10 Tips – Customer Centricity as a Strategic Management Tool

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Guest Post by Anja Thielsen Valentino, Loyalty Group

“We are customer-focused”, “we have a clear insight into our customers and carry out Customer Surveys” are comments often put forward by company managers. But what does it really mean to be Customer Centric? – And how can it be used as a strategic management tool to scale your company?

Many managers have a sincere wish for their company to be Customer Centric and acknowledge the connected increased ROI in doing so. However, it is often the case that although a company completes Customer Surveys, Customer Journey Mapping (CJM) or similar specific projects, the company fails to achieve the expected change in Customer Experience – usually, because of its inability to manage the organizational change required.

The challenge is ensuring that Customer Centricity becomes a key priority and a useful targeted tool for the top management enabling them to support the company’s Reason d’être by ensuring direction and orchestrating all customer-facing functions within and outside the organization – only then can Customer Centricity be more than good intentions!

10 Tips to Customer Centricity as a Strategic Management Tool:

1. Draft a Customer Strategy
Get the basis right! Which customer needs are the company put into the world to fulfil? How can the company’s customer-facing initiatives within the organization best be value-optimized in the eyes of the customers and thereby scale the company?
Consider these questions or similar and outline objectives, goals and milestones based on the company’s position. On this basis, as well as with the top management’s commitment, the company’s customer strategy can be defined and drafted as a concrete document along which execution and planning can be disseminated throughout the organization.

2. Calculate the Financial Value
Calculate the value of being more Customer Centric. You cannot argue with numbers! How does Customer Loyalty affect your retention rate? With higher loyalty, how much more buying power can these customers potentially represent to your company? How do administration costs differ with different levels of Customer Loyalty? How many new customers are loyal customers generating automatically for the company through recommendations? – And do not forget to calculate the company costs of not being Customer Centric: E.g., what are the financial costs of the customers your company is losing on a monthly or yearly basis – and what are the negative effects of customers talking badly about the company and scaring away potential customers

3. Base Your Decisions on Facts
when a company decides to become more Customer Centric, the decision should always be based on facts. Therefore, the key areas of focus should first of all be defined to attain insight based on a pre-analysis: A so-called RoadMap. A RoadMap can help ensure the direction of a project and that time and resources are spent in the best way possible. This can be done by attaining insight into the potential ROI, the loyalty of a representative customer group, as well as ensuring management commitment and momentum.
Do not forget that a company carrying out customer surveys, NPS ratings and the like, should never allow these activities to stand-alone. Use the insight e.g. to understand customer needs, unexploited potentials or benchmarking, effectively allowing strategic decisions to be based on facts.

4. Identify the Most Valuable Customers
Identify the most valuable customers to measure, focus and prioritize the company’s efforts efficiently. Many companies use the traditional ABC-ranking, but when mapping the most valuable customers, it is not only a question of how much they currently purchase from the company. Equally or more important, is their purchase potential (Share-Of-Wallet) and how loyal they feel towards the company, thereby gaining insight into how likely they are to buy more and recommend the company to other customers. A customer segmentation based on loyalty using e.g. NPS, the Loyalty Matrix or similar Red, Yellow and Green metrics compared with their current use and purchase potential, makes a huge positive difference in prioritizing and allocating the company’s resources and efforts.

5. Map and Design the Customer Journey
According to a survey by Bain & Co., 80% of CEOs believe that their companies provide excellent customer experiences. However, only 8% of their customers agree with them. In order to truly understand this gap, an insight into the customers’ journey is key! Not only when the company meets the customers directly through sales and support, but in instances of contact not as obvious. What are the true experience of the customers and what emotions are he or she left with after a purchase? Not to mention, what might the customers tell their network or communicate on social media? Therefore, truly understanding the customers’ journey is crucial followed by an optimization of all Touch Points where the customers meet or are in contact with the company. A structured insight into the customers’ journey can effectively be achieved by mapping a Customer Journey Map, defining specific Personas and targeted designing the best possible Customer Experiences.

6. Breed a Customer Centric Culture
Obtaining a targeted Customer Focus and creating actual change can only be established when all employees are involved and understand the importance and value of Customer Centricity, as well as their impact on it through their choices, activities, focus and daily mindset. Therefore, all employees must be included, and not only the ones who directly encounter the customers. Full employee inclusion ensures motivation and a common goal and ultimately a noticeable change in the Customer Experience. The key to ensuring a real change is within the employees, as they are the only ones who can breed and support a culture that leads to the essence of great Customer Experiences. If a company truly wishes to be Customer Centric, the organization’s functions and culture must act accordingly and support this as a common vision.

7. Prioritize the Company’s Resources
From a Customer Centric perspective, the company’s internal resources and efforts should be prioritized accordingly to generate maximum customer value. But which functions create true customer value? What is important and what is less important? Use the company’s time and resources in the best way possible. In no way, does it make any sense to use time, efforts and money on an activities or functions that ultimately generate little or no customer value. Therefore, a prioritization of the company’s resources based on Customer Insight and an understanding of what is truly valuable from the customers’ viewpoint, is essential to succeed.

8. Create an Action Plan
The Action Plan can be drafted when the foundation, i.e. the Customer Strategy, as well as insight into the most valuable customers and value-creating factors for the customers and a prioritizing hereof, is defined, clear and measurable. The successful Action Plan operates throughout the organizational functions ensuring both direction and commitment of the customer-facing initiatives. A well thought out Action Plan can be drafted based on a Driver Analysis and/or a Customer Journey Map.

9. Visualize the Value within the Organization
Visualizing how employees create customer value can help ensuring and aligning the direction of the organization to a common mission of creating and developing excellent Customer Relations as well as breaking down organizational silos. Making the customer experience and value visible to employees in the organization, can be done by implementing continuous trigger-based surveys ensuring that all employees know what is being measured and why. The results are based on selected KPIs e.g. shown on noticeable Dash Boards throughout the company’s departments. This way, the common Customer Focus is visible and perceived as a part of the organization and all employees can continuously see the value they contribute to create.

10. Create an Emotional Connection with the Customers
A strategic Customer Focus is key in creating and developing emotional Customer Relations with the goal of developing a high Customer Loyalty and company Ambassadors.
A recent survey from Bain & Co. showed that more than half of all buying decisions are based on feelings and not on rational reasoning. Therefore, make sure that the customers feel they are understood, appreciated and their needs are being met. Ideally, the company’s brand, product or service should be perceived as a natural part of the customers’ lives and routines, identities and “world”. During so by ensuring and supporting convenientness, simplicity, comfort ability, simplicity, understanding when customers encounter with the company, its services or brand making them feel confident with the company. Ultimately buying more, staying loyal, and recommending it to family, friends and acquaintances.

Customer Centricity as a Strategic Management Tool

When managed correctly, a Customer Centric focus can become a strategic management tool, not only valuable for scaling the company, but also in positioning the company in the eyes of the customers. The critical basis for becoming Customer Centric is a keenly defined Customer Strategy and key Customer Insight as well as ensuring top management commitment.

In the quest for Customer Centricity, a well-developed RoadMap will allow the company to get the foundation right. A RoadMap gives your company a solid basis for working in a sound strategic and targeted way, ensuring excellent Customer Experiences and Relations.

Original Post: http://loyaltygroup.dk/eu/news-inspiration/article-archive/2015/10-tips-customer-centricity-as-a-strategic-management-tool/