A Closer Look at Customer-Centricity

Customer-centricity generally is defined as organizing your business around the needs of your customers. Clearly, there’s a lot of room for interpretation here, but most database marketing consultants point to Best Buy’s 2005 stores overhaul as the shining example of what it means to be customer-centric. After studying its customer base and testing the resulting approach in laboratory stores, the consumer electronics chain tailored 100 or more of its stores around the needs of five customer segments it identified as most important to the company’s success. Everything from the store layout to the background music, signage, type of staff hired and exact mix of merchandise is centered around serving these key segments.

To take customer-centricity to the ultimate level, however, product development and corporate structure also get designed around catering to the needs of your top customer groups. That’s a huge step for all but startup companies, but the experts consulted for this story point out that customer-centricity offers smaller lessons that fit any business.

“Essentially when we talk about being customer-centric, we’re talking about looking at the world through the eyes of the customer: what they want from you [and] from the market, what they expect and what they can count on you for,” explains Laura Patterson, president of Austin, Texas-based marketing services firm VisionEdge Marketing.

How Is Customer-Centricity Being Applied?
Companies typically are organized around their individual brands, with managers for product marketing, channel marketing and so on. A customer-centric company realigns that focus, says Joe Paulsen, senior vice president and general manager of integrated marketing services at Experian, a global provider of marketing services with headquarters in Costa Mesa, Calif. “You know someone’s doing customer-centricity well when they’ve got a segment marketing organization structure—whether it’s overlaid or not is a different story. But if they’ve got an owner of marketing to [each key] segment, then they’re starting to get down that path.”

These segment managers, he continues, must be “political enough; can evangelize enough; can advocate for [their] segment and muscle up the changes in merchandising, store, product development, marketing and the rest” to pull off this approach.

What Are the Main Challenges?
At a tactical level, the focus is on identifying the key customer groups. Paulsen cautions companies against building these segments too fast. “We want everything oriented around the customers’ beliefs, passions, preferences and so on. But it’s not manageable to manage 20 million unique relationships. So, organizationally, if you do it around segments as fine as you can get them, then you know you’ve got a commitment to [getting more customer-centric],” he explains.

And for companies not ready to reorganize their entire operations, Paulsen notes that it’s worthwhile to start by customizing just your marketing messages, putting them in the tone and tenor of however many segments you can reliably define and manage. “You can argue that Tesco did that well,” offers Paulsen. “They didn’t change the layouts and merchandising in all their stores, but they ended up going from six segments to, what, 5,000 clubs? That’s not entirely customer-centric, but it’s fine microsegments of customer interest.”

Biting off not just what you can chew but what you can measure also is important, states Gary Hennerberg, head of Dallas-area marketing consultancy Hennerberg Group. First, he points out, you obviously need enough customers in each segment in order to test approaches to these groups. Second, he cautions marketers to recognize that consumers change their minds frequently. What they told you they wanted a month ago, he says, easily could change before you’re able to market to them. “Consumers are not static; you cannot put them in a segment and expect them to stay there over time. Segmentation is especially tough in these volatile times. And there is no computer model that can predict all the changes in a household; the consumer has to volunteer much of this insight.”

That insight is what marketers lack in general, Patterson emphasizes. She sees four areas where marketers stub their toes every day with respect to a focus on the customer:

1. No understanding of how customers purchase and decide to buy. They’re so used to pushing marketing out that companies are not paying enough attention to the feedback coming in.

2. Enablement of the sales organization is almost entirely product-oriented. “What’s typical of the B-to-B environment is talking about product features, loading up the team with product-oriented tools that don’t help them understand what’s in it for the customer,” Patterson explains.

3. Working from customers’ language. “Oftentimes we don’t use words that the customer uses. We come up with our own language inside our companies. But customers have a language, and it’s important to be able to speak in their language for our marketing,” she says.

4. No really good measurement processes and tools for looking at things from a customer-centric point of view. “One of the things companies have been looking at is customer engagement,” notes Patterson, “but even that metric has been hard to get your hands around—and is still measured in terms of things behaviorally that companies have decided is important” rather than the opposite direction.

What Are the Beginning Steps?
For companies looking to better serve their key customer segments for stronger performance, Paulsen recommends starting small. “The best advice that I have is to start with some scheme at the five- or six-segment level and just be relentless about ‘deaveraging’ those segments and coordinating across the operating units of your company—whether they’re retail stores, field sales, whatever it is. But be relentless about breaking down the barriers to get better service to those customer segments,” he says.

Patterson also emphasizes the need to set up ways to listen and learn from your customers. “I’m amazed at how few companies, especially B-to-B companies, spend any money on customer research. This includes setting up customer advisory boards and third-party research.”

Some of the key questions to ask yourself to determine areas of customer feedback to explore, according to Patterson, are:

• Would your customers say you’re mobilized on their behalf?
• How do you play a role in helping them with their supply chain?
• Do you understand what value means to them?
• Would customers think you develop new products and services with their needs in mind?
• Do you see yourself in a relationship with your customers, or are they just people to sell to?

In the end, Patterson recommends firms look at customer-centricity through this lens: “Success at being customer-centric means focusing on targeting the right customers, providing a meaningful value proposition to them, delivering those products and services that fulfill that promise, and then performing against those promises.”

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