How to Create a Customer-Centric Strategy For Your

Business
superoffice.com/blog/how-to-create-a-customer-centric-strategy

Posted by Steven MacDonald - 56 Comments

Last updated: 4 May, 2021
Post summary:

The customer is firmly in the driving seat and with it comes

a required change in how you build and nurture
relationships with potential and existing customers.

Companies that put the customer at the heart of their

organization are experiencing an increase in customer
lifetime value and a reduction in churn. How? By being
customer-centric.

Becoming a truly customer-centric organization takes time,

but you can start small. We provide you with 4 best
practices to becoming a customer-centric company and
share 3 ways to measure success.

A customer-centric way of doing business is focused on providing a

positive customer experience before and after the sale in order to drive
repeat business, enhance customer loyalty and improve business growth.

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However, a customer-centric company requires more than offering good
customer service.

Both Amazon and Zappos are prime examples of brands that are customer-
centric and have spent years creating a culture around the customer and
their needs. Their commitment in delivering customer value is genuine. In
fact, Zappos is happy to fire employees if they do not fit within their
customer-centric culture!

But, how important is being customer-centric?

Econsultancy recently asked what the most important characteristic is in

order to establish a truly "digital-native" culture.

The answer to that question and leading the responses with 58% was to be
customer-centric.

Yet, according to CMO Council, only 14% of marketers believe that

customer-centricity is a hallmark of their companies.

Here's the thing:

Executing a successful customer-centric strategy doesn't happen overnight.

Let’s explore ways to create a customer-centric strategy that connects your

business to the unique needs of your customers.

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What is customer-centric?

Customer-centric (also known as client-centric) is a business strategy

that’s based on putting your customer first and at the core of your business
in order to provide a positive experience and build long-term relationships.

When you put your customer at the core of your business, and combine it
with Customer Relationship Management (CRM), you collect a wealth of
data, which gives you a full 360 view of the customer. This data can then be
used to enhance your customer’s experience.

For example:

You can use customer data to understand buying behavior, interests

and engagement

You can identify opportunities to create products, services, and

promotions for your best customers

You can use customer lifetime value to segment customers based on

top spenders

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Research by Deloitte and Touche found that customer-centric companies
were 60% more profitable compared to companies that were not
focused on the customer.

Companies that focus on their customers are able to provide a positive

customer experience through their entire journey. To accomplish this,
companies must undergo a massive shift in their organization’s structure
and culture.

The challenges of becoming a customer-centric organization

The power shift between brand and customer happened during the
economic downturn in the late nineties as customers became more
selective in which brand they chose to spend their money with.

The winning brands were the ones who treated their customers with
respect, offered great service, and built a relationship with them that still
exists today.

During the same period, another game-changer took place - social media.

Social media marketing (and with it social selling) changed the way
customers interact with brands and became a major part of the customer
journey.

In a report by Global Web Index, 54% of social media users use social
media to research products and 71% are more likely to make a purchase
based on social media referrals.

Social media is just one of many digital channels that is changing the
landscape between companies and customers.

Research reveals that companies struggling to become a customer-centric

organization are unable to share customer information across departments
and lack an aligned culture around the customer’s needs.

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Most companies do not have all of the components in place to claim they
are customer-centric, but the most important part to remember is this:

Customer-centricity starts by focusing on what customers need and how

they want to interact with your business - not your products, it’s features,
or revenue model.

By designing your company from the customer’s perspective, your

organization will be able to meet the customer’s needs and deliver a
positive experience.

4 Best practices to becoming a customer-centric company

Becoming a customer-centric business allows you to anticipate customers'

needs and delight them with products and services.

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Consider the CEO of Apple, Tim Cook, who said, “Our whole role in life is
to give you something you didn't know you wanted. And then once you get
it, you can't imagine your life without it.”

Apple’s entire strategy revolves around customer-centricity. Their product

makes customers fall in love and their Apple Centers provide world-class
customer support to help them get set up and out the doors with a smile on
their face.

Thus, a customer-centric brand creates products, processes, policies and a

culture that is designed to support customers with a great experience from
initial discovery to point of purchase and beyond.

To achieve better customer-centricity, here are four best practices to help

your business stand out:

1. Hire for customer success. Employees are the front-facing

workforce that will shape many of the experiences with customers.
Regardless of role, focus on hiring talent that can be aligned with
customer-centric thinking and the importance of customer experience
at your business.

2. Put relationships first. Customers are not numbers to be

measured and analyzed in a revenue performance report. They are
people and benefit greatly when you establish a mutually beneficial
relationship together.

3. Democratize customer data. Adopting a new customer-centric

strategy requires centralized access to customer data and insights.
Having a CRM database can help facilitate a better understanding of
customers to provide a unified front that delivers better customer
experiences.

4. Connect company culture to customer outcomes. Employees

will be motivated by a customer-centricity strategy when actions can
be linked to results. For example, strategies to reduce customer wait
times or making transitions easier for a customer can be captured in
real-time to highlight successful strategy implementation.

3 ways to measure the success of a customer-centric company

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Not every organization will have the same customer success metrics to
measure customer-centricity. However, the three most important
customer-centric metrics that should be carefully monitored are churn
rate, Net Promoter Score and customer lifetime value (CLV).

1. Churn rate

Acquiring new customers is becoming more difficult. Therefore, more

companies are investing in keeping existing customers instead of trying to
find new ones. Here’s why:

Acquiring new customers can cost up to 5x more than keeping existing

customers

A 2% increase in customer retention has the same effect on profits as

cutting costs by 10%

On average, companies lose approx. 10% of its customer base each

year (also known as customer churn)

Companies with a high retention rate grow faster.

The key to improving retention rates is to understand why people leave,

and why people remain customers.

Call Miner’s Churn Index Report reveals that $35.3 billion is associated
with unplanned switching to a different brand due to triggers that could
have been avoided. For example, customers were more likely to leave a
brand if:

Knowledgeable customer support, or super agents, can address

customer needs by emphatically listening and addressing an issue
then solving it promptly
Companies lacked automated self-service channels, such as a
knowledge base, to solve issues on their own
Customers not feeling rewarded for their loyalty while new customers
receive onboarding benefits and bonuses

Once known, you can calculate churn rate by measuring the number of
customers who left in the last 12 months divided by the average number of
total customers (during the same period).

2. Net Promoter Score

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Are your customers happy? How do you measure customer happiness?

The answer is through NPS.

NPS, or Net Promoter Score focuses on uncovering customer loyalty by

asking only one, simple question:

Each time a customer responds to this question, the answer is then

segmented based on predefined criteria:

Promoters (9-10): These people are in love with your product or

service and are likely to refer you to potential buyers. The customers
who rate you a 9 or 10 are repeat customers and will have a high
customer lifetime value.

Passives (7-8): These people who rate you a 7 or 8 are content with
being a customer of your business, but are the most likely to switch to
a competitor should they find a new or better product.

Detractors (0-6): These people are not happy with your product or
service and are likely to damage your brand reputation by sharing
their negative experience with their friends, family and connections.

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The more Promoters you have, the healthier your business. Simple, really?

And the fact that it’s simple to implement and measure makes the NPS a
favorite with company boards and executive committees.

3. Customer lifetime value (CLV)

For a customer-centric business, the most valuable "asset" is their

customer base.

If you're investing in long-term relationships, you can calculate the

"health" of the relationship with customer lifetime value or CLV.

CLV measures the amount of revenue a customer contributes to your

business for as long as they are a paying customer. It starts with their first
purchase and ends when they stop doing business with you.

To calculate CLV, add up the total revenue you have earned and multiply
that with the length of the business relationship. Then, deduct the initial
cost of acquiring them.

For example, if a customer spends $1,000 annually, and the average

"lifetime" of a customer is 10 years, then you multiply $1,000 by 10 years
($10,000). Now, subtract the cost of acquisition (in this case, we'll estimate
$1,000), and the CLV is $9,000.

Not bad, right?

Calculating CLV helps you understand why it makes sense to invest in

keeping your customers.

But, rather than looking at CLV from purely from a revenue perspective,
you should be looking at it from a value perspective - which is why I love
Dennis Shiao's take on Customer lifetime value.

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Conclusion
The shift towards becoming a truly customer-centric organization is both
complex and long but, do not be put off by this as even the smallest
changes to policy and processes can have a significant benefit for both
employee and your customer.

Being a customer-centric organization is the Holy Grail towards unlocking

the true potential of customer value. Always put yourself in the shoes of the
customer and minimize customer effort and maximize customer value.

Do you consider yourself a customer-centric organization?

The best CRM software plays an important role in becoming customer-

centric as this is where all of your customer data is stored. See how
SuperOffice CRM can help your business by signing up for a free demo.

Customer Service

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