Famously, early twentieth century retailers Harry Gordon Selfridge, John Wanamaker and Marshall Field coined the phrase ‘the customer is always right’. They all recognised the central reality of retailing—and, indeed, any other business—that without customers, you have no business. This seems obvious. However, businesses around the world have struggled with this idea over the last century. Many have still failed to grasp it.
As we head towards 2021, we believe that customer centricity has never been so important.
Competition, incumbent advantage and customer expectations
In any industry, there is an enormous amount of competition. However, these days the picture has changed. It is no longer the new entrants to many markets who are finding life hard. Instead, it is often the most traditional businesses and sectors that have suffered most. In retail, banking, and insurance, for example, long-established firms have found themselves hard-pressed to keep up with new entrants. The ‘incumbent advantage’ seems to have been turned on its head.
Analysts agree that there are generally two factors behind this. The first is digitalisation. This has brought new business models to existing markets. Incumbents, often managing with legacy systems, cannot respond rapidly enough. The second is changed customer expectations. Customers now expect more personal attention, better recognition of their needs, and faster service.
The firms that are succeeding are those that have recognised that customers want something different—and have been able to deliver it. These firms are customer centric, and they reap the rewards of their approach in customer loyalty and advocacy.
Understanding customer centricity
There are many different definitions of customer centricity. However, it is generally agreed that it is a way of operating that focuses on providing positive customer experiences at every stage: before, during and after a sale. It is also generally agreed to be a ‘whole organisation’ approach. In other words, everyone in the organisation needs to be thinking about what customers want, and how to please them.
In his book Confessions of an Advertising Man, David Ogilvy commented, “The customer is not a moron. She’s your wife.”. At its simplest, this means that businesses need to treat their customers as intelligent people. However, dig a bit deeper, and there is another message: we are all customers. How would you like to be treated? And your family and friends? If you can embed this message, you start to lose the ‘them and us’ mentality that puts people on the defensive. Instead you enable your employees to see things from the customers’ perspective—and focus on how they can best help customers.
A focus on need
Being customer centric does not mean only reacting to customers. That respects their timetable—but it does not necessarily meet their needs.
Consider some of the breakthrough innovations of the last 100 years. Henry Ford, for example, was said to have commented that if he had asked his customers what they wanted, they would have said faster horses. They didn’t know they wanted a car, because it didn’t exist. Similarly, no customer knew that they wanted the iPod or the iPhone, but when Apple produced them, there was a ready market. Being customer centric therefore means anticipating customer demands, often before the customer is even ready to articulate them.
Communication is important—but it must be right
There is a tendency to think that more communication is always better. Pause a moment, however, and it will become clear that this is not the case. If you order something very expensive online, you might want to know its location every second of the time from order to delivery. A pair of socks? Not so crucial. You probably won’t want to provide customer feedback on the socks either, unless they fell apart on first wear. Customer centric companies recognise the difference, and act on that knowledge.
These things matter because companies that get it wrong rapidly lose customers in favour of those who understand the situation. The product itself is only a very small part of the customer experience.
But if customer centricity is a whole company issue, why does it particularly matter to marketers? First, because marketers are part of the company. Second, however, because marketers have a key role in developing and overseeing the whole customer experience. Their ability to coordinate the right information is crucial—and will only become more so as competition and digitalisation increase.