What Does It Mean To Be Customer Centric?

WHAT DOES IT MEAN TO BE CUSTOMER CENTRIC? Being customer centric is often confused with being customer focused-but the reality is, there's a big difference. Being customer focused means offering a consistently great and relevant experience. It's an overarching principle that basically urges companies to treat their customers right. Championed by Dr. Peter Fader, co-director of the Wharton Customer Analytics Initiative at the University of Pennsylvania, and author of Customer Centricity: Focus on the Right Customers for Strategic Advantage, being customer centric means looking at a customer's lifetime value and focusing marketing efforts squarely on that real-world, high-value customer segment to drive profit. 66% 17% Marketing leaders who don't knovw how much their customers are worth. Potential increase in sales from identifying and maximizing top value customers. Most of Your Customers Aren't That Valuable There is no "average" customer, and most of your customers end up not being very profitable. Building a business around them just doesn't make sense when you could be focusing on your best customers. Customer Centricity Is Customer Centricity Is Not Using customer data to better understand and segment your customer base. Focusing on the “average" customer. Courting and retaining low-quality Identifying the best customers. customers. Focusing on products and services for the best customers. Underspending on acquiring high-quality customers. Using Customer Lifetime Value (CLV) to segment your customers. A Celebration of Customer Heterogeneity The differences between distinct kinds of customers is something to celebrate. By breaking your customers into meaningful groups, you can obtain great data about the kinds of customers you really want to attract. Why focus on a hypothetical average when you can focus on a real-world, high-value customer segment? As an example, here's how Fader breaks it down for one company. 20% Good 70% Meh Customers 10% Great Customers Customers "Meh" Customers Good Customers Great Customers Consumers who are not committed to the product, and will leave if something better or less expensive comes along. They have a very high attrition rate, and a very low lifetime value. Keeping them around is often more expensive than it's worth. People who like your products well enough to stick around for a while. Often called loyal customers, these folks will stick with you indefinitely unless they're given strong incentive to leave. Their This means a lower attrition rate, and a much higher lifetime value. They may attrition rate is small and even become Great Customers with the right development. they have a very high lifetime value. These are the customers you want. The One-Dollar Question you had an extra dollar to spend, which of these activities would you use it on? If %24 Customer Customer Retention Customer Acquisition Development %24 Gold Medal Silver Medal Bronze Medal Retention Acquisition Development Development is about the great American question: Creating the next big thing isn't as important as finding the next big customer. Every "Do you want fries with dollar spent acquiring these customers will return that value many times over. Even if you do retain "Meh Customers," they're not worth very much. There's no real value in spending more to retain them. Instead, spend that?" Getting more value from an existing customer is good, but extremely difficult. that money on acquiring more Great Customers. How to Become Customer Centric It made sense in a product-centric world to distinguish between profitable customers and no-so-profitable customers. Times have changed. THROW CONVENTIONAL MARKETING WISDOM OUT THE WINDOW USE DATA TO YOUR A profitable customer-centric strategy is about how, where, and when you acquire instantly actionable learnings about your customers. ADVANTAGE BUILD YOUR BUSINESS Come up with products and services to make your AROUND THE BEST best customers even better. CUSTOMERS monetate Follow @monetate on twittery SOURCES: AdAge | Amazon | Linked In | Wharton %24