For many years, organisations have been successful in driving growth and profitability. In Australia, most brands were operating in duopoly or oligopoly - meaning there were two or three key players in each industry - and population growth fuelled natural growth. Fast forward to today, and that stable business world we were operating in no longer exists and every single industry is being disrupted by new entrants, and globalisation provides consumers with access to a global marketplace. Much of this disruption is coming from digital, which enables just about every organisation large or small to deliver things faster, cheaper, and better, and this has radically changed consumer expectations.
This is driving organisations to shift their approach from being one that is product-driven or centric, where products or services are developed and provided with little consumer engagement, to an approach that starts and is led by the consumer’s needs. In other words, coined by none other than Seth Godin, the goal is: don’t find customers for your products, find products for your customers.
Organisations cannot continue doing what they have for the past 50 years if they want to sustain growth. However, despite the rapidly changing market, many organisations still haven’t embraced a customer-centric approach to marketing and selling even when they tout that they do.
Most companies want to be customer-centric. Most are trying, and many will probably claim they are. However, being customer-centric is not just saying you are. The truth is that on too many occasions, transformation and change aimed at improving the customer experience is built on company-centric policies, without paying attention to new consumer habits or customer expectations and behaviour.
In today’s hyper-competitive market, where consumers are more informed, selective, and empowered than ever before, the concept of customer centricity has become crucial and somewhat a means for survival. In this article, we will explore why true customer centricity is vital in today’s landscape, the gap between perception and reality, and how companies can genuinely achieve it through introducing some specific frameworks like customer journey mapping, design thinking, genuine customer feedback loops and more.
The Changing Consumer Landscape
The digital age has transformed consumers into more informed and discerning buyers. Access to information and social media platforms has empowered them to research products, compare prices, and read reviews before making purchasing decisions. This shift in behaviour means that consumers are no longer passive recipients of marketing messages; they are active participants in the buying process.
Moreover, consumer preferences have evolved significantly. Today’s consumers prioritise experiences, personalisation, and ethical considerations over mere product features or price.
According to a study by Gartner, 64% of consumers now consider customer experience more important than price when making purchasing decisions. Brands that fail to recognise and adapt to these changes risk losing relevance in the eyes of their customers.
In addition, the sheer abundance of choices available to consumers has intensified competition across all sectors. Switching brands is easier than ever, and customer loyalty is increasingly difficult to maintain. In such a landscape, customer centricity is not just a competitive advantage; it is a necessity for survival.
The Gap Between Perception and Reality
Many brands believe they are customer-centric, but there is often a significant gap between this belief and the actual customer experience. This disconnect can be attributed to several factors, including an overemphasis on products or profits at the expense of customer needs. According to research by Kale, while 68% of business leaders believe they are customer-centric, 62% of customers claim that companies do not understand their needs.
This discrepancy highlights a common pitfall: companies often focus on what they think customers want, rather than truly understanding and meeting their needs. This misalignment can lead to missed opportunities, customer dissatisfaction, and ultimately, a loss of market share.
The Importance of True Customer Centricity
Embracing true customer centricity offers several key benefits. First and foremost, it builds long-term loyalty and reduces churn. When customers feel valued and understood, they are more likely to remain loyal to a brand, even in the face of competing offers. This is particularly important in industries where customer acquisition costs are high.
Customer centricity also provides a significant competitive advantage. By deeply understanding and meeting customer needs, companies can differentiate themselves in a crowded market. This not only attracts new customers but also encourages repeat business and positive word-of-mouth referrals.
Companies like Starbucks, Amazon, Netflix and Walt Disney World are often cited for their customer centricity. Starbucks creates a welcoming environment, offers customised beverages, and provides a seamless mobile/app ordering experience. This customer-centric approach has helped Starbucks cultivate a loyal customer base and drive repeat business.
Ikea’s customer vision is to create a better everyday life for the many. It is committed to meeting the needs of its customers by creating a great customer experience, whenever and wherever customers want to meet them. The Swedish home retailer is recognised for its immersive in-store customer experience. Customers shop carefully furnished and curated spaces, visit a food court and snack on famous meatballs and even take advantage of complimentary childcare. Apart from the in-store experience, IKEA’s digital experience is also very customer-centric. One way the brand delivers this is through its IKEA Place app. Shopping for home furniture can be challenging to imagine how an item will look in your space. The app gives customers the ability to virtually place true-to-scale 3D models in their own space, furnish a whole room in one tap or find the perfect product by searching with your camera.
Finally, L'Oreal is helping customers find their right shade by launching L’Oréal Perso, an AI-powered smart device that creates custom formulas for lipstick, foundation, and skincare. A customer uploads a picture to the Perso app that uses AI to identify skin conditions like dark spots, large pores, or wrinkles. The app layers in real-time contextual data to account for environmental concerns that affect the skin, including pollution, pollen, and UV index all of which are used to create a custom formula that is dispensed in a perfectly portioned, single dose. According to internal sources, the company aims to give consumers more control over their makeup and skincare.
Frameworks & Approches for Achieving Customer Centricity
To achieve true customer centricity, companies must adopt specific frameworks that place the customer at the heart of their operations. In this next section, we explore five of the most effective frameworks used by brands today. These are customer journey mapping, design thinking, customer feedback loops, VoC programs, frameworks & approaches.
Customer Journey Mapping
Customer journey mapping is a tool used to visualise and understand the end-to-end experience that a customer has with a brand. It involves identifying all the touchpoints a customer interacts with, from the initial awareness stage to post-purchase support, and analysing the emotions, pain points, and expectations associated with each stage.
According to McKinsey & Company, organisations that use customer journey mapping effectively can increase customer satisfaction by 20% and reduce churn by 15%. The process helps businesses identify areas of improvement, streamline processes, and create more personalised and seamless experiences for their customers.
Some of the many steps involved in creating an effective customer journey map include:
Defining customer personas: Understanding who your customers are and what their goals and challenges might be.
Identifying touchpoints: Mapping out every interaction a customer has with your brand.
Analysing emotions: Assessing how customers feel at each touchpoint and identifying areas of friction.
Optimising the journey: Making improvements to enhance the customer experience at every stage. These can come in the form of opportunities and or evolutions.
Amazon’s customer journey map is known to be is one of the most complex around and would take most people days to read through and understand each customer journey stage. A key feature of Amazon’s customer conversion funnel and how the customer journey is enabled by its own products that push users through the sales funnel to maximize customer engagement. Most interestingly, here is how Amazon includes its success metrics for each stage of the customer journey these include impressions, reach CTR, add to cart, purchase assists, ROAS, reviews and more, most of which you will see retailers measure.
Design Thinking
Design thinking is a problem-solving approach that places the customer at the center of the innovation process. It involves five stages: empathise, define, ideate, prototype, and test. This iterative process encourages businesses to deeply understand customer needs, explore creative solutions, and refine those solutions based on feedback.
According to the Knowledge Academy Airbnb’s is one of the popular Design Thinking Case Studies disrupting the traditional hotel industry by applying Design Thinking principles to create a platform that connects travellers with unique accommodations worldwide. They conducted in-depth user research by staying in their own listings and collecting feedback from both hosts and guests. This empathetic approach allowed them to design a platform that not only met the needs of travellers but also empowered hosts to provide personalised experiences.
As a result, Airbnb's intuitive website and mobile app interface, along with its robust review and rating system, instil trust and transparency, making users feel comfortable choosing from a vast array of properties. Furthermore, the "Experiences" feature reflects Airbnb's commitment to immersive travel, allowing users to book unique activities hosted by locals.
Customer Feedback Loops
Customer feedback loops are processes that ensure continuous feedback from customers is collected, analysed, and acted upon. These loops create a dynamic system where customer insights directly inform product development, service improvements, and overall business strategy.
There are two main customers of customer feedback loops, and these include: Closed-Loop Feedback: This involves promptly addressing customer feedback, particularly when it’s negative. By closing the loop, companies show customers that their input is valued and that actions are being taken to improve their experience. Longitudinal Feedback: Regularly collecting feedback over time to track changes in customer sentiment, preferences, and satisfaction. Implementing tools like Net Promoter Score (NPS) surveys, customer satisfaction surveys, and real-time feedback platforms can help businesses gather insights and respond effectively.
Voice of the Customer (VoC) Programs
VoC programs are comprehensive initiatives designed to capture customer expectations, preferences, and aversions. These programs use a variety of methods, including surveys, interviews, social media listening, and focus groups, to gain deep insights into customer sentiment. VoC data is often integrated across departments to ensure that the customer’s voice influences decisions in product development, marketing, customer service, and more.
Spotify uses customer listening data to recommend new music, podcasts, and playlists that align with each user's preferences. As customers stream music and podcasts on the Spotify platform, the company gathers detailed data on their listening habits, preferences, and behaviours. This informs personalized recommendations and content curation.
Spotify also encourages users to provide direct feedback through surveys, ratings, and reviews within the mobile app, which are used to identify areas for improvement.
Key takeaway's from Spotify’s programs include:
Leverage first-party user data: By collecting detailed listening data from its customers, Spotify is able to build highly personalised recommendations and experiences that keep users engaged with the platform.
Embed VoC collection within the product: Spotify's in-app feedback mechanisms make it easy for users to share their thoughts and ideas, allowing the company to continuously refine the user experience.
Combine quantitative and qualitative insights: Spotify complements its analysis of user behaviour data with qualitative research methods, such as interviews and usability testing, to gain a more holistic understanding of customer needs and pain points.
Personalisation | data & analytics
Personalisation involves using data analytics to tailor products, services, and marketing messages to individual customer preferences. By leveraging data, companies can create more relevant and engaging experiences for their customers.
Brands are performing a couple of tactics to personalise experiences, and these are underpinned by the one or more of the following:
Customer Segmentation: Dividing the customer base into distinct groups based on behaviors, demographics, and preferences to deliver targeted experiences.
Predictive Analytics: Using historical data to predict future customer behaviors and needs, allowing for proactive personalisation.
Amazon and Netflix are prime examples of companies that excel at personalisation through data analytics, offering recommendations and content tailored to individual users.
Let’s double down on Netflix. Everything Netflix does is driven by data and powered by smart AI algorithms. The company is always brainstorming and testing ideas to ensure that whatever is disseminated on its platform matches the exact thought processes of its users. And its efforts are pretty much evident. Data on viewing, search history, and ratings, as well as time, date, and the device type is used to predict what should be recommended to them.
Statistics show that Netflix in 2014 used 76,897 “alt genres” or unique ways to determine the type of movies and shows it should recommend to each of its users to not only personalise their experience but also make them come back for more. Netflix also uses customer data to create unique homepages for each of its users. It shows content it believes would best match the interest of its users as well as enhance their overall experience with the platform.
Implementation and Best Practices
For customer centricity to be truly effective, it must be embedded in the company culture and championed by leadership. Leaders play a crucial role in fostering a customer-centric mindset across all levels of the organisation. This involves setting clear expectations, providing the necessary resources, and holding teams accountable for delivering exceptional customer experiences.
Employee empowerment is also critical. When employees are equipped with the tools and autonomy to make decisions that benefit the customer, they are more likely to deliver positive outcomes.
According to Gallup, companies that empower employees to solve customer issues on the spot see a 50% increase in customer satisfaction.
Finally, continuous improvement is essential. The needs and preferences of customers are constantly evolving, and companies must be agile in their approach to stay aligned with these changes. Regularly gathering and acting on customer feedback, analysing data, and iterating on strategies are all vital components of a successful customer-centric approach.
Customer centricity is no longer just a buzzword, it is a critical business strategy in today’s competitive landscape. By truly understanding and meeting customer needs, companies can build loyalty, gain a competitive edge, and drive sustainable growth. But achieving true customer centricity requires more than just good intentions; it requires top-down commitment and the adoption of specific frameworks, such as customer journey mapping, design thinking, customer feedback loops, and VoC programs, together with a commitment to continuous improvement.
Brands that embrace this approach will not only survive but thrive in the years to come. This holistic approach ensures that customer needs are consistently met and even anticipated, leading to stronger customer relationships and sustainable business growth.
At Arktic Fox, we are helping teams develop the muscles required for customer-centric approach, including upskilling teams with our series for Learnshops on Customer Journey Mapping and Personalisation together with our strategic advisory support. To find out more, click here.