Becoming Customer-Centric: What Most Organizations Get Wrong
The great news is that corporations, SMEs, and governmental organizations are increasingly focused on becoming more customer-centric. We also now have more tools than ever to better understand customers.
Whether this is motivated by the fear of being disrupted or the need to keep up with new competitors, boardrooms everywhere are embracing methodologies that view customer data as a keystone to success:
- Agile, Conversion Rate Optimization, and Marketing Automation teach teams to think about how customers (aka ‘users’) interact with a product or service.
- Business Model Canvas and Jobs to be Done are much more strategic and focused on understanding customer needs.
- Net Promoter Score (NPS) and customer satisfaction surveys are a fantastic customer diagnostic that allow teams to identify problems and measure satisfaction on a whole.
- Business Intelligence is now engrained into most organizations thanks to the reliance on CRM, third-party data, and analytics to track how customers find and interact with products/services.
- Lean Startup and Usability Testing make direct user feedback a dependancy to either beginning work on a project/feature, or to launching a product/feature.
The truth is that these methodologies are the backbone to the most successful customer-centric organizations. The problem is that implementing these methodologies may have little benefit if you make three very common mistakes.
Three factors limiting your ability to become a customer-centric organization
The following factors are ones I’ve been facing over my career and especially over the last two years leading strategy for PH1, a Canadian customer experience research firm.
Ultra-lean tech startups, government, and large corporations face these. While all are increasingly customer-centred, it is hard for organizations to override the need to think about customers from the standpoint of operations and revenue. And most methodologies and software are designed with that frame of mind.
Here are three of the most common factors limiting organizations:
Issue #1: Demographics and customer segments don’t show empathy for who a customer actually is.
Being customer-centric requires us to see the world from their perspective, not ours.
Walk up to any customer and ask them to say a bit about themselves. You won’t find one that introduces themselves as “I’m a single Latino that’s a Millennial who has been a non-paying customer for three years.”
From the customer’s perspective they describe themselves based on their passions, what brings them joy, and who they surround themselves with. And when talking about products or services they will talk about how and why they use them.
How to become more customer-centric:
- Listen to how customers describe themselves and their actions, then use analytics to verify and/or dig deeper into their resulting actions.
- Replace demographics with psychographics. They provide a broader understanding of the personality, values, and perceptions of your customers.
- Create customer personas to complement segments. Personas use psychographics and analytics as a way of grouping customers based on how they use —or want to use— the product. Avoid using demographics as the basis of any personas.
Relying on business-centric customer data schemas will cause you to miss nuances that are important to your success. Maybe Millennials on a whole didn’t react well to your new pricing strategy, however young urbanites who are motivated to buy your product because of their stressful, on-the-go lifestyles, gladly will pay for a more filling snack that’s healthy.
Issue #2: Analytics and reporting were created with the business in mind, not your customer.
Every organization clearly understands which KPIs they need to report on. The challenge is that very few organizations have identified and regularly track the KPIs that customers themselves think about when deciding to register for, or buy your product or service.
And when assessing the success or failure of a program or campaign, the metrics captured are: views, registrations, sales, revenue. So what happens when you want to understand why revenues were below expectations? Or how to assess the actual success/failure of an initiative?
A customer-centric analysis is impossible because those metrics don’t indicate why customers made the choices they did, nor their satisfaction level.
How to become more customer-centric:
- Understand how customers make decisions and track your performance. These may be factors like: proximity, value-for-money, hours saved, or one specific feature.
- Customer reporting, like NPS, are great diagnostics. The issue that many customer metrics used today is that can’t answer why the problem exists. Conduct regular customer experience research to spot pain points before they become a much bigger problem.
- Structure reporting based on individual customer journeys to get a better view on performance versus satisfaction.
When looking at case studies of successful businesses that were disrupted there’s a common link: their reporting failed to spot changes in customer satisfaction and the changing customer expectations of specific features. This cost long-standing brands like Kodak and Blockbuster their market dominance and can happen to any business that uses reporting that doesn’t evolve with evolving customer behaviours.
Issue #3: Put all the attention on researching customers instead of non-customers.
While customer-centricity challenges us to better understand why consumers make the choices they do, equally important — and almost always neglected — is understanding why consumers decide to say no.
By applying human-centred principles —psychographics, personas, journey mapping— to better understand non-customers, you’ll identify opportunities for growth that simply isn’t possible with traditional lead nurturing methods. Yes, third-party data can enable this unless you know what data is important it will only conflate the end goal.
The need to better understand non-customers should also be imperative before conducting all forms of research. How many different personas have you actually spoken to during street/phone interviews? What psychographic similarities do users have who use your free service, but not your paid? Who are the users that don’t visit a specific webpage and what journey do they through other pages?
How to become more customer-centric:
- Strive to understand non-customers as much as customers, including their psychographics, personas, journeys.
- Ensure that the non-customers recruited for research —like surveys, focus groups, interviews, tests, experiments— are representative of those personas and journeys. Note: this is extremely important when doing interviews within the Lean Startup methodology.
- Consider auditing and researching your competitor’s customers as a way of better understanding the customer-centric needs and perceptions of your non-customers.
By integrating this approach your organization will increasingly gain insights on how to innovate product, marketing, and sales strategies.
If you have any questions or want to better understand how this applies to your organization, please contact me or comment below.
For nearly two decades, Arpy has been working with startups and corporations creating strategies to innovate their customer experiences. His strategies have validated and launched startups, enabled corporations to launch into new markets, and enabled governments to identify how to innovate their experiences. He’s worked with organizations such as BC Ministry of Health, Hootsuite, VANTEC Angel Network, Sage Software, Agropur, Canadian Western Bank.