How to Create a Customer Centric Strategy For Your Business
- The customer is firmly in the driving seat and with it comes a required change in how you build and nurture relationships with potential and existing customers.
- Companies that put the customer at the heart of their organization are experiencing an increase in customer lifetime value and a reduction in churn. By being customer centric.
- Becoming a truly customer centric organization takes time, but you can start of all small. We share 4 best practices to becoming a customer centric company.
Customer centric is a way of doing business with your customer in a way that provides a positive customer experience before and after the sale in order to drive repeat business, customer loyalty and profits.
But, a customer-centric company is more than a company that offers good service.
Both Amazon and Zappos are prime examples of brands that are customer centric and have spent years creating a culture around the customer and their needs. Their commitment in delivering customer value is genuine – In fact, Zappos is happy to fire employees if they do not fit within their customer centric culture!
But, how important is being customer centric?
The good news is that’s becoming very important!
Econsultancy recently asked what the most important characteristic is in order to establish a truly “digital-native” culture.
The answer to that question and leading the responses with 58% was to be customer-centric.
Executing a successful customer-centric strategy doesn’t happen overnight. You need to start somewhere and in this case, it’s understanding the definition of customer centricity.
What does it mean to be customer-centric?
Customer centricity is not just about offering great customer service, it means offering a great experience from the awareness stage, through the purchasing process and finally through the post-purchase process. It’s a strategy that’s based on putting your customer first, and at the core of your business.
When you put your customer at the core of your business, and combine it with Customer Relationship Management (CRM), you collect a wealth of data, which gives you a full 360 view of the customer. This can then be used to enhance the customer experience.
- You can use customer data to understand buying behavior, interests and engagement
- You can identify opportunities to create products and services for your best customers
- You can use customer lifetime value to segment customers based on top spending customers
Not only does focusing on the customer make sound business sense, but research by Deloitte and Touche found that customer-centric companies were 60% more profitable compared to companies that were not focused on the customer.
The challenges of becoming a customer centric organization
The power shift between brand and customer happened during the economic downturn. Customers became more selective in which brand they chose to spend their money with – The winning brands were the ones who treated their customers with respect, with great service, and built a relationship with them that still exists today.
And during the same time as the recession, social media marketing and social selling exploded onto the scene and mobile became a major part of the customer journey. Customers can now compare products and services in real time and across multiple devices, which has presented a huge challenge for many brands.
Research has found that companies are struggling with this change and are unable to become a customer-centric organization – with the biggest challenge not being able to share customer information across departments.
Most companies do not have all of the components in place to claim they are customer centric, but the most important part to remember is this:
You need to start with your customers, not your products and focus on what your customers want to do.
By designing your company from the customer’s perspective, your organization will be focused on the customer’s needs.
4 Best Practices to becoming a Customer Centric Company
By being customer centric, you will want to anticipate customers’ needs and delight them with products and services they may not have thought of, but will immediately fall in love with (i.e. the Apple iPhone or iPad). Thus, the customer centric brand creates products, processes, policies and a culture that is designed to support customers with a great experience as they are working towards their goals.
The four best practices that stand out regarding customer-centricity are:
- Brands that are committed to customer centricity are passionate, and truly believe the customer comes first. They believe that without the customer, they cannot succeed in business (which is true) and want to see the world through the customer’s eyes. Marketers inside customer-centric organizations understand what customers want, and use customer data to capture customer insights and share this across the organization.
- Brands that are committed to customer centricity focus on what the customer wants and needs, and develop products and services around that.
- Brands that are committed to customer centricity focus on building relationships designed to maximize the customer’s product and service experience.
- Brands that are committed to customer centricity analyze, plan and implement a carefully formulated customer strategy that focuses on creating and keeping profitable and loyal customer.
How to measure the success of a customer centric company?
Not every organization will have the same customer metrics to measure customer centricity. However, the two most important customer centric metrics that should be carefully monitored are churn rate and customer lifetime value.
Acquiring new customers is becoming more difficult. Therefore, more companies are investing in keeping existing customers instead of trying to find new ones. Here’s why:
- Acquiring new customers can cost up to 5x more than keeping existing customers
- A 2% increase in customer retention has the same effect on profits as cutting costs by 10%
- On average, companies lose approx. 10% of its customer base each year (also known as customer churn)
Companies with a high retention rate grow faster.
The key to success is to understand why people leave, and why people remain customers.
To calculate the churn rate, measure the number of customers who left in the last 12 months divided by the average number of total customers (during the same period).
Customer lifetime value (CLV)
For a customer-centric business, the most valuable asset is the customer. The profits generated during the retention phase are often known as customer lifetime value or CLV. Customer Lifetime Value (CLV) measures the profit your organization makes from any given customer.
To calculate CLV, take the revenue you earn from a customer, subtract the money spent on serving them and adjust all of the payments for time value of money. Another way to calculate it is to take average order value and repeat purchase rates. For example, if your average order value is $100 and the repeat purchase rate per customer is 20% your estimated CLV is $120.
Calculating the customer lifetime value helps you understand why it makes sense to invest in keeping your customers. It’s a great way to get an understanding of your customer portfolio and to segment your customer.
The shift towards becoming a truly customer centric organization is both complex and long but, do not be put off by this as even the smallest changes to policy and processes can have a significant benefit for both employee and your customer.
Being a customer centric organization is the Holy Grail towards unlocking the true potential of customer value. Always put yourself in the shoes of the customer and minimize customer effort and maximize customer value.
Do you consider yourself a customer centric organization?
CRM software plays an important role in becoming customer centric as this is where all of your customer data is stored. See how SuperOffice CRM can help your business by signing up for a free demo.