Engage customer centricity in the right way
Today, digital bells and whistles and marketing buzzwords seem to overshadow some basic business and marketing approaches.
Customer centricity (a buzzword by itself) seems to have fallen into this trap as well.
Before launching into a customer centric transformation there are some fundamentals that must be considered.
First is the leadership team of a business is 100% committed and secondly does the organization has the right mindset to absorb a customer centric transformation. This change management is a topic by itself and I won’t delve into this in this article.
Assuming now that the organization is revved up and eager to go – what’s next? The answer is not at this stage doing a new Net Promoter Score survey (NPS), nor a retraining of the customer service organization nor just the creations of personas and buyer journeys.
Your Customer Centricity requires some strategic choices before launching into execution.
According to Professor Peter Fader, Professor of Marketing at the Wharton School of the University of Pennsylvania, “Customer centricity is when the brand identifies the most valuable customers and surrounds them with relevant products and services.”
Check out a great interview with Professor Fader here.
Possibly the most valuable marketing process in this phase is the proven Segmentation-Targeting-Positioning approach.
I’m a metaphor person so please join me for a relaxing fishing trip. Our first exciting decision is where do we want to fish? Ocean fishing sounds exciting but river and lake fishing provide some unique experiences!
Your Segmentation exercise is core to deciding exactly what business you are in. An effective segmentation will classify customers into like groups by attitude, behavior, needs, or other common characteristics. And notice that this goes way beyond a simple geographical segmentation (by postal codes for example) or by income levels. By mapping out your clusters according to specific variables, you will be to identify core segments. The final choice of which segments to focus will largely depend on:
- Size and potential: is the segment large enough, in terms of sales and profitability, to warrant an investment?
- Access: are you able to reach the segment, particularly in terms of distribution and communication?
- Actionable: are you able to implement an effective and unique marketing mix to change behaviors?
It is only at this stage that you can get into creating relevant Customer Persona. These are semi-fictional representations of your ideal customer based on real data about customer demographics, behavior patterns, motivations, and goals.
More on Customer Personas, tips and tricks in a later blog.
Now that you have decided that river fishing is your sport, the question is whether salmon or trout is going to be featured on the family table.
Targeting is the process of evaluating, selecting and allocating resources to the customers that are most likely to achieve the best return for a specific business objective. The first comment is that Customer Centricity is a true business model geared to deliver your financial goals. It is not a fluffy ‘be nice’ department.
Here are a couple of key notions for targeting:
The first thing is to identify the big fish! Here is where the concept of Customer Lifetime Value comes in. You should have a clear idea on how much business potential each customer represents over a given period. This should include current products and services but also any reasonable and expected upsells.
Establishing Customer Lifetime Value requires a deep understanding of your customer’s business as well as some access to data such as production capacity, sales history, development opportunities etc. Failing this, find your rule of thumb! My customer produces 50 000 widgets per year, the value of my product & services is 5euros per widget under a standard 3-year contract. Customer Life Value: 750 000 euros.
Now that you know who the big fishes are, the second question is how difficult it is to reel them in. The Total Cost to Serve captures all the investments you make to acquire and serve these customers. This goes from sales reps’ visits, customer service allocation to all the so-called freebies such as gifts, trips etc.
You can probably guess that this makes an ideal 2-way matrix!
Finally, you are ready to fish. All you need is the right bait. Positioning is all about packaging the right products and services to create a compelling Value Proposition for your customers. The better you understand and empathize with what your customer is trying to achieve, the stronger your value proposition will be. True Customer Centric value propositions can be built around your current offerings but they also often lead to moments of inspiration of incremental value or sometimes disruptive innovation.
Now you are all set to embark on your Customer Centricity adventure. The only thing that you still need is to figure out is the best way to cook the fish… But that’s a different story.
Engage Customer Centricity in the Right Way:
Where do I want to fish?
Make the strategic choice of where you want to operate.
What do I want to fish?
Approach the most profitable customers from revenue and cost point of view
What is the bait?
Design compelling customer centric value propositions that create differentiated value for your customers
Contact the team of customer centricity experts from Minds&More and learn how we help to create sustainable growth by better focusing on your customers.
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