How would you rank customer centricity by country?
Markus Lessing: The trend towards customer centricity can be seen in the degree to which companies have already established the position of Chief Customer Officer, or CCO for short. This is the member of the senior management who primarily deals with customer relationships and is responsible for them. In our eyes, the CCO is the ultimate authority on customers and plays a central role in all matters related to customer centricity. The introduction of a CCO usually leads to changes in not only processes, but also management divisions and responsibilities, including management board areas of responsibility, in some cases. According to a study, 22% of the hundred highest-revenue companies in the United States have already established a CCO position in their organization; among the five hundred highest-revenue companies, this percentage is already 10%. The United States and Canada lead the world in this respect, followed at a great distance by the United Kingdom and then Germany.
Customer centricity is considered to be a success strategy for companies: Why?
Susanne Karlein: Against the backdrop of digitalization, we consider customer centricity to be more of a survival strategy than a success strategy. In today’s digitalized and globalized world, customers have a much different power than before. Customers can compare information, change their information and purchasing channels quickly and are increasingly less loyal and much more demanding. Consequently, just having a good product is no longer sufficient for reaching and keeping customers. We live in a world in which customer needs are changing at an ever faster rate. Successful companies are able to adapt to these needs. And they can only do that by understanding the changing needs of their customers.
Markus Lessing: Large corporations are contending with new competitors today in all sectors of industry – and they often do not originate from the traditional competition environment. Suddenly customers are buying products from a competitor. We analyze these switch purchases and often find that the competitor is simply more customer-centric. That is why customers are turning away from conventional companies. That is why we call it a survival strategy. Companies that ignore customer centricity will be overtaken sooner or later.
The turnover of customer-centric companies are said to grow faster than those of their competitors: Why is that?
Susanne Karlein: Deloitte emphasized in a study [1] that customer-centric companies are up to 60% more profitable. Thus, customer centricity has a massive impact on sales and profits. This is mainly due to the fact that a majority of customers – about 80% worldwide – are willing to pay more for a better experience. These customers might say: “If a company treats me in a customer-centric way, I will also be less price-sensitive.” Take Apple as an example: With this brand, the price is often completely secondary. It offers an optimal customer experience. The Net Promoter Score, NPS for short, is a good way to measure customer satisfaction. We have often seen a clear connection between a high NPS and the company’s focus on customer centricity. Ultimately, this means that these companies sell more because their regular customers not only trust them, but recommend them to others as well. And these recommendations drive sales.
Customer centricity means designing all processes and business activities so that they help customers fulfill their needs. Is this an adequate definition in your opinion?
Markus Lessing: Customer centricity certainly means more than just focusing on customers’ wishes and needs; instead, the goal is to shape the entire customer relationship. It is about how you establish and maintain your relationships with customers. And that is often more important than the product itself. Apple’s wireless Bluetooth ear pods known as Air Pods are a good example of this. They were bashed when they first came out. But if you look at Apple’s sales distribution today, you will see that gadgets like the iWatch and Air Pods are extremely important. This success is mainly due to customer relationships because the gadgets are presented within an attractive eco-system – namely with music streaming, the right hardware, service, log-in and subscription. That creates trust in new products and the Air Pod has become the world’s bestselling ear pods. This shows the paramount importance of the combination of product and customer relationship.
What first steps should a company take to become more customer-centric?
Susanne Karlein: First of all, the company must make a strategic management decision to put customer centricity at the center of all activity. In the next step, the company must study the behavior and expectations of customers in every stage of the customer journey, including all points of contact and channels. Often, a company does not have a detailed understanding of its customer journey, which usually doesn’t begin in the company but already in the phase when customers begin to think a product for the first time. And it extends to the after-sale phase. And so, make a management decision, analyze the customer journey, determine customers’ expectations and devise specific measures to fulfill them. Ultimately, you need to inspire customers. What inspires customers? What frustrates them? Once you have analyzed and understood these things at the different points of contact, you can improve the customer relationship in a targeted way and permanently bond customers with your company.
How can companies inspire their customers today?
Susanne Karlein: Ultimately, a customer relationship is no different from any other kind of relationship. It is often not big gifts that bond customers permanently, but small, sincerely meant expressions of appreciation and personalized communication. If the customer senses that, he or she will remain loyal to a company.
Link Deloitte Study: „Wealth Management Digitalization changes client” advisory more than ever before“
[2] Mergers & Acquisitions (M&A) is a collective term for transactions in the corporate sector such as mergers, company acquisitions, business transfers, leveraged takeovers, etc.
