Ramblings and useful reminders on customer-centricity

Caring for existing customers is a new construct for large companies

The focus of the largest most successful companies has been on attracting new customers.  Caring for new customers is relatively recent invention and a new construct for these companies.  Today, there is more of a balance between attracting new customers and keeping existing customers.   Genuinely caring for customers and cultivating existing relationships is something many big companies struggle to embody in their day-to-day behaviour.  Yet more and more companies are making more of an effort to do better.

Why care for your existing customers?

The fundamental reason for cultivating enduring relationship with existing customers is simply that customers are scarce resources – sometimes the most scarce resources!  In a market/industry where this is not true there is no compelling reason to care for customers unless attracting new customers is more costly than keeping existing customers.  Why do I say that?  Because it is much more demanding to cultivate relationships and keep customers; attracting new customers through seductive advertising, sales promotions and aggressive selling is much easier.

Strategic implications

The strategic implication of taking a customer retention focussed approach to doing business is simple and straight forward: court your customers ongoing so as to achieve 100% customer retention.  Think of it as the zero defect ethos and practice applied to existing customers.  What does that mean?  It means that you get that “it only works if it all works” and so you set clear expectations, attract the right customers and then deliver on your promises; you do not give customers a reason to leave you because of  defects in expectation setting, product delivery, product performance, service etc.

Clearly, you have to put in place mechanism to identify and part company with customers you have taken on and with which you do not have a fit: a fit  between their needs and what you promise; and a fit between your needs and what these customers deliver to you.

Relationship based philosophy is the foundation of customer-centric strategy

Customer-centric strategies rest on a relationship based paradigm (‘relationship marketing’) which is best captured through the adage ‘don’t make a sale, make a customer – for life’:

  • If you are good to your customers you will make them feel good (about you and themselves) and they will keep coming back because they like you;
  • If they like you they will feel more comfortable with you and they will spend more money with you;
  • If they spend more money (with you)  you will want to treat them better.
  • If you treat them better they will keep coming back and the circle starts again.

Useful principles for customer-centric businesses

How do you make customers feel good about doing business with you?  The answers are limited only by your imagination, your understanding of the human condition and your understanding of your customers. Having said that here are some useful principles:

  • It only works if it all works – solve the customer’s problem completely by ensuring that everything (products, services, channels, touchpoints….) works and works together;
  • Value the customer’s time – use it wisely, don’t waste it;
  • Provide exactly what the customer wants – no less and no more;
  • Provide what is wanted exactly where it is wanted;
  • Provide what is wanted, where it is wanted, exactly when it is wanted;
  • Continually think outside the box of your product and services to come up with expanded products+services to help your customer achieve his desired outcomes in ways that are easier, quicker and more like play than hard work; and
  • Leave customers feeling good about doing business with you – what you stand for matters as much as how you treat your customers.

What it takes to deliver on the customer-centric dream?

It takes a lot to deliver on customer-centric strategies and become a customer-centric business.  As I have written before moving from a product/selling centred orientation to a customer-centred orientation requires organisational transformation akin to the caterpillar turning into a butterfly.  Put simply the steps to customer-centricity sound simple yet are tough and as such they require uncommon commitment and persistence.  And this has to start right at the top with the CEO and the Board of Directors and cascade down and throughout the organisation.

One useful framework for thinking about the capabilities that you need to put in place to deliver on the customer-centric dream has been put forward by Peppers & Rogers:

  • Identify customers at an individual level and determine how these customers can be contacted;
  • Differentiate customers by their needs and financial value;
  • Interact with customers through their preferred channels across the customer journey and set-up a two way dialogue that enables the company to learn about the customers and the customers to learn about the company on an ongoing basis;
  • Customise your products, services and ‘interaction platforms’ so as to leave each customer feeling she has been treated as an individual; and

Whilst not specifically pointed out by Peppers & Rogers, it is clear that the organisation that seeks to put this into practice has to be a learning organisation as put forth by Senge et al.  An organisation that is not able to learn will not be able to sense and respond to customer needs – especially when these needs change.

Before you run off and reinvent your organisation remember this

Your company has to make a profit to survive.  An excellent relationship with yours customers is worthy goal only if your customers offer a reasonable profit potential.  This means that you have to understand your customers and their needs and you have to take into account both the benefits and costs of investing in building relationships with these customers.   It also means that your marketing has to deliver ROI; your sales folks have to close deals in a reasonable time at a reasonable price and margin; your customer service function has to please customer and yet manage its cost base by using the right mix of interaction channels and so forth.

A great example of using Relationship Marketing to deliver a memorable customer experience

On relationship marketing

About ten years ago relationship marketing was in vogue.  Marketing departments were abuzz with the talk and the promise of relationship marketing.  And I noticed Seth Godin’s Permission Marketing in many a marketing department.  Since then the word relationship has been jettisoned and today we are left with customer marketing, customer life-cycle marketing and CRM (marketing).  Why?

I believe that many who started on the path of relationship marketing have collapsed two distinct categories of marketing into one.  In one form of relationship marketing you use marketing to cultivate and grow relationships – the emotional bond between you and your customers. This form of relationship marketing I refer to as Relationship Marketing: it is the real deal – at least in my book.

There is a world of difference between Relationship Marketing and Customer Life-Cycle Marketing

In the second form of relationship marketing you use the ‘relationship’ – the customer life-cycle, the customer journey – to organise and execute your marketing to customers.  This second form of marketing is simply a different, perhaps a cleverer, way of doing direct marketing.  Whilst it may drive up response (because of getting the timing right) it does not necessarily increase the bond between you and your customers – that is to say that it does not strengthen the relationship and increase loyalty.  This form of marketing is best described as Customer Marketing or Customer Life-Cycle Marketing.

It is a shame that so many marketers have settled for Customer Life-Cycle Marketing rather than Relationship Marketing. I get lots of direct mail and I throw most of it away before opening it up.  I am on the Dell database (as I bought a computer from them many years ago) and they continue to send me a catalogue.  When I receive it, I throw it away.  I am a Sky (pay TV) customer and part of their customer marketing database.  So I receive the magazine, I read it and then I put it in the bin.  The magazine does not build any emotional loyalty between us.

Practiced correctly, Relationship Marketing packs an emotional punch, generates a memorable experience and drives up customer engagement and loyalty.  Allow me to share an example with you.

Direct Recruitment: a great example of Relationship Marketing

About two days before my birthday I received some post, one looked like it contained a birthday card so I opened it eagerly.  And this is what I saw:

On touching the card I realised it was a top quality card and I was immersed in trying to figure out which of my considerate friends had been the first one to send me such a fine card.

So I opened up the card and was greeted with a handwritten personal greeting from Sarah Owen who runs the Direct Recruitment agency.  I was surprised and delighted at the same time.  Sarah and I met back in 2007/2008 and each year she sends me a birthday card and each year it comes as surprise. No other company remembers and celebrates my birthday – arguably the most important day of the year for me.

Once I came to grips with my surprise and my delight I noticed the third piece of the card – see below.

This is a great piece of direct marketing:

  • It offers me an opportunity to help a friend;
  • It spells out the benefits for me of helping out a friend; and
  • It compliments me in the very first sentence “..someone as talented as you….”; and
  • The last sentence is a great finish “We really do value your recommendation, so thank you in advance for thinking of us.”

What Impact Did This Have On Me?

Frankly, I feel valued both as a human being and as a professional.  And in return I value Sarah and Direct Recruitment.  More than that I feel indebted to Sarah and I feel a desire to find opportunities to refer people to Direct Recruitment.  I have absolute confidence in their professionalism.  Indeed  I have phoned Sarah to thank her.

The Lesson and the Opportunity

There is a wide open space to deliver knock-out customer experiences for your customers through Relationship Marketing. That means using marketing to build relationships by creating emotionally engaging customer experiences that matter to your customers. How about using special occasions like birthdays, Christmas and anniversaries (first time the customer bought from you)?

So few companies who claim to be customer focused actually take advantage of these opportunities. I wrote a post on that back at Christmas time: “With so much customer focus why am I not drowning in thank you cards?”

Finally, please do remember that there is world of difference between Relationship Marketing (as I have described here) and what too often passes for relationship marketing: Customer Marketing, Customer Life-Cycle marketing and CRM