“The customer isn’t always right. The right customer is always right. And yes, there is a difference.” Professor Peter Fader.
Surely that can’t be right? It goes against everything that’s ever been said about giving a high standard of service to customers.
Not all customers are created equal.
Don’t confuse a great customer experience or service, or being nice and friendly to them, with customer-centricity.
You can’t give the same high level of service to all your customers as many don’t deserve it and those who try it may not deliver a satisfactory level of service to any customer. The consequences can be potentially disastrous.
Customer journey transformation: The customer experience of the future is personalized, digital and human-centered
What is customer-centricity?
The objective of a product-centric company and a customer-centric company are the same: make the company as profitable as possible in the long run.
Customer-centricity strategy aligns the company with the wants, needs and preferences with those of its customers. Using the value that they give as a consistent measure; its specific aim is more sustainable profits for the long-term.
You must treat customers fairly, but not equally. To do this, you must understand the value of individual customers, what they want from you and their preferences for interacting with you. You’ll end up understanding that there are many kinds of customer doing business with your organisation.
Applied correctly, customer-centricity is a ‘diamond-hard’ strategy of how to engage with different customers in a way that creates sustainable value for them and the company.
Not everyone who says that they are, are
Many financial services organizations proclaim themselves to be customer-centric but are still fixated on maximizing product sales and increasing market share, traits of a product-centric business.
They’re paying lip-service to customer-centricity to please no-one but themselves and they’re not fooling their customers who continue to give them ‘so-so’ satisfaction scores and continued low levels of trust and loyalty.
All the time their most valuable customers are disengaging because they recognize their value to the company, but the company doesn’t.
Why is it so hard to do?
Customer-centricity isn’t a just a way of being nicer to customers to improve your net promoter score, it’s not being customer-focused either as that’s a job half-done.
It’s a strategy where the bank re-orientates its entire business model and culture around their customers where the outcome is to create sustainable value for them and their customers.
This change inevitably creates tensions as a new way of thinking of how to create long-term sustainable value dismantles the managerial product fiefdoms, uses hard facts instead of out-of-date views based on employees’ ‘subjective reality’, and allocates resources to where it makes sustainable value, not this quarter’s target profits.
That’s why it’s so hard to implement successfully.
The forces of change in today’s economy are reducing the advantages of a product-centric model.
Why should you be customer-centric?
If, as I stated earlier, the objective of a product-centric company is the same as a customer-centric one, and that it’s hard to do, why would you want to change?
The forces of change in today’s economy are reducing the advantages of a product-centric model.
These advantages included:
• A competitive advantage based only on their understanding of their products gained through years of developing and selling them.
• A simple view of the business profitability through their separate product divisions and teams, based on maximizing sales volume and market share.
• Low-cost ‘innovation’ where the product is constantly ‘improved’ or ‘tweaked’ to expand it into new markets.
• Lower costs because they don’t have to spend much time or money understanding their customers. They make products they think they want and push to whoever will buy them.
It’s a simple model. Unfortunately for many financial services businesses, it may be hard to sustain in the face of universal and rapid change.
Even before Covid, the World was changing
The pandemic sped up the forces of change that had been clear and growing for years.
• The pace of technological change sped up during the pandemic and has changed how consumers now want to buy and use financial services products. Meaning that the old organizational, technology, product and operational silos are a hinderance to the company’s aims and performance.
• Deregulation encouraged new start-up and technology companies to who don't rely on a physical presence to deliver their products and services to compete with mainly physical incumbents. The digital companies thrived as consumer aligned to their capabilities overnight in response to lockdowns.
• Just about every business on The Internet can now provide financial products to consumers at the point of sale of goods, often cheaper than the incumbents by solving a consumer problem or helping them realize a dream through data led decisioning and modern technology.
• The Internet now means we live in the era of the ‘savvy consumer’. They now want what they want, when and how they want it, and can now get it from whoever they want. They no longer must look to their financial services provider for help. It comes to them whenever and wherever they need it.
• The explosion is customer level data, and the availability of modern data management techniques means that there are new ways to grow profits that many of the new entrants are exploiting to the detriment of the incumbents.
What do we need to do to be customer-centric?
It requires that your company change its organizational design, performance metrics, and employee structures to focus on long-term creation and delivery of value through satisfaction, trust, and loyalty.
It means switching from making and selling the products you think your customers will want to making, selling, and keeping sold products and services your customers that you know they will want to buy and use.
Qorus have a simple model we call The Three Principles© that our partner, Smarter Way Mentors who are customer-centricity experts, developed to help organizations to be customer-centric and reap the rewards that include engaged and satisfied customers and employees, improved levels of trust and loyalty, and create sustainable value.
We’ve summarized The Three Principles© below:
Understand your customers
The business must have a deep understanding of your customers’ behavior, their life-cycle events, their problems to solve, or dreams to realize. You must know who your most valuable customers are now and in the future.
Customers will feel understood and valued and that the value exchange is fair.
Be insight led
Having established a deep understanding or your customers, you can analyze why and how customers use your products and services so that you design profitable propositions that they want to buy.
Customers will feel that you are on their side, and that you are helping them with their financial and personal wellbeing.
Optimize customer experience
This is how you allocate your resources to where they will create value and engaging with customers in a way that leads to improved satisfaction, loyalty and create sustainable value.
By optimizing your customers’ experience, they will receive more personalized, relevant, and timely offers that builds trust and loyalty.
