Strategy & Leadership

What if customer focus turns out to be just an empty shell?

May 4, 2015

Do you also have colleagues or friends who are convinced of that they are empathetic while in reality they only talk about themselves? Who claim to be concerned about the fate of others, while they would not even stop for a pedestrian at a crosswalk?  It is easy to say that you think of other people, or even that you place other people's interest before your own, while in reality self-centered behavior is the norm for you. Seeing things from your own perspective is, of course, easier than from your fellow man’s point of view. To be keenly focused on your own interests is easier than walking in other people’s shoes.

The same holds true for companies. Employees and departments already find it difficult to empathize with each other, and customers are just too far away. Companies say they are committed to the customer, but the customer truly comes first for a small number of employees only. They talk about customers but hardly ever with customers. This form of corporate egocentrism contrasts sharply with their self-image as a customer-focused organization.

Degree of customer-centricity

In recent years I have investigated the extent to which organizations really put the customer first, according to their degree of customer-centricity. What is so striking here is that managers broadly agree with the statement that creating value for customers is the raison d'être of their organization. They accept the premise that organizations are tools with which certain target groups can be served.

Terms such as “customer focus," "the voice of the customer," "service" and "customer value" are widely embraced as commendable. Yet few companies score well on any standard of customer-centricity. This is a real paradox.

Managers do not fully understand customer-centricity

Obviously, to be "company-centric" is easier than to be "customer-centric," so part of the explanation lies in the natural tendency of companies to become self-involved. But we also suspect that managers lack understanding of what customer focus really entails and do not have the tools to practice customer-centricity. Therefore, let us look at three common misconceptions about customer-centricity, and then explore some tools that can be used to make customer-centricity happen in practice.

Misconception 1: Customer-centricity equals customer intimacy.

In their famous 1995 book, The Discipline of Market Leaders, Michael Treacy and Fred Wiersema argued that in addition to "operational excellence" and "product leadership" there was a third way to create better long-term value for customers than competitors, called "customer intimacy." This approach consists of organizing a company in such a way as to be able to offer precise tailored solutions for the needs of customers. The value for the customer does not lie in the solution being the cheapest or the best in terms of quality, but rather in it being adapted to that customer's specific circumstances. A company that strives for disciplined customer intimacy is organizationally able to provide tailored products or services (or actually more correctly: value propositions) where the price and quality may not be too far out of step with competitors. Rabobank subsidiary De Lage Landen (leasing and vendor finance) is a good example.

It is, however, a misconception that "customer focus" means that each value proposition must be customized. Maybe, the customer does not want an expensive suit but just an off-the-peg suit. If a customer wants a cheap product of acceptable quality, and that customer is placed in the center, then an operational excellence approach fits a customer-centric organization. Postal company Sandd, for instance, knows where intelligent cost savings can be made by talking intensively to its customers. But also companies that pursue product leadership, such as TomTom and global market leader in revolving doors Boon Edam, put clients first, also when developing new products. So-called "open innovation" – involving outsiders, including customers, in innovation processes – is a trend that fits a customer-centric product leader. In short, regardless of the value approach you choose, the value perception of the customer can always be in the center.

Misconception 2: Customer-centricity equals "the customer is king."

No, the customer is not always right. If only because different customers can have contrasting requirements. A company that does everything, for all customers, will not be focused enough to become really good at anything. Every company needs a strategy to determine which customers they should focus on and what needs can be met, also in order to know when they should say a well-considered “no." Companies often find this discipline difficult to maintain, sometimes out of engagement with the customer, but more often out of opportunism. But ultimately it is in the interests of serving its customers that a company maintains focus. Don’t do everything for the customer, but whatever you do, do it for the customer.

Misconception 3: Customer-centricity equals account management.

Appointing someone within the organization as the "first-line" relationship manager can help raise the level of customer-centricity. But we also come across account managers who fanatically strive to achieve their sales target or who bug customers to talk up their Net Promoter Score (NPS; the extent to which customers would recommend you). For some account managers, the customer is only a hurdle between them and their bonus. But even when account managers play a valuable role in promoting their customers’ interests, such managers are often used by others in the organization as an excuse not to have to deal with customers themselves. Customers? Fortunately, we have someone to deal with them. At another counter. The problem is also that the account manager must be the interface between customers and the organization, and is crushed between them. In a customer-centric organization everyone should be customer-facing and responsible for the customer.

How does a company become customer-centric? It all starts with embracing the philosophy and accepting some basic action standards (for example “client requests always come first," "no decision without customer participation," "everyone should speak to one customer every month"). Leadership is critical to make this an integral part of the corporate culture (do managers lead by example, do they talk to employees about their customer focus, what stories do they tell?). There are also some useful tools for reinforcing a customer-centric culture, such as involving customers in innovation and strategy processes, involving all employees in customer research, help desks and customer complaints, and having everyone receive their own services as a kind of "mystery shopper." Only then should the harder things come, such as a good CRM system, customer satisfaction indicators, and a tailored remuneration structure.

This makes it immediately clear why there is a paradox: there is much talk of customer focus but few companies practice it. The hard systems (which you can buy) can only support a culture change, not bring one about. A customer-centric organization is one that thinks and acts customer-centric and you don’t need systems for that but leadership and perseverance.

How does your company change into a customer-centric organization? This is the subject of the Masterclass Organizational Excellence for Senior Executives. This masterclass is part of the Senior Executive Program and will help you refine your skills which you, as a senior executive, use to fulfill your role as a strategist, organizer, leader, and director.

More information about the TIAS Senior Executive Program

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