Is this the most serious misunderstanding plaguing customer-centricity?

Misunderstanding, reality and narrative

There are so many misunderstandings around customer-centricity that it is hard for me to know where to start.  In this post, I want to deal with a particularly dangerous and widespread misunderstanding.  Some of you have led yourself to that misunderstanding after reading my last post on customer-centricity.  Before I deal with this misunderstanding I want to draw your attention to the following:

Reality is amenable to and readily supports any narrative that we place on it.  Once upon a time the narrative was the earth is flat.  Later the narrative changed to the world is round.  Once upon a time there were witches in the world, now, at least in the West, there are no witches.  For a little while the narrative was almost all of the DNA in the human genome was junk DNA.  Today the narrative is that vast majority of so called ‘junk DNA’ is essential to and involved in key biochemical processes.  I hope you get what I  am getting at.

No single definition and/or ‘understanding’ of customer-centricity will exhaust customer-centricity.   Put differently, customer-centricity seems so obvious until you really grapple with it.  And when you grapple with it all kinds of stuff shows up – some of it rather surprising.  Furthermore, what shows up as customer-centric in one context may not show up as customer-centric another context.

With that out of the way and the context set, lets grapple with this misunderstanding.

To be customer-centric you have to be nice and give you customers what they are asking for

Far too many people confuse customer-centricity with doing what the customer wants, giving the customer what he wants, and being ‘nice’. Some go further and equate customer-centricity with being a patsy, a pushover. I say this is the most serious misunderstanding plaguing customer-centricity. 

Why is it so dangerous?  First, there are the people who understand customer-centricity this way and for them it shows up as unrealistic and distasteful.  Given this way of understanding customer-centricity they dismiss it and/or want nothing to do with it.  Second, there are a different group of people who speak and act as if customer-centricity is as simple as giving the customer whatever he asks for.

Customer-Centricity is neither this simple nor this simplistic

To both of these groups of people I say that you are mistaken.  You’re mistaken, badly mistaken.  Customer-centricity is neither that simple nor that simplistic.

I say that being customer-centric is a stand that you take and not a fixed set of behaviours.  What kind of stand am I talking about?  The kind of stand that says that the only acceptable profit is that made by creating genuine value for customers.  It means letting go of existing policies and practices that enrich the company at the expense of customers  – ‘bad profits’. Taking the customer-centric stand is not possible without courage.  The kind of courage Tony Hsieh and the Zappos management team showed when the business was in deep trouble financially and they gave up a lucrative source of revenue, profits and cash because it did not fit with their vision and stand to be the brand renowned for great customer service.

I say that being customer-centric is as much about being proactive in coming up with new products/services/experiences that you believe will create value for customers as it is about reacting to what customers say/ask for.  As I write this Apple/Steve Jobs/iPod/iTunes/iPhone/iPad come to mind immediately.  Or think of Amazon, ebooks and the Kindle.

I say that being customer-centric is as much about influencing/persuading customers as it is listening to/obeying customers.  Yes, there is a role for the right advertising, marketing and selling.  Customers are human beings and they do not necessarily know what is best for them.  Even if they do know, customers often do not do what is best for their well-being.  This is where you can use insights into the human functioning to come up with a design that nudges the customer towards the right behaviour.  It is also where something more forceful than a nudge can be necessary.  Again I cannot help but think about how Jobs handled the antenna/signal reception issue around the iPhone.  Or think about how Zappos persuaded shoe buyers that it was OK to buy shoes online without trying them on.

I say that customer-centricity only makes sense in a particular context and as such being customer-centric requires a “yes” when it is appropriate to say “yes” and a “no” when it is appropriate to say “no”.  This point was the key point made by Frances Frei and Anne Morriss in their book Uncommon Service.  As they say “you have to be bad in the service of good”.  They talk at some length about Commerce Bank: to be great at convenience and service Commerce Bank chose to only offer one banking product (checking account) and paid the worst rates of any bank in the market place.   Look, if you turn up at my Mercedes dealership and want to pay Ford prices then the most ‘customer-centric’ behaviour is for me to drive you to the nearest Ford dealership!  Furthermore, sometimes a “no” is simply in the best interests of your customer even if he does not know it.  This was the point I was making in this earlier post.

I say a lot.  What do you say? If you the situation at hand differently to me then speak up and share your understanding.

6 reasons why companies continue to struggle with customer centricity

I can think of six reasons why many publicly quoted companies continue to make slow, painful, progress towards customer centricity:

  • They are publicly listed enterprises and they are expected to be shareholder centric not customer centric;
  • They make a significant part of their revenues and profits at the expense of their customers and are not willing to forgo the practices that deliver these ‘bad profits’;
  • They are designed to make and sell standard products not to create and deliver customer experiences;
  • They are structured into silos and each silo has its own agenda, priorities and metrics that makes it rather difficult to play the joined up game of customer experience;
  • The Tops are totally divorced from the day to day reality of the way that the organisation works (just watch Undercover Boss); and
  • They seem to believe that customer centricity lies in the realm of the marketing function rather than a total transformation in business philosophy, corporate strategy, management mindset and organisational design.

What do you think?