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Perspectives

Is Customer Centricity Yesterday’s News?

By Tony Gallo

I don’t know about you, but customer centricity seems increasingly old-fashioned and, dare I say, questionably relevant. I mean, who doesn’t know that if you aren’t addressing the needs of your customers, you aren’t going to succeed? And, frankly, in the context of just-in-time feedback courtesy of social media, you will know pretty darn quickly if you are not making your customers happy.

I would brazenly (some might say foolishly) propose that there are two factors taking precedence over the dated notion of customer centricity: customer understanding and employee engagement. Let’s take a quick look at both.

Customer Understanding vs. Customer Centricity

Pictured: a magnifying glass sitting on top of a collage of words. The magnifying glass is focused on the word "customer", symbolizing customer centricity being under examination.

Customer centricity arose in the old days when customers were not at the top of the pyramid.  It was an attempt – and a worthy one – of “putting the customer first.” And it truly helped move many organizations into the 21st century. However, putting the customer first inherently implies there are a whole bunch of things that come after the customer that are less important.

I would argue that today every organization recognizes the importance of customer centricity, but the true levers of success come from understanding. This means developing a dynamic knowledge system that allows you to deeply understand your customers’ needs today and what is driving those needs, and anticipating what they will need tomorrow.

Pictured: a quote from Jeff Bezos, CEO of Amazon. It reads "We see our customers as invited guests to a party, and we are the hosts. It's our job every day to make every important aspect of the customer experience a little bit better."

It’s all about knowing how to make the most of every customer interaction. Certainly technology, big data, and social media have helped make that more possible. But these platforms have also leveled the playing field, making the competition for your customers’ share of mind (and wallet) more intense than ever. Brands like Amazon are setting the customer understanding bar pretty high for everyone across industries.

Amazon harnesses data to personalize the shopping experience. Its platform helps shoppers in real time with product selections based on browsing and buying history. Jeff Bezos established early on that Amazon would not simply sell stuff but would “help customers make purchase decisions.” This culture of working to understand the customer and help them find products (and now services) is ingrained in the Amazon work environment.

Employee Engagement Translates to Satisfied Customers

This brings us to employee engagement or employee centricity, which I’d argue is superseding customer centricity for two key reasons.

First, it is expensive to hire and train new employees. In a study of U.S. workplaces, the Center for American Progress reported that “the estimates of the cost of turnover…range from 5.8 percent up to 213 percent, depending on the job and employee skills. Looking only at estimates of the cost of turnover for workers earning, on average, $75,000 per year or less, 17 case studies find a cost of turnover in the range of 10 percent to 30 percent.” That’s a lot of dough that could be applied elsewhere, right?

But more importantly (and here is reason number two), if you can create a culture where, in addition to being rewarded monetarily, employees are rewarded psychically when they hear a customer exclaim “wow, that is faster, better, more than I expected,” you don’t need to force them to think in terms of customer centricity.

Gallup’s employee engagement assessment also sheds light on the topic. Researchers found that employees with highest engagement levels had double, triple, and even quadruple odds of success compared with workers with low scores. What’s more, work units displaying top-quartile engagement rates exceeded the bottom-quartile’s performance significantly: 10% on customer ratings, 21% on productivity, and 22% on profitability. This study supports The Service Profit Chain theory.  In the book–The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction and Value–the authors argue that happy employees positively impact customer loyalty and profitability.

Southwest Airlines is a well-studied example of how highly engaged and happy employees make for better customer loyalty and satisfaction.  The airline is known for its employee engagement programs and recently achieved top ranking (for the second year in a row) among low cost airlines for customer satisfaction in the  J.D. Power 2018 North America Airline Satisfaction StudySM.

None of this is to say that an engaged workforce precludes the need to understand your customer.  Without knowing what will please your customer, you will have a losing value proposition. An ongoing grasp of what will meet or exceed customer expectations at each touch point puts you in the game.  A differentiated product or service championed by a dedicated team will then help you win.

Everything in business is about capturing an audience and compelling them to buy or act.  That fact will never change.  But, what we see evolving are two different ways of putting the customer first that are becoming increasingly important to business success.  By digging deep to really understand your customer through data analysis and predictive modeling (like that set forth by Amazon) and fostering a culture where employee engagement and satisfaction is critical (like that of Southwest) your organization will be better positioned to achieve the holy grail of customer and employee loyalty.

Connect with Tony to discuss these and other trends related to customer centricity.