Beyond the buzzword: unpacking the true meaning of customer centricity

"The purpose of a business is to create a customer who creates customers." - Shiv Singh

If you follow us online, work with us and/or know us in person you’ll be aware that we are big fans of customer centricity and talk about being customer-centric in our approach to projects.

And it’s not just us - lots of other people use this phrase and extol a similar approach. But what does being customer-centric actually mean? Is it just a trendy phrase or is there more to it? What are the alternatives? Who does it well? We’ll explore all this and more in this blog post!

What does it mean to be a customer-centric company?

Being a customer-centric company means putting the customer at the heart of everything you do. It's a business strategy that prioritises the needs, preferences, and expectations of customers above all else.

Here are some key characteristics of a customer-centric company:

Understanding customers: A customer-centric company invests time and resources in understanding its customers deeply. This includes knowing their needs, preferences, behaviours, and pain points. They use tools like customer surveys, data analytics, and direct interactions to gain these insights.
Personalised experiences: Based on the understanding of their customers, these companies provide personalised experiences. They tailor their products, services, and communications to meet the unique needs of each customer or customer segment.
High-quality customer service: Customer-centric companies are known for their exceptional customer service. They go above and beyond to ensure customer satisfaction, resolving issues promptly and effectively.
Feedback and adaptation: These companies actively seek customer feedback and are open to criticism. They view every piece of feedback as an opportunity to learn and improve. They adapt their strategies and operations based on what they learn from their customers.
Long-term relationships: Customer-centric companies focus on building long-term relationships with their customers. They see beyond individual transactions and aim to foster loyalty and repeat business. They often have strong customer retention strategies and loyalty programs in place.
Company culture: In a customer-centric company, the focus on the customer permeates the entire organisation. Every team member, from the CEO to the frontline staff, is encouraged to think from the customer's perspective. This customer-centric culture is often reflected in the company's mission, values, and practices.

In essence, being a customer-centric company means continually striving to provide value to the customer, exceed their expectations, and build a lasting relationship with them. It's about seeing your business through the lens of your customers and making decisions that enhance their experience and satisfaction.

Who are some famous customer-centric companies?

There are several companies across various industries that are renowned for their customer-centric approach. Here are a few notable examples:

Amazon: Amazon's mission statement is "to be Earth's most customer-centric company," and they live up to this in many ways. From their vast selection and user-friendly website to their personalised recommendations and exceptional customer service, Amazon consistently puts customers first. They are also known for their "customer obsession" culture and their practice of starting new initiatives with the customer and working backward.
Apple: Apple is known for its focus on creating products that provide an exceptional user experience. They pay great attention to design, functionality, and integration across devices, all of which are centred around the needs and preferences of their customers. Their retail stores also provide personalised service and support.

"Get closer than ever to your customers. So close that you tell them what they need well before they realise it themselves." - Steve Jobs

Zappos: Zappos, an online shoe and clothing retailer, is famous for its extraordinary customer service. They offer free shipping both ways, a 365-day return policy, and 24/7 customer support. They are also known for going above and beyond to delight their customers, such as by occasionally upgrading customers to overnight shipping or sending flowers to a customer who had a death in the family.
Nordstrom: This upscale department store chain is renowned for its customer service. Nordstrom empowers its employees to go the extra mile to ensure customer satisfaction, leading to stories of exceptional service like a salesperson personally delivering items to a customer's home.
Southwest Airlines: In the airline industry, Southwest Airlines stands out for its customer-centric approach. They are known for their friendly service, transparent pricing (with no hidden fees), and customer-friendly policies like allowing free checked bags and no change fees.

These companies demonstrate that being customer-centric can be a powerful differentiator and driver of success. They show that when you put the customer at the heart of everything you do, you can build strong customer loyalty and a sustainable competitive advantage.

What are the upsides to a company being customer-centric?

Being customer-centric offers numerous benefits to a company, including:

Increased customer satisfaction: When a company places the customer at the centre of its business decisions, it's more likely to meet and exceed customer expectations, leading to higher customer satisfaction.
Improved customer loyalty and retention: Satisfied customers are more likely to be loyal to the brand and continue doing business with the company. This leads to increased customer retention, which is more cost-effective than acquiring new customers.
Positive word-of-mouth and reputation: Happy customers often share their positive experiences with others, leading to valuable word-of-mouth marketing. This can enhance the company's reputation and attract new customers.
Competitive advantage: A customer-centric approach can differentiate a company from its competitors. In a crowded market, being known for excellent customer service can be a significant advantage.
Increased revenue and profitability: Loyal customers tend to buy more and more often, leading to increased revenue. They are also more likely to buy additional products or services and are less price-sensitive, contributing to higher profitability.
Better customer insights: By focusing on customers, companies can gain a deeper understanding of their needs, preferences, and behaviours. These insights can inform product development, marketing strategies, and other business decisions.
Enhanced employee satisfaction: A customer-centric culture can also lead to higher employee satisfaction. Employees who see that their work directly contributes to satisfying customers may feel more engaged and motivated.
Long-term business success: Companies that are successful in being customer-centric are often more sustainable in the long run. By continually meeting customer needs and adapting to changes in customer behaviour, these companies are more likely to thrive in the long term.

What are the downsides to a company being customer-centric?

While being customer-centric has many benefits, it can also present some challenges. Here are a few potential downsides:

Increased costs: Implementing a customer-centric approach can involve significant investment. This could include costs related to training staff, implementing new technologies, conducting customer research, and more. These costs may be prohibitive for some businesses, especially smaller ones.
Balancing stakeholder interests: While focusing on customers is important, businesses also need to consider the interests of other stakeholders, such as employees, shareholders, and the community. Striking the right balance can be challenging.
Risk of over-promising: In an effort to please customers, businesses might make promises they can't keep. Over-promising and under-delivering can damage a company's reputation and customer relationships.
Difficulty in measuring success: The impact of customer-centric initiatives can be hard to measure. While metrics like customer satisfaction and net promoter score can provide some insight, they may not capture the full impact of these initiatives on business performance.
Potential for neglecting innovation: If a company is too focused on meeting current customer needs, they may neglect innovation and fail to anticipate future needs. This could leave them vulnerable to more forward-thinking competitors.
Risk of catering to the vocal minority: Companies need to be careful that they're not only listening to the loudest voices among their customers. A vocal minority might not represent the views and needs of the broader customer base.
Slow decision making: If a company always seeks customer input before making decisions, it could slow down the decision-making process. This could be a disadvantage in fast-paced industries where quick action is needed.

Despite these potential downsides, many businesses find that the benefits of a customer-centric approach outweigh the challenges. The key is to implement this approach in a balanced and strategic way, considering the needs of all stakeholders and the long-term sustainability of the business.

What are alternative business strategies to customer centricity?

While customer centricity is a popular business strategy, it's not the only approach companies can take. Here are a few alternative strategies:

Product-centric strategy: In this approach, the focus is on developing superior products or services. Companies that adopt this strategy invest heavily in research and development to innovate and create high-quality products. Apple, for instance, is often considered a product-centric company because of its focus on creating innovative, high-quality products.
Operational excellence: This strategy focuses on efficiency and streamlined operations. Companies that adopt this strategy aim to deliver their products or services at the lowest possible cost while maintaining acceptable quality. This approach is common in industries like manufacturing and logistics. Amazon, with its efficient logistics and delivery systems, is an example of a company that focuses on operational excellence.
Sales or market orientation: This strategy focuses on aggressive sales techniques and capturing as much market share as possible. Companies with this approach often have strong sales teams and invest heavily in advertising and promotions. Procter & Gamble, a multinational consumer goods company, is known for its market orientation. They invest heavily in market research to understand consumer needs and preferences, and they have a strong sales and marketing focus.
Competitor-centric strategy: In this approach, companies focus on outperforming their competitors. They closely monitor their competitors' activities and strive to offer better products, services, or prices. This strategy is common in highly competitive industries. Samsung is an example of a company with a competitor-centric strategy. They closely monitor their competitors, particularly in the smartphone market, and strive to offer better products or more attractive prices.
Profit-centric strategy: Some companies focus primarily on maximising profits. This could involve cutting costs, raising prices, or focusing on high-margin products or services. While this approach can boost short-term profits, it may not be sustainable in the long term if it leads to a decline in product quality or customer satisfaction. Ryanair, the low-cost airline, is often seen as a profit-centric company. They focus on minimising costs and maximising profitability, even if it sometimes leads to criticism regarding their customer service.
Employee-centric strategy: Some companies focus on their employees first, believing that happy employees will lead to happy customers. These companies invest in employee development, offer competitive benefits, and strive to create a positive work culture. Companies like Google and Salesforce are known for their employee-centric approach. They offer competitive benefits, invest in employee development, and strive to create a positive work culture. They believe that happy, motivated employees will create better products and services, leading to higher customer satisfaction.

It's important to note that these strategies are not mutually exclusive. Many successful companies combine elements of several strategies. For example, a company might focus on creating innovative products (product-centric) while also striving to understand and meet customer needs (customer-centric). The best strategy depends on the company's industry, competitive landscape, and specific strengths and capabilities.

"Customer service shouldn’t just be a department, it should be the entire company." - Tony Hsieh

Hang on! Isn’t customer centricity just fluff, spin or buzzwords? Surely all companies by definition are in some way customer-centric?

Critics who dismiss customer centricity as mere buzzwords or spin may be overlooking the substantive differences between companies that are truly customer-centric and those that merely claim to be. While it's true that all companies must consider their customers to some extent, there's a significant difference between a company that makes decisions primarily based on what's best for the customer and one that prioritises other factors, such as cost or convenience.

Here are a few points to consider in response to such criticism:

Depth of understanding: Truly customer-centric companies invest time and resources in understanding their customers deeply. They use tools like customer surveys, data analytics, and direct interactions to gain insights into their customers' needs, preferences, behaviours, and pain points. This level of understanding goes beyond what many companies achieve.
Focus on experience: Customer-centric companies prioritise the customer experience in all aspects of their business, from product design to customer service to marketing. They aim to create a seamless, positive experience for the customer at every touchpoint.
Responsiveness to feedback: Customer-centric companies actively seek customer feedback and are open to criticism. They view every piece of feedback as an opportunity to learn and improve. This responsiveness is not always present in companies that are not truly customer-centric.
Long-term relationships: Customer-centric companies focus on building long-term relationships with their customers. They see beyond individual transactions and aim to foster loyalty and repeat business. This long-term perspective is not always shared by companies that prioritise short-term sales or profits.
Company culture: In a customer-centric company, the focus on the customer permeates the entire organisation. Every team member, from the CEO to the frontline staff, is encouraged to think from the customer's perspective. This customer-centric culture is often reflected in the company's mission, values, and practices.

In Conclusion

In conclusion, while all companies must consider their customers to some extent, not all companies are truly customer-centric. Being customer-centric involves a deep understanding of customers, a focus on the customer experience, responsiveness to feedback, a commitment to long-term relationships, and a customer-centric culture. Customer centricity is more than just a buzzword—it's a comprehensive business strategy that can lead to higher customer satisfaction, loyalty, and business success.

"It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages." - Henry Ford