Customer Centricity: Why It Matters To Your Business
Compared to customers of a bygone era who would typically walk into a store, purchase something and then often forget about the experience they received, today’s customers are much more invested and empowered in their interactions with the companies they purchase from.
From their initial online research of that company, their products and communications with their sales staff, to their post purchase chats with the company’s support staff and any comments they leave about that company’s product in surveys, review sites and social media platforms. Today’s customer is a lot more engaged, not just during the purchase process itself, but before and after too.
Subsequently, the company who they’re interacting with needs to be equally as engaged, responsive and interested in them, while delivering great customer experiences that encourage that customer to stay and buy more from them. However, they’ll only be able to successfully do that if they can consistently put the needs of their customers first, which is where the concept of customer-centricity is really important.
What is customer centricity?
Customer-centricity is the practice of putting customer experience first based on an organisation’s actions and attitudes towards their customers.
It’s an approach that focuses an organisation’s business model on customer needs rather than competitor offerings. The idea is that it offers the organisation doing this the chance to gain a competitive advantage by delivering superior value to customers that other companies can’t or are unwilling to provide.
Subsequently, the definition and aim of customer-centricity can be broken down into the following:
- It's all about understanding customer wants, needs and value: customer-centricity is not just a mere strategy, but a comprehensive and scientific approach to understanding customers’ wants, needs and value.
- A compelling value proposition that addresses the customer’s ever-changing needs: A customer-centric business must be able to identify what the customer wants and craft a unique offering that appeals to their needs.
- The ability to create more customer relationships: The goal of customer-centric companies is to turn more customers into long term relationships. This means building a connection with customers that goes beyond the simple purchase of a product or service.
- Building loyalty and trust: Customer-centricity strives to create customer relationships based on trust and loyalty. The idea here is that customers will feel comfortable doing business with a company, repeatedly buy its products and be happy to recommend it to others.
The benefits of customer centricity
The importance of adopting a customer-centric approach becomes even more obvious when you consider some of the wider benefits which include:
Customers spend more when they feel heard and appreciated
When customers receive meaningful experiences that take their feedback into account and make them feel heard, they’re more likely to spend more. In fact, up to 86% of buyers would be willing to pay more for a great customer experience. So, putting your customers at the forefront of everything you do is really worth it.
It pays to personalise
Delivering a positive customer experience that is customer-centric, rather than generic can also be lucrative to an organisation’s revenue. Compared to their less successful rivals, brands with a more personalised approach tend to grow more rapidly, receiving 40% more revenue with this approach.
In contrast, brands that don’t provide this service risk annoying their customer base and harming customer satisfaction, with 76% of customers left frustrated when they don’t receive a personalised experience.
More customer loyalty and lifetime value
When customers feel heard and appreciated by businesses, they’re more likely to come back for similar experiences, rather than seeking new ones elsewhere.
Given that it costs far more to acquire a new customer than retain an existing one, it makes sense to increase loyalty and customer value by investing in creating better, more customer-centric experiences with your brand.
Customer centric businesses perform better
Compared to companies that don’t, companies who are focused on their customers are typically 60% more profitable than their less customer-centric rivals.
Therefore, it’s clear to see that there’s a financial cost impact of ignoring your customer needs and the best way to grow is to become more customer-centric.
How to create a customer centric strategy
Given the many advantages of making your business more customer-centric, there’s never been a better time to get started.
However, to gain a better understanding of what you’ll need to do, to become a more customer-centric organisation, you’ll need to go through a number of key steps, which can initially take a bit of time to work through.
Collect customer data
The first place you need investigate is your customer data and feedback to see what your customers are saying and doing. This is crucial as otherwise you could risk creating a customer-centric strategy that fails to meet your customers’ expectations.
Your customer data can be collected from a range of sources within your organisation, that can include:
- Customer survey feedback including your Net Promoter Score (NPS) responses
- Customer behaviour data, which could include transaction history
- Front-line feedback from customer service employees
- Website analytics tools
- Third party review sites
- Loyalty program data
- Social media platforms
- Subscriptions to brand marketing, such as newsletters
- Text analysis on call transcripts, chat, SMS, emails and other feedback
- User testing results
Increase your customer knowledge through data-led insights
Gathering data-led insights can help you to spot trends and patterns, and then link customer’s feedback with actions your company has taken. Exporting your customer data into a customer experience platform that can help distil this data into insights, can allow you spot patterns in customer behaviour much faster, so you can begin detailing the actions you need to take.
Insights you might start to pull out can include:
- Predictions of future customer needs, based on past behaviour trends
- Details about channels your customers prefer to use for different activities, whether that’s liaising with a customer service representative or providing comment about your performance
- Data that indicates which customer relationship actions have the best ROI
- How to improve personalisation at scale through customer segmentation
- Details about how to retain customers beyond their first purchase and increase their customer lifetime value
Build your strategy and setting goals
The good thing about the data insights you gather during this process, is that it should give you ideas about where you can make the most impact for the least amount of investment. So, once you have a clearer view about which actions produce the greatest results, you can develop your strategy accordingly and set goals.
For example, if your customer feedback and user testing data indicate that your main customer sign up page is confusing, you can reduce the number of people abandoning you at this stage in the customer journey by making the page more user-friendly.
Subsequently, your company actions and goals could be to:
- Get your web development team to improve your user experience
- Ask your marketing team to make it clear to your customers that their feedback has been taken into account and improvements will be made
- Ask your customer experience team to gather more post-action feedback to see the impact that was made
- Ask your customer service reps to flag any payment issues in future
- Review customer data post-action to see if your changes have had a positive impact on sales and revenue, abandonment rates, customer calls, etc
- Monitor KPIs such as customer satisfaction post-action for signs of improvement
How to get your customer centric strategy in motion
The implementation of your customer-centric strategy should be a company-wide process. It’s also a strategy that more companies are likely adopt as the benefits become clearer.
So, get ahead of the competition now by implementing a strategy that pays dividends.
Here are some suggested actions:
Build a customer centric culture that encompasses your entire business
Overall, your business strategy should reflect a customer-centric company vision. Doing this should make it obvious to everyone within your business that your overall company goal is to put customer satisfaction first with every action that is taken.
Areas where you could focus your strategy include:
- Customer-centric marketing, with the aim of encouraging customers to become active advocates, promoting your services to others through word of mouth
- Customer-centric selling, where the products and services you offer are more reflective of your customers indicated wants and needs
- Customer-centric thinking, whereby you encourage suggestions and regular feedback from your staff to help improve customer relationships
Build-in customer centricity from your very first day
Given that staff are often the best advocates of a customer-centric approach, it makes sense to instil a sense of customer-centricity in your workforce, from the very beginning of their work with your brand.
To help encourage this, you might try to engage in:
- Customer focused hiring practices, identifying and showcasing employees that also share a customer-centric approach to doing their work
- Customer-centric personnel development, whereby you build customer-centricity into your employee evaluations as a KPI
- Making your onboarding practices more customer focused, which also offers the chance to share your vision for greater customer-centricity to new customers
How to measure customer centricity
Developing and getting your customer-centric strategy off the ground is a major undertaking, but once it’s in motion, you should gradually start noticing the benefits.
However, as is the case with any strategy, you need to be able to measure your efforts to know how well it’s working or if you need to make any tweaks along the way.
The following customer experience metrics should be able to help you with this:
Your churn rate measures the rate at which your customers stop doing business with your company. It’s a particularly a popular metric for subscription-based companies, like SaaS businesses. Your churn rate is simply calculated by dividing the number of churned customers by the total number of customers within a specific time period.
If your churn rate is high, you’re obviously doing something to drive away people who liked your offerings enough to make at least one purchase, which indicates there is a major problem with your customer experience somewhere in your customer journey.
Customer Lifetime Value (CLV)
The good thing about the CLV metric is that it measures the value of a customer over the entire lifecycle of its relationship with a company. Therefore, this metric can provide a good indication of how good your company is at developing profitable, long-term relationships with its customers, based on delivering customer experiences they love.
However, you can also use CLV data to identify early signs that a customer might churn and investigate potential pain points that led them to that decision.
You can calculate your CLV rate by working out your average customer purchase value, then multiplying this by your average number of customer purchases, before multiplying this by your average customer lifespan.
For example, if the average value of a customer purchase is £40, the average number of purchases is 12, and the average customer lifespan is 3 years, your CLV would be:
CLV = £40 x 12 x 3 = £1440
Net Promoter Score®
The Net Promoter Score (NPS®) survey metric is based on asking your customers the following simple question.
“How likely is it that you would recommend [our company] [our product] [our service] to a friend or a colleague?
It’s a popular metric with businesses because it provides a very effective way of measuring customer loyalty and satisfaction, which is particularly useful when you’re trying to assess the success of your customer-centric strategy.
Regularly measuring your NPS and tracking the progress of this will help you to evaluate if the changes to your customer experience are making your customers more loyal, happy and willing to recommend you to others, or if there is still more work for you to do, to improve it.
Your net promoter score is simple to work out using our NPS calculator.
Customer Satisfaction Score (CSAT)
The final and most direct way of measuring how happy your customers are with your customer-centric approach and the experiences you’re delivering for them, is to measure their satisfaction through the CSAT metric.
Your customer’s satisfaction levels can be measured by asking them the following question.
‘How satisfied were you with our (product, service, support interaction)?
Your customer is then invited to rate their experience on a 5-point scale ranging from very dissatisfied to very satisfied.
You can then calculate your CSAT, by dividing all the positive responses you receive by your total number of responses and then multiplying this figure by 100, to leave you with a CSAT percentage. Alternatively, we also offer a handy, free to use CSAT score calculator, that can quickly do all the maths work for you.
Scores closest to 100% demonstrate the highest levels of satisfaction, while those at the opposite end of the scale the lowest.
Make sure your strategy evolves with customer needs
Developing into a fully customer-centric business takes time and considerable effort, even with a detailed and effective strategy. But the benefits are worth it, as you’ll be able to develop deeper, longer and more profitable relationships with your customers that help super charge your growth.
However, you won’t be able to achieve this unless you’re continually monitoring your progress and evolving your approach to meet your customers changing needs, as a truly customer-centric business is one that’s under continual review.
Consequently, rather than being too static in your approach, it pays to employ real-time insights to ensure that your teams are always working towards current customers’ expectations. With constant monitoring, business-wide KPIs and an adaptive strategy, you’ll ensure that your brand is always evolving to meet customer needs.
By continually analysing and predicting behaviour based on loyal customer trends, you’ll be better able to replicate successful actions for new customers and develop more effective steps to retain existing customers.
So, if you’ve not already started thinking about or began developing a customer-centric strategy, there’s never been a better time to do so and get ahead.