Customer Centric Culture - Organizing

Customer Centric Culture - Organizing Strategies That Succeed

The wave of change in business strategies - from product centric to customer centric - over the past two decades has been dramatic and yet challenging as well. For those businesses that "get it" when relating to a customer-as-king philosophy - albeit a 100% change in company culture is a substantial risk - in many documented cases their growth and prestige has been nothing short of remarkable. For other firms, that bring up the rear in the marketplace by insisting they know the customer but still focus on product-centric approaches, the light at the end of the tunnel is just a mirage. This paper reviews and reports on both of these dynamics.

An article in the Harvard Business Review by Mohanbir Sawhney ("Don't Homogenize, Synchronize") uses the metaphor of the Palm device (and how it synchronizes seamlessly with one's personal computer when placed into its docking cradle) to advocate for companies to get all their systems in sync. And the article uses the example of 3M as a company with multiple brands and 50,000 different products as an example that once was totally out of sync in terms of its terrible fragmentation. Indeed, 3M was an innovator, but the company's customers were left in the lurch, having to wade through 3M's Web sites and visit "several different sites to get information on related products."

Beyond that problem, the basic problem with 3M's Web site was that it was concentrating all its "internal silos" rather than on "its customer's needs." So, 3M got synchronized, and now presents a more "unified fact to its customers" by storing all "customer relationships and product configurations" in a single database. This transformation from the awkward presentation of products and slipshod system of customer record keeping - similar to what Thompson Financial did - is called moving from a product-centric company to a customer-centric company. Instead of finding "customers for its products," both these firms (and untold hundreds of other companies) now concentrate on finding "products for its customers," Sawhney writes.

For companies, the focus is often on "creating great products," Sawhney continues; but for customers, they're thinking about "the activities they perform and the benefits they seek." Products are "ends" for companies, but for customers, "products are means," Sawhney explains. And if there is a disconnect between how customers think and how companies organize themselves, there will inevitably be "inefficiencies and misses opportunities," and that brings into focus the need for a customer-centric culture within companies that truly understand the need to build their marketing and production specifically and around the needs and habits of customers.

Another article in the Harvard Business Review relates to the new dynamics of businesses on the global stage; in the past, corporations were in control of determining what the consumer should want and buy, clung to their own defined roles - and their customers and suppliers stayed within their well-defined roles. However, the article ("Co-opting Customer Competence") points out that in the new marketplace it is more like a cooperative family with suppliers, vendors, corporate participants and consumers all interacting on the same stage. Indeed, the customer today brings competence and dialogue to the corporate table as part of the "collective knowledge available to the whole system" (Prahalad, et al., 2001).

In this new marketplace, which clearly is more customer centric than merely "customer friendly," corporations either see their customer interaction as "...a dialogue of equals" or they will fall victim to outdated thinking and fail. What's more, the dialogue must "evolve" or it will shrivel up and die, Prahalad asserts. In addition, a customer-centric company must learn how to a) mobilize customer communities (which is possible due to the Internet); b) manage "customer diversity" (in the technology field, for example, there is a "sophistication gap" between consumers who readily learn new software and those who struggle, albeit they are all valued customers); c) co-create and manage personalized customer experiences (by "harnessing" their competencies); d) manage the evolution of customers (by realizing that customers judge products by the "degree to which a product or a service gives them the experiences they want."

Another key point made by Prahalad is that a company must be intelligently "shaping customers' expectations" as well as seeing the "customer as an asset" to be able to create and sustain a customer-centric culture.

Still on the subject of customer expectations, a recent article in IBM Systems Journal (Hirschheim, et al., 2006) analyzes the dynamics at work when approaching strategies for successfully marketing IT services to businesses. Marketing IT services is a complex and difficult task, since, as the article ("A marketing maturity model for IT: building a customer-centric IT organization") points out, there are really three separate customer models to deal with. There are the "transactional customers" (typically the desktop user); and there are "relationship customers" (usually companies which use and pay for multiple services and for whom ongoing operational support is vital); and third, the "IT influencer" (typically a "business-side senior executive, external to the IT organization," who assists in creating visions and marshalling resources).

The bottom line in this rather lengthy and tech-heavy article is that within the activities of "restructuring, reengineering, downsizing, out-sourcing, back-sourcing..." And offshoring, companies have too often concentrated on "process and structure" and hence there has been a "failure to build an effective relationship between IT and the business." But to create a truly customer-centric culture within one's IT company, there needs to be, Hirschheim writes, "strategic alignment" between IT and the business customer the IT firm must somehow see the process from the perspective of the customer and that entails "measuring user satisfaction." Indeed, the author concludes, IT today "operates in an environment in which every perturbation in service becomes the subject of 'water-cooler gossip'." Slip-ups in understanding the three levels of IT customers are out in the open in a hurry, and word travels fast when IT can either be a seamless assistant or a frustrating speed bump.

Meanwhile, in the Journal of Personal Selling & Sales Management (Leigh, et al., 2001) the authors indicated that strategies designed to increase sales within a corporate setting had been (up to that time) "very limited." But based on research work by The Chally Group, the list of "best practices" that the writers created for sales groups began with "...establishing a customer-centric culture." The other strategies (seven in all) focused on markets, technology, and sales personnel. But why did the Chally Group's well-known 1998 study ("Customer-Selected World Class Sales Excellence") hit the nail on the head for Leigh, et al.

For one reason, the need to "continuously upgrade the competency and commitment" of the sales component of any company should be linked to the strategy of creating a customer-centric culture; i.e., those candidates who show the strongest capacity for embracing and celebrating the customer centric philosophy should have priority when it comes to hiring. Leigh reports that the Chally Group's study emphasizes hiring those who: 1) wish to learn about customers and initiate a dialogue with customers; 2) can embrace all selling roles that fit customer requirements; and 3) are self-motivated and show cognitive and procedural knowledge.

Writer Leonard L. Berry ("The Old Pillars of New Retailing") explains that customer-centric cultures try hard to understand the need to create a "total customer experience" (Berry 2001). While his "Pillars" may seem obvious, they resonate with common sense. Published in the Harvard Business Review, Berry offers five "Pillars" in which to build customer-centric cultures within an organization. Those include solutions, respect, emotions, pricing and convenience. While they are apply to just about any business climate, most interesting to this writer is "emotions" ("Pillar 3: Connect with Your Customers' Emotions"). An example of reaching out to the emotional side of a company's customers is Journeys, a shoe store, which targets young men and women. A Journeys' store "pulsates with music, videos, color and brand merchandize," Berry writes; and while being "both welcoming and authentic to young people," Journeys' sales staff is young, dresses casually, and exerts "no pressure to buy." That is certainly a classic example of a customer-centric culture - which reaches out to the emotions of its shoppers.

There are a never-ending variety of ways in which companies can implement customer-centric cultures. The journal Intelligent Enterprise offers "customer-centric personalization" examples and ideas drawn from e-business relationships. The company Lands' End, for example, goes after repeat customers by offering "My Virtual Model," a service that invites customers to enter their measurements and try clothes on a 3D model. As of the time the article was written (White, 2001), over a million and a half customers had used the 3D model to "try on" clothes. Basically, these Web site merchants are learning to be "customer-centric" rather than "produce-centric" - and a perfect example is amazon.com. After purchasing a book at Amazon, the Web user is shown "...a list of other products that were bought by people who purchased the same product," White explains. Also, the next time a user goes into Amazon, a list of books that are in the same genre as that person's last purchase pop into view. All those nice customer-friendly marketing techniques notwithstanding, White notes, customer-centered personalization can't work well without being linked with high-quality, high-visibility customer service.

Even some of the most successful corporations, like IBM, apparently stumbled along for a time, totally failing to "get it" when it came to customer-centric strategies. According to the industry publication Chain Store Age, in the early 1990s, a customer-centric culture "was foreign to Big Blue" - and to Wal-Mart - until fairly recently. The writer goes on to explain that when considering Wal-Mart and Target (two retail giants that are becoming "more alike than different"), "sameness" is a "trap" that happens when a company "takes its eye off the brand to focus on the numbers, loyalty goes by the wayside. It happened to Sears," the article asserts.

RESISTANCE TO CCS/CRM: In the Jossey-Bass book, Designing The Customer-Centric Organization (Galbraith 2005), the author suggests that businesses that hesitate to create customer-centricity are likely suffering from "fiscal myopia." And moreover, Galbraith continues, there are apparently two good reasons for some companies resist transcending product-centric strategies and moving into customer-centric cultures. One is based on the fact that half of all the CRM implementations "fail to achieve the desired results" and "one in five actually damages customer relationships" (Galbraith 2005). Apparently many of those that fail did so because they underestimated the dramatic changes that are required in order to create a customer-centric system. Meanwhile, word gets around fast that many attempts fail, so other non-customer-centric companies shy away from this strategy.

The second reason companies may resist customer-centric systems is that, according to Galbraith, is that they believe they already are customer centric. They have labored long and hard to become "close to the customer," and believe in their heart of hearts they are "customer focused," the author continues. To be truly customer centric, the entire firm "must literally organize around the customer," Galbraith reminds. And in Chapter One of his book, he observes that some managers can be "fooled into believing" they have left product centered strategies behind, when in fact those strategies are still "running the show" and the customer centric world is just a "cosmetic gloss of customer focus sprinkled around the edges."

The author flatly states: "Today, nobody owns the customer. The customer owns you." That may seem a bit bold or exaggeratory, but largely because of the Internet, and the new global nature of doing business, the customer is greatly empowered, Galbraith explains. He offers four bullet points that explain why the customer has risen so high in the world of business and corporations. One, "the globalization of the customer"; two, the "preference" that today's customers have for "partnerships or relationships"; three, "the rise of e-commerce"; and four, the desire of the customer to find "solutions."

Another reason why some companies may shy away from the move to customer centric approaches is that a "shift in culture of this magnitude calls for a transformation of epic proportions, not to mention top level" leadership, according to an Ivey Business Journal article (Angel 2004). How many companies, it is fair to ask, are truly equipped to transform their culture in "epic proportions"? How many have executive leadership with the vision and clout to pull such a transformation off? The answer is blowing in the wind, but one can surmise from even a cursory glance at American companies that not many would fit into that category.

Meantime, Angel makes a very good point when he writes that customers today are "armed with a wealth of information" hitherto not available to them; and, moreover, customers are far more aware of their options - and far more "value conscious" - than previous customers have been, and hence, they can "no longer be relied on to buy the message being pushed at them." This, Angel asserts, is the most revolutionary change in consumer dynamics in fifty years (since Madison Avenue began its powerful marketing machine). And so, "consumers are making more purchasing decisions in environments where marketers have less direct influence," says Proctor & Gamble's director of global marketing, Jim Stengel (quoted in Angel's article).

Customer Relationship Management

CRM ORIGINS: When did Customer Relationship Management (CRM) begin to emerge as a strategy for businesses? CRM emerged out of the "sales and marketing systems environment" in the middle 1980s, according to information found on the Microsoft Web pages www.searchcrm.com (November 2003). The CRM movement grew out of the early "Sales Force Automation" market, as alert CEOs and executives began searching for a "more strategic and broader reaching platform" through which to handle customer interactions and customer data all across the board. What came out of that search was CRM, albeit "some might say that the CRM industry is still trying to hit the CRM requirements' nail on it's head,"

Exactly what is Customer Relationship Management? According to the information on the Web site www.destinationcrm.com, it is a "strategy" - that should be implemented company-wide - designed to solidify customer loyalty. And in the process of solidifying the loyalty of the customers a company already has, costs are cut and hence an improved profit margin. The three key elements in any successful CRM initiative are "people, process, and technology," according to writer David Weiss. "If customer relationships are the heart of business success," Weiss asserts, "then CRM is the valve that pumps a company's life blood" (Weiss 2002).

The people in a company that is going the CRM route must be thoroughly tuned in and trained in CRM for it to work; the process must be well thought out, and the technologies used must be top shelf in order for the best client data to be available to all employees at all times, according to Weiss's article. Moreover, along with better customer (client) relations, a smoothly functioning CRM should bring increased "call-center efficiency, added cross-sell and upsell opportunities, improved close rates, streamlined sales and marketing processes, improved customer profiling and targeting, reduced costs..." And again, better overall profitability.

Starting a CRM project isn't necessarily an overnight event; Weiss writes that it could take from a few weeks to "a year or more." And along with the training and full participation by the employees, Weiss suggests that the culture itself should "create an internal bond" among the staff. And at the end of the day, if executive management insists on growth and less employee turnover along with references and sales "that stick" and invoices "that get paid," those executives certainly have to buy into the CRM and back it 1,000% as well.

Another Weiss article in www.destinationcrm.com ("A Long-Term Approach to Customer Relationships") discusses (again) the importance of management must get behind the 8-ball on CRM or it will fail. Indeed, Weiss writes that the competitive advantage that a company achieves through the successful implementation of CRM is that loyal buyers, happy customers, "don't shop the competition" to see if they get a better deal somewhere else. And beyond that, happy customers who are "very satisfied" are "six times more likely to buy than merely 'satisfied' customers," and, importantly for the bottom line, it costs 10 times as much to get a new customer than it is to keep your current customers.

A white paper by CRMUK & SECOR Consulting (CSC) ("Customer Relationship Management: Introduction to Customer Centric Culture") alludes to the fact that many businesses have switched from transactional to relationship marketing - putting the customer at the center of all business activity. "Countless organizations" have been "oblivious" to that concept (putting the customer at the center of the universe of a company's strategy) the CSC group asserts, but the evolutionary process of bringing a business into focus on the customer is gaining appeal and participants. In fact, businesses that have caught on to the fact that customers "must be vehemently studied and their needs accurately identified and translated."