Why are companies misled into a Customer Centric business model?
In the last few years, discussions in the area of customer service have shifted from Service to Delight to Relations Management, and recently to Customer Centricity. This transition clearly shows that the challenge for any business to survive and grow would be to focus on changing target markets and the resulting customers.
However, what we notice with several businesses is the tendency to immediately jump on any trend (today, it’s being customer centric, tomorrow, something else) without fully understanding its essence and prerequisites.
In the end, another plan goes haywire, another investment, down the drain. And everyone blames somebody else!
I remember some four to six years ago when Customer Relations Management was the buzzword. Many companies had one goal: Get information about the customer.
The result: the influx of information. The problem: Database storage limits became an issue. In the end, many businesses realized that they had so much information but both their technology and systems did not actually tell them what they should concentrate on or where they should go next. Too much analysis leads to paralysis.
Sadly, when we were called in to provide expert advice and training on Customer Relations Management, we discovered that the businesses were software/technology-ready but not people/mindset-ready. The service processes where not even CRM ready!
We found that many businesses missed the following critical aspects of being customer centric:
Issue #1 – It’s not a buzzword (as many would like to capitalize on). Rather, Customer Centric is a disciplined process that aims to focus on moving the business towards thinking more about and doing more for the customer in a holistic manner. This creates confusion when more vital questions remain unanswered: Who truly is the primary customer segment?
Are they the ones who provide the largest chunk of revenue (Value)?
Or the largest number of transactions (Volume)?
Or the least cost of servicing (Efficiency)?
Or the least adjustments versus processes (Effectiveness)?
The answer would have been easier if just one customer segment claims dominance in all of the above criteria. But this seldom happens.
Issue #2 – Management should take a clear stand towards Customer Centricity instead of leaving the decision to various departments. Why? Because each department will tend to favor a customer segment according to what is beneficial for their department.
The Marketing Department will favor new market segments.
Manufacturing will favor the segment with the least changes in production.
Logistics, the segment with the shortest delivery distance.
Credit & Finance, the segment with the least past dues.
And the Sales Department, the segment that orders most!
In other words, before even talking about being Customer Centric, first settle the identity of the primary customer segment your business is aiming for.
Issue #3 – The company’s personnel are not aligned in terms of commitment. As has always been the case, it’s easy to purchase the needed machines or software/hardware for any new project. What stifles success is when employees are not aligned with new directions.
This can be traced to the profile of employees hired long ago and who remained with the business. When your business opened and started hiring, the focus was probably on a different set of customer segments. This is what those employees are accustomed to.
Then, due to either new management or changes in target markets, new customer segments arise and you want everyone to aim to be Customer Centric.
This catches many employees (from managers down) unsure of their new commitments. Maybe even worse, when you ask the leadership what to expect from new market segments, they clearly have no true understanding of what these segments are!
Retraining of the employees is also done too late: after new directions to be Customer Centric are set.
Issue #4 – There is a tendency to announce to the public that the business is Customer Centric before it truly is. Sadly, many a marketing team is eager to announce and create image awareness, without even checking that other departments are ready.
What happens is that the public now demands what has been promised—and the fulfillment of expectations falls short. Even worse, despite ‘Internal Staff Orientation,’ the programs may be efficient but not effective.
They are efficiently done because the orientation usually provides a pep talk from the president or senior management. Ineffective because, prior to the orientation, other departments were not consulted, issues were not resolved, and Murphy’s Law concerns were never discussed. So during the orientation, employees are made to believe that Customer Centric programs will never fail. Only employees do!
Next time around, before your business jumps on the next business model bandwagon, make sure you intend to take it beyond being a mere buzzword.
Print ed: 07/10