A customer-centric business places the customer, and their needs at its centre and everything else then orientates to this view. Unfortunately, many businesses speak of being customer-centric, but very few indeed are, and this failure limits their potential success.
Active Knowledge Questions:
What is the most critical metric in your business? What does that say about how you view the catalyst of your business’s success?
Being Customer Centric
Being customer-centric is placing the customer, their needs and the value you deliver into those needs as of prime importance in all decisions and actions.
No, this does not mean that you abandon all sense of profitability, but it does mean that you see the customer as the catalyst of success in your business. Meet their needs better than anyone else, and success will be your reward. And therefore, your focus should place the customer first as they are the catalyst of success in your business.
Let me pose it this way:
- Are you in business to profiteer from your customers, or are you in business to meet their needs better than anyone else? Your answer will determine whether your customers come first or, in reality, are used by your business solely to earn profit. Only one of these choices – customer or profit – can be first.
- A ‘customer first’ focus requires placing the customer and their needs at the centre of your business, and everything else then orientates to this view. Your business is designed around the customer, and what you must do to deliver on the customer value you compete on.
- A customer focus is not so much about a person or group of people but rather about their needs and the value delivered to satisfy those needs. Customer service is merely one minor element of the value delivered.
- The ability of a business to achieve a true customer focus is often stymied by a profit-first motive and cost reduction initiatives that are developed to deliver budgeted profit outcomes.
- Businesses that look at their customer through the lens of their products/ services are also challenged in developing a customer focus. As they view the relationship and value delivered from their own perspective, rather than that of the customer and their needs.
- A true customer focus, once developed, provides a competitive platform through which the business can continually deliver greater value, therefore, outcompeting others in their market. While also continually finding new opportunities for growth to expand their business and the relationship they have developed with their customers.
When a profit-first motive leads a business, the customer can, at best, only ever be number two. However, with many businesses taking a short-term focus on profit results, I am not even sure the customer comes second. Instead, they are just part of the formula that is manipulated to deliver the promised profit result.
Herein lies the reason why very few businesses ever achieve a true focus on the customer, and the performance that such a focus can deliver.
Customer Focus
Achieving a customer focus within your business is a lot more than customer service, customer personas, or simply saying ‘Our customers come first’.
A customer focus reflects the way you think, organise the business, and the basis upon which decisions are made. It reflects the business’s purpose for being.
A customer focus reflects motive and basically says, ‘We as a business are here for a purpose’, and that purpose is to meet ‘these stated needs’ in the marketplace. We compete around the value we are able to deliver to the customers who have those needs. If we compete well, profit will follow. Profit is important as it allows us to meet those needs and invest in the future, but we do not exist just to profiteer.
This view of the purpose of business and the role of needs is a significant paradigm shift for many businesses, especially publicly listed businesses that have become accustomed to quarterly profit reports and the mantra of ‘more profits’. But, as we have seen over the years with many businesses, a veneer of the ‘customer being number one’ and a motive of profit can come unstuck very quickly.
A customer focus is born out of purpose and is sustained by a motive to compete. The right mantra is ‘better every day’ and supporting this by being better at delivering more customer value.
Why was your business originally formed? What needs did it seek to fulfil? What value did it intend to deliver to its customers to allow it to compete effectively? How has that need, and the value delivered evolved and grown over the years? Is there still a cornerstone of purpose that resides in your business? Or has that been lost, as your business has chased growth in the pursuit of more profit?
These are the questions you will find yourself asking if you seek to recapture or establish a customer focus in your business?
Customer Value
Do you believe that in today’s markets, we compete around the value delivered to customers, as seen through their eyes? If so, then a relentless focus on the customer is a must for your business to remain competitively fit.
It starts with understanding customer value, including:
- What is the customer need that your business is seeking to fulfil?
- What gives rise to that need, and how is it best met/satisfied?
- What is evolving/changing in the world that may impact that need?
- What is evolving/changing in the world that may allow you to deliver greater value?
- Where do opportunities exist for you to improve the value you deliver to your customers in meeting their needs?
- Where do opportunities exist for you to expand the scope of needs you presently meet?
This understanding of customer needs is not superficial; rather, it is best described as intimate. So close that you know it well, but at the same time you can step away from it to understand change, impact, evolution, and opportunity.
By this, I don’t mean an opportunity to profit, but one to deliver greater value to more customers through being more competitively fit. And from which more profit will be earned.
This distinction where the customer and competing to deliver greater value comes first and from which profit is earned may seem semantics to some – the chicken and egg analogy – but it is actually a vital and distinct approach.
Who Is My Customer?
In asking ‘who is my customer’, you are really asking – What needs are we seeking to fulfil, and what value can we competitively deliver to meet and win the custom of that need?
There are three steps to answering these questions:
- The first step is to think of the market you compete in as your chosen market. ‘Chosen’ by you because this is the market you can succeed in.
- The second step is to define the boundaries of your market and be competitive in that market.
- The third step is to recognise change in your chosen market and use it to your advantage.
If you were to ask any of your senior executives – or actually any employee – who your business’s customers are, how do you think they would answer? Try it, and you may be surprised as to how diverse their answers are.
And why should this be a concern? Well, if you wish your business to outcompete others in your marketplace, then you need to have a pretty clear focus on who your prospective customers are and what needs they are seeking to fulfil. Otherwise, you are really flying blind in trying to match your offerings to their needs and to do so at a level that will outcompete others. But the full answer to this question extends beyond just knowing who your customers are.
Defining your chosen market and its boundaries is a key task in developing a customer focus in your business and a competitive strategy to win.
Chosen Market
It is critical that your choice of market be deliberate. It’s not accidental, something that you stumbled into (well, that does happen) and continue to stumble your way through (that shouldn’t happen).
You initially chose your marketplace based on the purpose for which your business was created. Almost each and every business is formed to meet a specific customer need. Sometimes the business views this need through the lens of the product or service they sell. But that becomes very limiting and you need a role reversal to look at your product or service through the eyes of your prospective customer.
Today’s markets compete around the customer value delivered, and you simply cannot get a handle on that value by viewing it solely through the eyes of your business. If you consider customer need through the lens of your product/service, then your value is unlikely to keep track with change. The scope of your view won’t be wide enough to see all the things that are occurring in the market, which are evolving your customers’ needs. By the time the gap between your offering and what customer need has become big enough for you to notice, well, it will likely be too late to catch up.
Boundaries
When I speak of boundaries, I don’t mean rigid, unchangeable barriers but rather a dotted line that draws everyone’s focus to a specific domain. These boundaries will expand and shift with growth, and – if they were to remain unchanged over the years – it would reflect stagnation in your business.
The boundary of your chosen market is established by answering a range of questions, for example, what are the:
- Actual customer needs that you seek to meet?
- Demographics of the clients you are targeting?
- Products/services you provide to meet client needs?
- Value you seek to deliver to customers through those products/services?
- Geographical markets you really compete in?
- Price points?
- Channels to market used?
If you were to pick up a blank piece of paper and a pencil, draw a circle and then answer each of these questions, jotting your answers down around the circumference of the circle, you will have a pretty clear view of:
- The needs you are seeking to meet.
- The product/service you are hoping will meet that need.
- To whom you are seeking to sell.
- Where geographically you are seeking to sell.
- Your pricing strategy.
- Your channels to market.
- How all of that represents a customer value that will outcompete anyone else.
This crystal-clear view of your chosen market will allow all your resources to be focused on success in that market. It will also allow you to answer two critical questions:
- Who else is competing in my chosen marketplace?
- Do I have the capabilities to outcompete them?
Change
Before you make any decision as to whether you have chosen a market in which you can be successful or one in which your competitors are far too strong for you to make inroads, you must understand what’s changing.
The drawing of your market boundaries also allows you to ask the questions:
- What is changing in my chosen market?
- How will that impact the value I intend to offer?
- What new opportunities may they offer for me to grow?
In answering these questions, you will be drawing out three considerations:
- Factors – What are the changes you see occurring in your market?
- Impacts – What do you think will be their impact on your customers’ needs, the value you deliver, and the strength of your competitors’ offerings?
- Responses – How do you propose responding to these changes?
The types of changes you should be considering looking into the future include, for example:
- Customer needs.
- Customer demographics.
- Technology.
- Government spending, intervention or regulation.
- The strength of the economy.
- Employment and interest rates.
You are seeking to identify changes which will impact the needs of your customers and the value you are able to offer them.
The clarity and focus you bring to your chosen market will support you in outcompeting everyone else who encroaches into your chosen space. You will know your market better than them. You will understand your customer needs more clearly. You will be able to track the change. Through all of this, you should be able to craft an undefeatable strategy.
A Relentless Focus On The Customer
A business that has a relentless focus on the customer is one where its sole reason for existence is meeting its customer needs. Everything is geared toward delivering more value to the customer, and from which great profits will be earned if done well. Profit is merely one outcome of competing effectively and is certainly not the most important outcome or measure of success.
In a business where a relentless customer focus has been developed and is being sustained, you will likely see:
- A sense of purpose that is clearly connected to the specific needs of customers.
- A motive to compete overriding a profit-first motive.
- That customer need is the focal point of the business and all activity.
- Metrics measure the effectiveness of delivering customer value.
- Rewards are based upon contribution to purpose.
- Decisions are made and assessed by their impact on customer value.
- Growth opportunities are assessed against alignment with purpose.
- Profit performance is measured against that required for sustainability, reinvestment in future customer value, working capital requirements, and the cost of capital, including dividends – not against maximisation.
A relentless focus on the customer is the cornerstone for a business’s enduring success. It ensures the business never loses sight of their customers’ needs and what the business must do to remain competitive. It also delivers a continual path for growth, with new opportunities always emerging.
It also ensures the business is not distracted and chases various possibilities for growth and profit but rather keeps it anchored and compounding on its strengths.
A relentless customer focus is the making of great businesses.
A focus on your customers requires that they come first in all of your actions and decisions. Your entire business exists to meet their needs today and into the future. They are today and tomorrow’s lifeblood and the compass for future direction. Everything orientates itself to customer needs and delivering the greatest value possible. Failing to place them first is to allow yourself to be defeated in your chosen marketplace.
An entirely new level of performance.
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All the best in the success of your business,
Richard Shrapnel
