Seth Godin once wrote: “Quit or be exceptional. Average is for losers.” How does this relate to the principles of customer-centricity and how can you be exceptional for all of your customers, all of the time?

There is a lot of talk about customer-centricity, but I fear most of us don’t understand what it is actually about. Let’s dig in deeper and get it right (credits to i-Scoop).

What does it mean to be “customer-centric” according to Don Peppers:

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“Assuming that you start with a quality product and service, being customer-centric means understanding the customer’s point of view and respecting the customer’s interest. You fix problems, handle complaints, and remember individual customer preferences.”

Shift in control

Customer-centricity, as opposed to product-centricity or human-centricity, has everything to do with a shift in control from the seller to the buyer – due to an increasingly digital customer, increasing expectations and increased availabilty of relevant information, experiences and opinions.

While in the past a buyer was relying on the seller to supply up to 80% of the information needed to help make a short list or a decision to buy, today 80% of all relevant content is available online. Allowing the buyer to postpone contacting the seller to 80-85% of the buying process. At the same time the velocity of the buying process has increased from several months to just a few days or weeks, while new business models eliminated the need of a middleman in the supply chain.

As a consequence the seller needs to (learn how to) identify, track and engage prospective buyers by following them in their digital footsteps.

Market Share versus Share of Customer

Let’s have a look at customer centricity versus product centricity: how do they compare?
Map customer centricity versus product centricityDon Peppers, co-founder of Peppers & Rogers Group, a customer-centric management consulting firm, suggests the diagram above and explains:

Product-centric competition is based on having a product that meets a certain customer need, and then trying to find as many customers as possible who want to have that need met. Success is measured by the length of the horizontal arrow (i.e., how many customers are reached). In competitive terms, this would represent your company’s market share.

Customer-centric competition starts with an individual customer and tries to meet as many of that customer’s needs as possible – across all the company’s divisions and business units, and through time (i.e., meeting a customer’s needs week after week, month after month). And the length of the vertical arrow represents your share of customer.

What’s more important, according to Don Peppers, is that the financial objective for a company that competes in a product-centric way focuses on optimizing value created by each product, while customer-centricity focuses on optimizing value created by each customer.

customer-centricity-vennCustomer Lifetime Value

According to Peter Fader (and others) customer-centricity is (therefor) about the Customer Lifetime Value or CLV and concentrating all efforts on these customer segments that were most valuable and interesting to optimize.

The Customer Lifetime Value (CLV) is a prediction of the total value (mostly expressed in net profit) generated by a customer in the future across the entire customer life cycle.

So what is customer-centricity really about?

Customer centricity is not about pleasing all of your customers. It is about optimizing value created by a customer in segments that are most valuable. CLV inspires to focus on the 10-20% of your customers who generate 80-90% of your revenue (yes, Pareto) and sell more to them.

Any company that tries to please all of its customers all of the time will simply drown in the attempt, burning up resources, while still creating an average customer experience. Customer-centricity is about focusing resources on the customers and segments that create the most value for your business.

Don’t let others fool you to believe it is about tender, love and care. You’re running a business, not a charity.

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