Customer Centricity:
A Home Run For Customers
If a company says it is going to become customer centric, it sends a clear and unequivocal
message to its customers and its employees. But can they deliver on the promise?
David Rance, Round
RM was heralded as something that would change a company
C
CRMProject.com
and make customers buy more. But we’ve all seen the statistics
on CRM success rates. Did anyone really expect a software
package or even consultants to change the way a company works so
dramatically that employees and customers would suddenly enjoy
harmonious and profitable interactions? Apparently they did. They also
expected miracles from TQM (total quality management), BPR
(business process re-engineering), ERP (enterprise resource planning)
and every other triple letter acronym. Weren’t these companies also
outsourcing their customer service and forcing customers to use
impersonal interactive voice response or the Internet just to reduce
costs? Yes, they were.
Way back in October 2000, we carried out some research in
partnership with CRMGuru.com. We asked CRM professionals
across the globe, “Why isn’t CRM working?” The results were
not surprising:
■
The company is internally focused – so the customer rarely gets on
the radar screen;
■
The functional organization design promotes functional strategies;
■
The command and control culture results in decisions being made
too far from customer;
■
Customer information is neither of these, it’s mainly functional
transaction data; and
■
CRM is seen as an IT solution and is left to the IT department to
implement without clear business requirements.
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unfortunate fact is that most executives have experienced life only in
structured organizations. They do not have an intuitive understanding
of what to do to change things. And with the average tenure of a senior
VP now less than two years, why would they take the risk of rocking
the boat?
Structured organization models are based on the principle of
specialization of labor introduced in the mid 1800’s by Adam Smith in
his seminal work, The Wealth of Nations. It was the big idea that fueled
the industrial revolution. The irony is that manufacturing companies
left this model back in the last century and have moved on to newer
models that promote teamwork and facilitate rapid change, resulting in
increased productivity and business performance. Perhaps there is a
clue here.
So now we have customer centricity. Is this just the latest
panacea promising the earth? I could certainly be forgiven for
thinking that, but I don’t. I think this is finally the real thing. In an
age of multinational brands and mass marketing, customers are
finally finding their power. For those of us who champion the
customer, this is just what we’ve been waiting for. Companies have
argued for the last two years that they have really embraced CRM,
when all they’ve done is spent loads of money on mega-systems that
have just sharpened their marketing campaigns and increased their
direct mail response rates.
But if a company says it is going to become customer-centric,
it sends a clear and unequivocal message to its customers and
its employees. Leading companies will set standards and customer
expectations that can’t be fudged by smart technology or clever
marketing. They will put clear water between themselves and
What is staggering is that four years on and with a 70 percent failure
rate the accepted norm, few have figured out what to do about it. If
this performance happened in
any other area of our life these
statistics would attract press
Following an extensive operational background in sales, marketing, IT and customer care, David Rance is now
attention and result in a public
managing director of Round, a London-based consulting firm, and a member of the guru panel for CRMGuru.
outcry or congressional enquiry. He has written a book on customer centricity being published at the end of 2004, co-written with Dr. Moira Clark,
So why is it like this? The
head of the CRM Institute at the Cranfield School of Management in the UK.
Future
their product centric competition, and the latter will ultimately
become commodities.
Even the term is unambiguous. You’re either customer-centric or
you’re not. Companies that only claim to be customer-centric will have
no place to hide. Their employees will know the truth and so will their
customers. It will be that obvious. Customers are getting very smart and
very demanding. So are employees. And they’ll both go to another
company that is serious about it.
Customer centricity is something the entire management team
will have to embrace, and it will require effective leadership to
bring about the holistic change. However, business leaders should
take comfort from the fact that everyone who deals with customers
will shout “hurrah” and willingly embrace the changes and lead
the way. The losers will be the controlling managers who stifle
creativity and focus on achieving volumetric performance measures
■
■
The information architecture should be just that, providing the right
information to support every customer engagement and supporting
rapid change; and
The performance metrics should measure and reward the behaviors
that result in increased customer loyalty and value.
We have developed these insights into a framework for change, and we
have learned a great deal along the way about how organizations can
change very quickly given the right direction and environment. The key
lies in the journey itself. We have identified four positions on the
journey to becoming fully customer-centric, around which a company
can align itself to ensure consistency. To facilitate ease of understanding
of something inherently complex, we have used a sports metaphor –
baseball. As a Brit, I certainly cannot be accused of blind patriotism to a
national game. We don’t play baseball. But baseball is the only sport that
We constantly find marketing spending large sums of money on all manner of ideas
to engage with customers while customer care is being forced not to speak to
customers at all.
creates this sense of a structured, incremental journey. It is also coached
dynamically on the field of play, and the tactics are changed pitch by
pitch, which is highly analogous to business. Baseball really works. And
we’ve found it was understood in Russia, Turkey, Macedonia, Austria,
Germany, Czech Republic and Holland as well as the UK and US. It’s
truly universal.
The bases represent milestones on the journey around which the
company optimizes is customer operations.
■
First base – Product centric (a functional organization focused on
efficiency and transactions);
■
Second base – Customer focus (a learning and improvement
company dedicated to maximizing customer satisfaction);
■
Third base – Customer value (a company focused on maximizing
customer value through an understanding of individual needs and
discrete strategies to realize them); and
■
Fourth base (home plate) – Customer centric (a company where
the customer is a raving fan, becomes an extension of the
organization and a stakeholder in its success).
It is important to understand that the journey is incremental, so as
a company moves around the baseball model, the capabilities of
the previous base are built upon, not discarded for a new strategy.
Between each base, therefore, the focus of the journey at that
point changes:
■
Home to First – efficiency;
■
First to Second – customer satisfaction;
■
Second to Third – customer level needs and strategy; and
■
Third to Fourth (Home) – customer relationship.
Defying The Limits
at the expense of both the customer and those who try their best to
serve them.
So how does a company become customer centric? First,
let’s understand what we have in place today: functional
organizational silos with functional strategies and functional
performance measures. If these functional strategies align to create an
ideal customer experience, this is almost certainly a complete fluke.
We constantly find marketing spending large sums of money on all
manner of ideas to engage with customers while customer care is
being forced not to speak to customers at all. Marketing (again)
spends a fortune on customer research when the customer care teams
take thousands of calls from customers every day. What’s wrong with
this picture?
Yet companies don’t see this of themselves, even though the
executives are all customers of other companies. And given the chance,
they all complain how bad it is for them. What color glasses do they put
on when they get to the office? Have they given up or is it they just
don’t know what to do about it?
In our survey we also asked, ”How do you make CRM work?” The
answers were interesting:
■
The company needs to have a clear sense of journey. CRM is not a
destination, it’s merely some of the tools that facilitate the business
becoming more customer centric;
■
There needs to be a clear customer strategy that is implemented
across the company end executed consistently though all points of
customer engagement;
■
The organization should be designed around execution of the
customer strategy, not around business functions;
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Customer Centricity: A Home Run For Customers
A company can only be in one position. However, parts of the
organization can be, and often are, in many different positions.
Remember, each base is a different kind of company and a
different kind of customer experience. If marketing operates at third
base, customer care at second and finance at first, it may explain why
there is so much tension in the organization. It’s not just goals that are
in conflict; it’s the whole style. And if it’s conflicting inside the
business, what does the customer see? Inconsistency and confusion,
which quickly leads to mistrust. The customer only joins you on the
journey when you reach second base. That’s because as a learning
company, you have to engage the customer in finding out what’s
wrong with your processes and policies and then win their confidence
by fixing it. Up to that point, the relationship is largely adversarial.
Midway between first and second base is the line of chaos. This is
the point that many traditionally structured companies reach in their
efforts to be more sensitive to their customers. But without end-toend processes and policies to guide customer-facing employees, this
often results in reduced utilization and inconsistent customer
experiences. Capabilities developed independently become out of
alignment, causing tension as capabilities from one part of the
business cannot be supported by or are in direct conflict with those of
another. The result is increased costs and low ROI, followed by a loss
of confidence in customer satisfaction initiatives. At this point the
alarm bells ring and the company is dragged back to the perceived
safety of first base at the expense of the customer experience. The sad
thing is that the benefits of reaching second base are increased
1
Customer
Focus
customer satisfaction, increased employee morale, reduced costs,
reduced customer attrition (churn) and reduced bad debt – the very
objectives the business was trying to achieve.
The way to drive the business to second base (and beyond) is to develop
all the capabilities that make up the customer experience and align them
around second base. These capabilities are grouped into five enablers:
■
Business leadership including company vision, goals, brand values,
planning and leadership style;
■
Customer strategy including segmentation, customer value
calculation, process design, process governance, information,
customer acquisition, customer servicing and risk management;
■
Organization design including company and functional structures,
culture, people development, reward and recognition;
■
Information architecture including technical architecture, data
model, process automation, customer contact routing, Web, email
and SMS; and
■
Performance measures including company metrics, functional
metrics and process metrics.
Where the business
wants to be
Where the
business is now
Product
Centric
By mapping all these capabilities against
the baseball model, you can create a profile
of the business that will show overall
balance, strengths and weaknesses.
2
Customer
Value
3
Customer
Centric
4
Business
Leadership
Customer
Strategy
Gaps between
current and
required
capabilities
Organisation
Design
CRMProject.com
Information
Architecture
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Performance
Measurement
Figure 1: The customer centricity framework maps capabilities against the bases to manage business change.
By mapping all these capabilities
against the baseball model, you can
create a profile of the business that
will show overall balance, strengths
and weaknesses and help companies
prioritize where they invest to align
their capabilities to create
consistency and harmony whilst
minimizing their operating costs
(see Figure 1). And the winners?
Shareholders, executives, employees
and, of course, customers.
Any journey starts with where
you are now. To find out where you
are, go to www.round.co.uk/cci. It’s
free and takes just 10 minutes to
complete. Over 13,000 companies
have completed the assessment.
Once you’ve found out where you
think you are, set up your own
survey group and invite your
colleagues to complete it too. The
results may surprise you but the
insight will certainly help set you on
the right road. ■