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Realizing Customer Centricity
Prof. Dr. Dennis HerhausenAssistant Professor of Marketing
20./21. May 2014
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Customer Centricity – What does it mean?
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Product(Service)
Customer
Customer
Customer
Customer
Customer
Customer
Customer
Product
Service
Product
Service
Product
Service
Product Focus Customer Focus
A Shifting Focus: Customers, not Products!
„Sales Management“„Product Management“
„Customer Segmentation“„Customer Management“
Source: Rust, Moorman und Bhalla 2011
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Value forCompany
Value forCustomer
The Essence of Customer Centricity
„Customer Centricity is concerned with the process of dual value creation, where the paradigm lies on
creating value for the customer and, in the process, creating value for the firm.“
Source: Shah et al. 2006
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Customer Centricity – does it pay off?
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Outcomes of Customer Centricity
All Relationships have been investigated in empirical studies.
Customer CentricityCustomer Centricity
Higher Customer
Satisfaction
Higher Customer
Satisfaction
Higher Customer
Loyalty
Higher Customer
Loyalty
Higher Customer
Trust
Higher Customer
Trust
Higher Customer-Company
Identification
Higher Customer-Company
Identification
More positive Word-of-
Mouth
More positive Word-of-
Mouth
Higher Willingness to
Pay
Higher Willingness to
Pay
Source: Several Customer Centricity Studies
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Increasing Market Value with Customer Centricity
Source: Walker 2012
Companies with the highest customer orientation are much more successful than the average company within the S&P 500.
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Customer Centricity in Switzerland
Source: Survey IfM-HSG (2012)
Survey of 265 Companies (B2B) in Switzerland
Degree of Customer Centricity
Investing into Customer
Centricity pays off!
o = RelationshipCustomer Centricity andFinancial Performanceper Company
– = RelationshipCustomer Centricity andFinancial Performance
Fina
ncia
l Per
form
ance
in C
ompa
rison
to C
ompe
titor
s
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
The Degree of Customer Centricity is often Overestimated by Top Managers
92.1
87.7
84.2
81.4
78.2
70
75
80
85
90
95
SupportEmployees
Top Managers
MiddleManagers
Customer-ContactEmployees
Customers
Source: Employee Survey (n=894 Employees) and Customer Survey (n = 544 Customers) at a Swiss Company (2012)
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Customer Centricity – How to get there?
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Levers of Customer Centricity
4. CultureRole Models of
Customer Centricity
2. StructureCustomer-Focused
Organizational Design
1. Strategic Approach
Customer Focus
3. KnowledgeAddressing Latent Customer Needs
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
1. Strategic Approach: Customer Focus
1. Our business approach is based on the customer. We always show that we want to meet the customer's requirements as soon as possible.
2. We treat the customers as our partners. We believe that sustainable business success depends on long-term relationships.
3. We aim to clearly understand the needs and expectations of customers and to meet these needs and expectations . We promise only what we can keep, and we always keep our promises.
4. We benefit from our own knowledge and experience and those of our customers in order to meet the needs of our customers with appropriate solutions.
Source: Survey IfM-HSG (2012)
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
2. Structure: Customer Centricity requires an Integrated Process Perspective
Pro
duct
Dev
elop
men
t
Pro
duct
Man
agem
ent
Sal
es
Cus
tom
er S
ervi
ce
The customer wants…Th
e O
rgan
izat
ion
thin
ks in
…
individualoffers
high quality
fastsupply
Sourcee: Backhaus 1999
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Hilti puts the Customer First
Source: Hilti 2010
CustomerMarket Regions / Marketing Organizations
Business Areas
Corporate Research & Technology
Supply Chain Corporate Functions
Executive Board
Board of Directors
Hilti Trust
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Hilti: Customer Needs, not Products
Measuring systems
Measure
Drilling and demolition,diamond cutting
Open
Direct fastening,anchor systems,installation systems
Fasten
Cutting, sawing and grinding
Execute
Firestop,construction chemicals
Close
Source: Hilti 2010
Realizing Customer Centricity
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3. Customer Knowledge, not Customer Control!
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
3. Knowledge: Addressing „Latent“ Customer Needs
It’s not the customer’s job to know what they
want.This is our job.
Source: Steve Jobs (Apple) 2007
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Successfully addressing „Latent“ Customer Needs
Qualitative Methods
Trend Watching
Scenario Management
Customer Integration
Customer Proximity
Future Focus
+ -
+-
HiddenCustomer Needs
Future Customer Needs
Explanation of innovative Methods of Market Research
Integrate customers into early innovation stages to learn about the use of products and services.
Use future-oriented focus groups with employees, experts and customers to gain insights into customers' latent needs.
Monitor trends in society that signal changes in your customers' needs.
Identify future customer needs with scenariomanagement.
Source: Herhausen 2011
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
4. Culture: Customer Centricity comes to life, when all Employees live Customer Centricity!
Customer-Contact Employees
Top Managementand
Middle Management
Support Employees
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
A long journey towards Customer Centricity…
Customer-orientation
2004
Customer-processes
2005
BrandMgmt.
2006
Transf.Leadership
2008
Personal-Marketing
2009
Perform.Mgmt
2010
Value-orientedLeadership
20132012
positiveCustomerContacts
MarketingSeminar
Impulses for Management: „Top-Down“
Impulses for Employees: „Bottom Up“
Change Arena I
2007
Change Arena II
2011
CulturalAnalysesI
2009
CulturalAnalysesII
2012
Change Arena III
2014
CulturalAnalysesIII
2015
EM-Impulses
2017
2015
Leader-shipSeminar
2016
Source: Villiger (GKB) 2014
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Impulses for Employees: “The Change Arena”
1. CC Knowledge
2. Making CC Tangible
3. Implement Changes
Source: Villiger (GKB) 2014
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Market Valuation of Graubündner Kantonalbank
Since starting the journey towards Customer Centricity, GraubündnerKantonalbank is much more successful than the average company
within SMI / SPI.
Source: Villiger (GKB) 2014
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Take-Aways
Customer Centricity… defines value creation from the customer perspective.
pays off (in particular) for B2B-companies.
determines the strategy for the whole organization.
affects all departments, divisions und processes within the company.
pays attention to „latent“ and „future“ customer needs.
comes to life, when all employees live Customer Centricity!
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Prof. Dr. Dennis HerhausenAssistant Professor of Marketing
Tel: +41 (0)71 224 28 59Fax: +41 (0)71 224 28 [email protected]
Institute of MarketingUniversity of St.Gallen HSGDufourstrasse 40a9000 St. Gallen
Contact
Realizing Customer Centricity
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© Prof. Dr. Dennis HerhausenUniversity of [email protected]
Further Reading (in German):Creating a Customer-Centric Company