the essentials of customer centricity
TRANSCRIPT
THE ESSENTIALS OF CUSTOMER CENTRICITY
Professor Peter FaderCo-director, Wharton Customer Analytics InitiativeThe Wharton School, University of Pennsylvania
[email protected]: @faderp
“Customer Centricity: Focus on the Right Customers for Strategic Advantage”
• The traditional product-centric business model is showing some cracks• Commoditization, well-informed customers, globalization, etc.
• Customer centricity is a promising alternative but is not clearly understood• Many firms that are touted to be customer centric really aren’t…
Adapted from Treacy and Wiersma, “The Discipline of Market Leaders,” 1995
What is customer centricity?
Customer centricity is a strategy that aligns a company’s development/delivery of its products/services around the current and future needs of a select set of customers in order to maximize their long-term financial value to the firm.
“Customer Centricity: Focus on the Right Customers for Strategic Advantage”
• The traditional product-centric business model is showing some cracks• Commoditization, well-informed customers, globalization, etc.
• Customer centricity is a promising alternative but is not clearly understood• Many firms that are touted to be customer centric really aren’t…
• Celebrate customer heterogeneity: distinguish the profitable customers from the less profitable ones
• It’s all about customer lifetime value (CLV)
• It’s a complex transformation
Galbraith (2005), Designing the Customer-Centric Organization
“Customer Centricity: Focus on the Right Customers for Strategic Advantage”
• The traditional product-centric business model is showing some cracks• Commoditization, well-informed customers, globalization, etc.
• Customer centricity is a promising alternative but is not clearly understood• Many firms that are touted to be customer centric really aren’t…
• Celebrate customer heterogeneity: distinguish the profitable customers from the less profitable ones
• It’s all about customer lifetime value (CLV)
• It’s a complex transformation
• And can fundamentally change the way we look at many functions in the organization – not just marketing
Customer centricity as an organization-wide strategy
• Marketing• Acquisition/retention/development > branding
• Finance• Customer equity as a legitimate component of corporate valuation
Customer centricity as an organization-wide strategy
• Marketing• Acquisition/retention/development > branding
• Finance• Customer equity as a legitimate component of corporate valuation
• R&D and production• Measure/incentivize by incremental CLV, not volume
• Salesforce and front-line staff• Measure/incentivize by incremental CLV, not satisfaction
Reflections on customer centricity
• Who is the customer? Can your organization come up with a single, consensus answer to this question, or can you at least reconcile the roles/relationships of the different potential customers?
• What are the major barriers to account for?
• What resources can you utilize to overcome these barriers?
• Thoughts about what competitors are doing in this area?
• Does it make sense for your organization to become customer centric?
Professor Peter [email protected]
www.petefader.comTwitter: @faderp
Customer Centricity: Focus on the Right Customers for Strategic Advantage”
http://bit.ly/FaderCC
