Marketing texts and gurus talk a great deal about the importance of a customer-centric approach to marketing – and business in general. The benefits of customer-centric marketing are almost self-evident. These benefits include:
- Maximising demand by creating products and a customer service model that meets or exceeds customer expectations – thus maximising sales.
- Facilitating differentiation and the customisation of the media and messaging strategies – thus minimising marketing costs.
- Facilitating adding value and creating a brand that will readily engage the target market – augmenting margin and the average sale maximisation.
- Understanding the customer journey and identifying opportunities for improving operational efficiency – thus reducing costs.
While many marketers and business people consider these and other benefits of a customer-centric approach to marketing self-evident, few businesses could reasonably be considered customer-centric. While many businesses I come across consider themselves customer-centric – claiming to’ listen’ and undertake market research – few are truly customer-centric. Certainly, few businesses I come across act in a way that enables them to benefit from being customer-centric.
Investopedia defines customer-centric marketing as follows. ‘Client-centric, also known as customer-centric, is a strategy and a culture of doing business that focuses on creating the best experience for the customer and, by doing so, builds brand loyalty. Client-centric businesses ensure that the customer is at the centre of a business’s philosophy, operations, or ideas. Client-centric businesses believe that their clients are the primary reason they exist, and they use every means at their disposal to keep the client satisfied.’
In practical terms, customer-centricity involves treating customers as assets – and indeed, your most valuable asset.
Making the customer the centre of the business’s philosophy is easy to talk about but less easy to deliver. It requires, among other things:
- Recognising that the investment in becoming customer-centric will be more than repaid in the form of reduced marketing costs and an increase in sales and margins.
- Rejecting the tendency to rely on intuition, embracing the truth that the ego that drives a reliance on intuition is unhelpful in the face of data (which is readily available).
- Shifting the focus from expecting the customer to empathise with the brand to the business placing maximum priority on developing an empathy for the customer.
- Recognising that perception and not reality is the driver of all human behaviour. Customers buy on their perceptions – not your reality.
- Understanding that while the customer is not always right – in practical terms, the customer is always right. What customers think, even when wrong, impacts the business.
QUALITY AND SERVICE
One of the first questions I ask a new or potential client is ‘Why should I buy your product rather than that of your direct competitors?’ To my mind, this is one of the most important questions in marketing and the more tangible the response – the better. Where customers view a product as being tangibly superior to the competition, the likelihood of maximising the lifetime value of each customer is increased. Further, there is an inverse relationship between having a tangible point of difference or strategic competitive advantage and marketing cost. Effective differentiation can drive marketing costs significantly lower.
I ask this question; the most common answers are related to:
- A better-quality product.
- A superior service offering.
There are, of course, problems with these responses, including:
- Both are claims that can be made by competitors.
- Neither is in the least bit tangible.
- The customer defines ‘quality’ and ‘superior.’
Most brands claim to offer a high-quality product” and ‘superior service.’ Indeed, both claims are ubiquitous in advertising and more and more, research suggests that such advertising is not credible. Research has found that as many as 96% of consumers don’t trust advertising. Glib, intangible, and platitudinous claims about quality and service have served to drive this mistrust.
A question – have you ever believed an advertisement that tells you a product is ”better,” or a service is ”superior?” I doubt it. There is nothing much to be gained from telling customers you offer a better-quality product or superior service unless the claims are specific (Better in what way? Superior in what way?). Such claims are almost never helpful in marketing and can even damage credibility – unless the claims are made tangible. If, however, the advertisement demonstrates the quality (addressing critical factors you are seeking – such as – safety features) or demonstrates superior service (addressing critical factors that matter to you – say – response times), you will be more likely to believe it.
However, the biggest issue here is that, in effect, consumers – not businesses define ‘high-quality’ and ‘superior service.’ While marketers and their masters might think they know what ‘high-quality’ and ‘superior service’ is, consumers:
- Determine the criteria they will use to define ‘high-quality’.
- Make their own judgements about what quality is.
- Determine the criteria they will use to define ‘superior service.’
- Make their own judgements about what superior service is.
Such judgements are often different from those of the business, but they are the only judgements that matter. Customers purchase based on their views – not those of the business or the advertising messages they are subjected to. What you think about your product or service matters little. The only thing that impacts sales is what the consumer thinks just prior to purchasing.
Being customer-centric requires a comprehensive understanding of:
- The criteria the target market uses to determine quality and service.
- How consumers apply these criteria and their conclusions.
Understanding these things facilitates:
- Developing a product that meets or exceeds consumer expectations.
- Offering a customer experience that meets or exceeds customer expectations.
The terms brand and branding have attracted any number of definitions. My favourite definition of the term brand was coined by Jeff Bezos, of Amazon, Blue Origin and The Washington Post fame. Bezos said:
- ‘Your brand is what people say about you when you are not in the room.’
I like this definition because of its focus on the consumer. It is the consumers’ perception of your brand – not your perception – that will determine unit sales, margins and the lifetime value of each customer. This definition highlights the distinction between:
- The actual brand.
- The optimum brand.
The actual brand reflects what customers say about your product when you are not in the room. It is the primary basis for their purchase decision. The optimum brand reflects the perception of your brand that you believe will maximise sales and margins – but more directly addressing those factors that you believe are most important to consumers – and which have the greatest likelihood of maximising sales.
Branding is the process of reducing and ideally eliminating the gap between the actual brand and the optimal brand. Branding is important because there is often a substantial gap between the perceptions of consumers and the perception marketers would like consumers to have. While advertising and communication more broadly can help reduce this gap – it is rarely the whole solution.
The reality is that identifying the optimum brand is essential – it matters little until such time as it becomes the actual brand. Customer-centric marketing requires:
- An unambiguous understanding of the actual brand.
- An evidence-based definition of the optimum brand.
- A branding strategy to eliminate the gap ASAP.
The benefits of this approach include:
- Developing a brand that meets customer expectations, maximising the perception of value.
- Maximising the perception of value and, as such – potential margins.
Being truly customer-centric requires:
- Viewing the world from the customers’ perspective.
- Identifying metrics to monitor customer-centricity.
- Implementing a long-term strategy – prioritising culture.
Developing a product, customer experience, pricing strategy, distribution strategy, and communication strategy that reflects the customers’ view of the world requires an in-depth understanding of the target market. This might be facilitated by:
- Regular market research and an openness to respond to research findings.
- Establishing a brand community or marketing panel to provide ongoing input.
Monitoring progress requires having clear metrics (rather than intuition or guesswork) to monitor the impact of strategies developed and implemented. This also facilitates the fine-tuning of those strategies. Objective metrics might include:
- Retention rates.
- Repeat business rates.
- Referral rates.
- Customer lifetime value.
More subjective measures of customer-centricity include:
- Net promoter scores.
- Customer satisfaction surveys.
- Customer service feedback.
- Market research participation.
Central to being customer-centric is developing a strategy that:
- Places a clear priority on customer-centricity and communicating this to all staff.
- Developing a culture of customer-centricity – led by senior management.
- Gathers and leverages customer data and insights.
- A commitment to addressing customer needs.
- Rewarding loyalty.
It is essential to ensure all staff have a customer-centric ‘mindset’ with all staff knowing that the customer must be put first and that all behaviour must be oriented towards better servicing customers’ needs. It must also be understood by all staff that while the customer may not always be right:
- They are the key to profitability and their job security and income.
- There is rarely merit in communicating to clients that they are not right.
In this regard, it is also important to ensure:
- Staff know how to be customer-centric in all circumstances.
- Have the skills and training required to act appropriately.
A wealth of data is available on the customer journey and customer experiences that can and should be gathered and analysed to inform strategy development, implementation, and updates. Data-driven rather than intuition driven strategies inevitably generate superior outcomes.
Understanding customer needs is important but of limited value, if this understanding is not used in the planning process. All strategic planning, at least insofar as marketing is concerned, should address known customer needs and the benefits of meeting or exceeding them.
Customers who display loyalty through repeat purchasing and referrals should be rewarded. They play a key role in driving profitability and deserve recognition for such. They should ideally be treated as part of the ‘brand community.’
- Great marketers in 2022 develop a customer-centric strategy.
- Great marketers in 2022 embrace empathy ahead of ego.
- Great marketers in 2022 build a brand community to drive customer-centricity.
- Place a higher priority on the customers’ perception than their own.
- Know that your customer, not you, defines quality and ‘high-quality product.’
- Know that your customer, not you, defines service and’ superior service.’
- Understand the gap between your actual brand and your optimum brand.
- Cut costs and increase revenue by implementing a customer-centric strategy.
- What is the gap between your criteria for a ‘high-quality product’ and your customers’ criteria for a ‘high-quality product’ – and what is this gap costing you?’
- What is the gap between your definition of a great customer experience and your customers’ definition of a great customer experience – and what is this gap costing you?’
- What is the gap between your actual brand and your optimum brand – and what is this gap costing you in lost sales and margins?
- What impact is the customer experience having on each customer’s lifetime value, especially repeat business and referral rates?
- What strategy do you have to ensure all staff understand the importance of customer-centricity and have the skills required to deliver it?