, and processes. To achieve that alignment, the authors present a “Customer Centricity Manifesto” that helps organizations focus on the four key components that must be valued, invested in, adopted, and endorsed: customer heterogeneity, cross-functional uses of CLV, metrics that reflect customer equity, and clear communication with external stakeholders.
Fader and Toms note that, “One day, customer-centric strategies will be seen as standard options in the business world, not as radical departures from today’s omnipresent product-centric thinking.” For those who know they need to leave their product-centric strategy behind, The Customer Centricity Playbook is the first of its kind to provide an action-oriented blueprint for achieving customer centricity.
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