Copernicus Revisited: Firm-Centricity to Customer-Centricity
Over 500 years ago Copernicus, a Renaissance-era mathematician and astronomer, revolutionized astronomy and science by stating that the Earth revolved around the Sun. This countered the prevalent view that everything revolved around the Earth. Today, leading companies and their executives are revolutionizing the business world by demonstrating that companies that revolve around the customer (customer-centric) are not only viable, but have a greater propensity to thrive in our highly competitive, frequently disruptive world. This has upended the firm-centric view that dominated,over the last 100 years.
CHANGING MINDSETS AND BELIEFS
Companies who hold mindset their customers must revolve around them, abiding by their business policies and practices, and constrained to a standard set of product/service offering, are being beaten by their nimble, customer-focused competitors. Companies who designed and sold products meeting everyone’s needs are realizing their offerings meet no one’s needs, a death knell in a world where customers have better options that meet their specific needs. These firms focused, or continue to focus, on growing shareholder value. They optimize their processes for what is best for the company. Today, they are facing declining performance levels and are beginning to realize being firm-centric and solely being driven by shareholder value won’t win in today’s world.
Customers, not companies, hold all the cards. They know, expect and demand more, and have many more choices that better meet their needs. Their expectations are not just influenced by what typical industry competitors offer, but these are now shaped by the practices of best-in-class companies, often out of their industry, like Amazon, Southwest, and USAA. Even more jarring, customers can choose to work with new, unheard of market entrants who deliver the same desired outcome, just radically differently, like Uber, Airbnb, and Venmo.
Firm-centric companies now see their “secure” customers leaving and choosing from a wide range of options. These options reflect the breadth of product/service offerings, customization/personalization options, and varying types of customer experiences. Customers no longer must settle as they often find what they want elsewhere. For firm-centric companies accepting that customer-centricity is essential to remain viable, and hopefully competitive is only a first step akin to admitting an addiction.
Challenging, and very often, changing many of the models, mindsets, and beliefs a company and its leaders hold (or held) and that formed the very foundation of how their business was run and operated is necessary for the firm and its leaders to become or be more customer-centric. For instance, realizing that a mindset that believes compliance with rules and procedures reduces risk and increases efficiency actually does the opposite, especially in a world where customers hold the cards and changes and disruptions continually occur. In this case, enforcing compliance with rules and procedures increases risk as employees are hindered from doing what is right for the customer resulting in revenue loss and reduced efficiencies as employees either find more costly workarounds or waste time going up the chain to get approval for an exception.
A new mindset is called for, one that realizes employees can and need to be trusted, enabled with information, technology, and knowledge and empowered to make the “right” decisions for the customer. This is just one of many shifts necessary to transform and have a customer-centric mindset as shown in the illustration below.
CUSTOMER’S VIEW OF CUSTOMER-CENTRICITY
Customers who buy from well-known, leading customer-centric firms, including Amazon, Chick Fil A, Disney, Harley Davidson, Southwest, Trader Joes, and USAA, value and rave about what these firms offer and the experiences of working with them. While these are only a few examples and B2C, instances abound across industries for both B2B and B2B2C firms. Each experience is valuable in its own way. Notably across all these businesses, the scope spans the entire end-to-end experience of interactions from the first moment of consideration through the post-purchase period, inclusive of the actual product or service purchased, but not limited by it.
What makes these companies special? During the entirety of their experience even after purchase, customers receive and perceive value AND feel special and cared for. Their needs are listened to and understood, and they get the products/services that meet and anticipate their needs. They get it when they want, where they want and how they want. They find these companies not only easy to work with and hassle-free, but a pleasure to work with when interacting in person, on the phone, or online. Customers experience and value consistency across all touch points and channels. They trust these companies because they act transparently and fairly, always with them, the customer, as their primary focus.
Customers know they are not just getting a product/service (output), but an experience (outcome) they desire and value. For example, like other airlines, Southwest moves people from point A to point B, however, they do it in a way that is easy, effortless, and enjoyable for the customer. There are no hassles for the customer with baggage fees, change fees, or unfriendly policies. Customers largely enjoy interacting with Southwest even to the point of having fun. While the output (moving from A to B) to the customer is a commodity, the outcome is what makes Southwest special and their customers loyal to it. The same holds true for the companies mentioned and others like them.
EMPLOYEES’ VIEW OF CUSTOMER-CENTRICITY
First, employees know, understand and embrace their company’s mission. They know the “right thing to do” and are trusted to do so. At Southwest, the Mission is “Connect People to what’s important in their lives through friendly, reliable and low-cost air travel”. This over-arching statement provides clear customer-focused guidance to all employees and sends a message on what customers should expect. Everything employees do is in service to and guided by their Mission. If they follow it, they will achieve their Vision “To become the world’s most loved, most flown, and most profitable airline”. By the way, notice the order of these objectives.
Compare this to the mantra at Spirit Airlines which is “To offer the lowest total price to the places we fly”. Their leaders have been very explicit that their airline is about delivering a bare-bones flight at the lowest cost. There are strict rules and policies. If you do not follow them, you will be charged more. Employees have no latitude to do otherwise. This mantra drives a very different set of employee behaviors and customer experiences.
A company’s view and practices around customer- centricity also affect the employee experience. Southwest employees know it is important to treat the customer in an authentically friendly and helpful way, regardless of their role or what they are doing. They do not make excuses or say, “but our policy says...”. They work together as a team to deliver on their brand promise. You never hear them say, “It is not my job, you need to go to...”. They know that if it is about providing friendly, reliable, and low-cost air travel it is their job. With this mindset, they don’t have to ask what they should do or for permission to do it.
For Southwest, their customer-centricity is never in question. Employees recognize that they provide something far more for their customers than moving them from point A to point B. Every Southwest flight is somehow a pleasurable, and often memorable, experience for each and every customer. It may because how an agent handled a customer’s flight change without a hassle or $200 in fees to how a flight attendant delivered the pre-flight announcement is their own personal way vs. the mundane, impersonal videos other airlines use.
Southwest employees are encouraged to be their authentic selves in their jobs. They know they can and are empowered to make a big difference for the customer. For all these reasons Southwest employees take pride in their jobs and consistently rate the experience with the company high, resulting in top ratings in the annual Great Place to Work survey.
BENEFITS OF CUSTOMER-CENTRICITY TO FIRM PERFORMANCE
In short, customer-centricity is a major and sustainable revenue growth driver. Customer satisfaction and customer experience measures far outperform firm-centric competitors. This leads to increased customer loyalty and higher net promoter scores leading to increased revenues from existing customers and new customers, as they become more aware of what the company offers. This leads to increased market size (as new customers enter the market), market share, and share of wallet, leading to significant revenue growth rates exceeding competitors and the market.
Becoming customer-centric does not mean disregarding operational excellence and discipline or financial results. Successful companies realize they need to master both, not choose between them. In the long run, profitability and profits increase because of faster revenue growth, lower account expansion, and new customer acquisition costs, reduced customer retention expenses, and lowered operating expenses as non-value-added activities are eliminated. Customer-centric businesses typically far outperform firm-centric businesses across customer, market and financial metrics and create more shareholder value.
Clearly, a compelling business case has been presented for becoming (more) customer-centric or at least exploring the impact of the current state or your business’s customer-centricity and the costs and benefits of becoming (more) customer-centric.
First, build your own business case for becoming or being more customer-centric. To do so ask yourself (including your employees and, if possible, your customers) the following three questions.
What do your company and its employees do, intentionally or not, that reduces the perceived value received by the customer and detracts from their customer experience?
What makes employees' jobs more difficult to do, especially but now only, when interacting with their customers?
Given your answers, what business impact do they have? Better yet, how much more valuable would your company be by addressing these issues?
Second, given the above, assess the current state of customer-centricity of your company as well as its drivers (many of which were mentioned in this article).
Third, define and richly describe what the future state should look like from both your and your customers' perspectives. Detail what this looks like internally, including from an organizational, process, and technology perspective.
Fourth, identify, prioritize, develop, and execute plans to sustainably address the gaps that need to be addressed to reach your desired future state. Recognize that these plans will evolve as your journey to customer-centricity proceeds.
While the benefits to become more customer-centric are usually immense, the journey is not without its challenges as it involves much change. It takes time. Benefits begin to accrue from the start. Strong sponsorship and leadership commitment is essential. Having an individual, not bound by your past, can be not only very helpful but very valuable, to guide and facilitate the process and help you navigate this journey. Godspeed!
Jay Weiser and Weiser Strategy Group assists organizations and their leaders in successfully make the journey to customer-centricity and business success. If you would like to have a complimentary conversation to discuss starting and how to effectively and efficiently make this journey, please contact me at email@example.com.