When it comes to business, strategy can make or break your path to success. It determines how you boost and manage growth, how you deliver products and services to customers, and how you approach business as a whole.
If you’re looking for the right strategy for your organization, customer-centricity could be the answer.
The customer-centric approach focuses on qualitative, sustainable growth, rather than rapid mass quantity growth. And it’s been proven to pay off – research has shown that customer-centric companies are 60 percent more profitable than companies with alternative business practices.
But before you can implement the strategy into your business model, you first have to understand the core principles of it.
What Is Customer Centricity?
Customer centricity is a business approach that prioritizes positive customer experience as the core company philosophy. Customer-centric companies are focused on seeing the world from their customers’ point of view, identifying needs, and delivering complete, long term solutions.
While this methodology centers around how you can best provide for the customer, it also pays close attention to the value that each customer brings to your company.
What's the Difference Between Customer Centricity and Customer Focus?
It’s important to note that there are some key difference between customer-centric companies, and customer-focused companies. While they sound the same, they have very different methods to how they provide services, and how they approach customers in general.
While customer-focused companies are still effective, adopting the customer-centric methodology can make an impact on the efficiency of your overall strategy.
Point of View
Customer-focused companies look at a customer and assess the situation, while customer-centric companies look at a situation from a customer’s point of view. This method helps you better understand customers and how you can provide products and services for them in a satisfactory way.
Wants vs. Needs
Customer-focused companies pay attention to the wants of a customer in order to determine which products or services they can provide to fill those desires.
The customer-centric approach, however, focuses on identifying the needs of a client and delivering a long-term solution. This results in greater customer satisfaction and is likely to boost your customer retention rate.
Approach to Service
Customer-focused companies prioritize giving great customer service to all customers. However, customer-centric companies take a little bit of a different approach.
While customer centricity does aim to provide excellent customer service to all, it primarily focuses on a core batch of customers who have been determined to hold a long lifetime value.
Similar to the previous point, this approach increases customer retention rate and focuses on the quality of customers over quantity.
How to Build a Customer-Centric Strategy: 5 Easy Tips
1. Establish Core Values.
Customer centricity has a lot to do with the philosophy and principles at the core of a company. Establish the core values of your company to define how customers should be treated – and how your employees should be treated – and make sure that your organization lives and breathes by them.
In case you need a little example, here at Bluleadz, we have five core values:
- Everything we do must be awesome.
- Do the right thing.
- Take ownership, be motivated and reliable.
- Be passionate and have a positive “can do” attitude.
- Treat everyone with respect, honesty, and consideration.
2. Develop Products Based Around the Customer.
Taking the point of view of the customer and assessing needs over wants allows you to better understand the customer and how you can serve them.
Be proactive, and use this knowledge to develop products and services based around meeting these needs. Tailor packages to create better, long-term solutions.
3. Focus on Customer Lifetime Value.
Customer centricity goes beyond a single sale to focus on a client’s lifetime value with the company. After the sale is made, continue to nurture the relationship with exceptional service, and focus on retaining repeat business from the customer.
4. Encourage Direct Customer Contact for All Teams.
The concept is customer-centric of course, so this one should really be a given. While most communication is done through email or over the phone, it’s important to make sure that all of your company’s teams get real face time with your customers.
Whether it’s taking a client out to lunch, or simply bringing them in for a meeting in the office, making direct contact with customers is a key element of fostering a strong relationship with them.
5. Make Sure Everyone is On Board.
Building a customer-centric strategy is great, but it won’t be effective unless you implement it correctly.
In order to do so, your employees will need to be trained on how they should be approaching customers and the mentality they should have throughout the customer journey and lifecycle.
How to Measure Your Customer Centricity
Once you’ve organized your company to become customer-centric, you need to measure it to track how successful your strategy is.
Implementing a customer-centric mentality throughout a company and then not following up with analysis is likely to result in major pitfalls. However, tracking metrics will allow you to identify and resolve flaws in your strategy to optimize impact.
There are two key metrics to pay attention to when you want to measure the customer-centricity of your company – churn rate and customer lifetime value.
Churn rate refers to the percentage of customers who discontinue their service or product subscriptions within a given time frame.
Customer-centricity focuses on having a high customer retention rate – while acquiring new business is important, the primary investment is in retaining current customers.
Churn rate and customer retention rate go hand in hand; if your customer retention is low, that means your churn rate is high.
Ideally, you want a high customer retention rate and a low churn rate.
To calculate your company’s churn rate, determine how many customers cancelled their services within the last 12 months. Then divide by the total number of customers overall.
If you find that you have a relatively high churn rate, then you should take a close look at your strategy for flaws and inefficiencies and find solutions to resolve them.
Customer Lifetime Value (CLV)
Customer lifetime value refers to the profit that your company makes from a customer. It focuses on maintaining long term relationships with customers, engaging in repeat business.
Assessing customer lifetime value provides a clear pathway to understanding why it’s important to maintain a high customer retention rate because it helps you determine which customers will be most valuable to the company.
Time to Make the Change
Now that you know about the benefits of implementing a customer-centric business model and how to do it, it’s time to make the change. If your organization is already customer-focused, then you’re a step in the right direction, you just need to make some adjustments to your approach.
While customer centricity is a wide-reaching methodology, you may need to adjust and customize the strategy to fit your own organization and your specific industry. It’s important to make sure that you implement a strategy that works for your company and its unique elements.