Customer-Centricity: how to become customer-centric in one easy step

If you listen to the pundits then customer-centricity involves a complete transformation of your business

Reading the mountain of ink that has been written on all things Customer (strategy, insight, experience, service, CRM) one would be forgiven for concluding that it is a difficult if not impossible task for a large organisation to become customer centred.  You have to come up with a great strategy, to segment your customer base, to work out LTV, to build propensity models, to implement complex CRM systems, re-engineer processes, overhaul the call centre and employ an army of change specialists to get the culture change you want. But is it that hard?

What lies at the heart of the customer-centric orientation?

Jonathan Field spelled that out last year in one of his blog posts:

“…..you’ll solve most of your business problems by spending more energy figuring out how to best understand your customers’ lives, psyches and challenges, then working to solve your customers problems and deliver delight to their doorsteps.”

That is the philosophy behind customer-centricity. Don’t like the word philosophy then call it the guiding doctrine or the core guiding policy.  But can you short circuit this process (avoid all the time, effort and cost in understanding your customers) and get there quicker?  Yes you can, it is really easy to act now – today.

How to become customer-centric in one easy step

If you really want to become customer centric then simply give up self-serving category practices that exploit the customer rather than build goodwill with the customer. What do I mean?  Allow me to give you example of self-serving, exploitative, industry practices:

  • mobile network operators deliberately make their pricing plan complex so that it is difficult for customers to compare apples with apples and also because the operators make more money as customers typically end up on more expensive plans.
  • supermarkets who deliberately put the milk and eggs at the back of the store so as to force customers to walk past tempting goods and thus make impulse purchases that they never intended to make when they first came in the store.
  • financial services providers that deliberately make their plans/policies confusing using jargon that customers do not understand, putting in place all kinds of loopholes that they can use to avoid paying out and finally wrapping it all up in legal terminology that few of us will ever understand.
  • utilities that deliberately make their tariff complex and are swift increase price because wholesale prices go up but then take their time lowering prices when wholesale prices drop.
  • financial services providers that sell products that are worthless – the PPI scandal is a great example of an issue where the red flagged was raised back in 1998 and then it took another 13 years for the banks to concede but only when the courts ruled against them.
  • software companies that make all kinds of wonderful sounding claims (business and technical) some of which are a stretch of the creative imagination and many of which will be hard to turn into reality.
  • budget airlines force customers to ‘uncheck’ the insurance option twice.  Why?  Because it makes more money for the budget airlines.

You might think that I am picking on these industries.  I am not.  I am well aware that every industry has self-serving category practices (that are considered ‘business as usual’ by all the players in that industry) that at minimum make life hard for customers and at worst exploit the customers.  So what does it take to give up these category practices?  Nothing – really it takes nothing, you can stop right now.  Yet, in practice it takes consumer watchdogs, regulatory bodies and often the courts.  Let’s just take a look at the utilities industry as it is in the news.

British Gas says it will be simplifying tariffs

Ofgem – the gas and electricity regulatory in the UK – has recently been piling up the pressure on the industry players. After making more hushed noises Ofgem conducted a comprehensive review concluding that the energy companies are making excessive profits and that they have to change their ways starting with their tariffs – make them simpler to understand and compare.  Well Ofgem came out and said this, the industry players did not like it one little bit and accused Ofgem of getting its facts wrong – or of misinterpreting the data.  Looks like the Tops in British Gas have changed their minds.

I have been listening to Jeremy Paxman (“JP) interviewing Phil Bently (“PB”) the MD of British Gas and here are the highlights:

  • “There are too many tariffs – 544 tariffs to choose from from six or so big energy players” – PB;
  • “Consumer find it hard to compare tariff, chose tariffs and understand how to save money” – PB;
  • “As an industry we should put our hands up and say we should be doing more to help” – PB;
  • “We have not made it easy” – PB;
  • JP shows a graph that compares the consumer bill against wholesale prices and asserts that whilst wholesale prices have gone down bills have not;
  • PB makes the argument that wholesale prices are only one part of the cost base;
  • “the whole point is simplifying tariffs, giving customers choice, giving them transparency..” – PB

If you want to listen to the interview or read the article click here.

My take on this

It is easy to become customer-centric by ditching self-serving category practices that exploit customers.  Yet, it is not in the interest of the Tops nor of the system that they play in to do that.  Why?  Because it hits revenues and profits and the name of the game is to maximise revenues and profits by legal and sometime illegal means.

When industries are locked into certain structures it requires a powerful outsider to come in and disrupt the status quo.  That outsider can be a regulator like Ofgem, it can also be another business that is not invested in the status quo.  Apple comes to mind (music, phones), Virgin comes to mind, Salesforce.com comes to mind and so does Skype.

When Tops (and companies) who have been taking customers for a merry ride (and are only changing their ways because of the regulator) talk about transparency take this with a pinch of salt. Why?  Read one of my earlier posts that deals with transparency.

The first step in changing your ways is to be honest and say it like it really is – think Domino’s Pizza and their admission about the quality of their pizzas and what they were going to do about that.

Being “authentic about your inauthenticity” is an essential step and yet few of us have the courage to take that step especially if you are one of the Tops – Gerald Ratner and his fate may be stopping many.


Posted on November 24, 2011, in Case Studies, CRM, Customer Philosophy, Customer Strategy and tagged , , , , , , , , . Bookmark the permalink. 3 Comments.

  1. Hi Maz,
    I really like your idea about being “authentic about your inauthenticity” and how we can use that to start building better relationships with our customers. But, how can a business start along this road? Does it start with an internal communication process or externally announcements like the one British Gas has recently made?

    Adrian

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  2. Maz,

    You’re right dropping self-serving industry practices would be really hard for an industry leader. They are making the most money so have the most to lose. They’ll have large organizations, risk-averse management… it’s tough to change.

    An industry leader will also have a communications challenge, it’s easy for them to reach an audience but who’ll believe them?

    But the story if different for new entrants, they need to get attention. They can lead the call for change, base their marketing around the need for change. If the industry’s self-serving practices can be aired and can be shown to be anti-customer that will invoke change:
    – legislation
    – market share
    -change in leader’s behaviour

    Ultimately anti-customer strategies are not sustainable. If leaders have the vision to see beyond quarterly results they establish themselves in the ideal position.

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  3. Hello Giles

    Change does not come from those that are not bloated by feasting on halls laden with all the food that you can eat. As your rightly point out, changes comes from those who are hungry or those that are dwelling in a different worldview and value set.

    What I wished to expose in this post was simply the gulf between the rhetoric and the reality of customer-centricity, customer focus or caring for the customer. In reality, organisations simply have to giving up doing stuff. That is it. They do not have to buy offices, or spending multi-millions on sophisticated IT systems nor hire an army of consultants to map the customer journey and redesign the customer experience.

    Now if you are not willing to give up the self-serving practices then how likely is it that all of the other customer stuff is really going to make a difference.

    Thanks for taking the time to share your perspective. I look forward to hearing your voice again. Until then be well, be great.

    Maz

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