People drive digital disruption through their choices and voices. Customer centricity is again a hot button in business strategy and executive conversations. But rather than just being about customer centricity, the conversation centers on customers in a digital world.
There is at least one PowerPoint slide in every CMO’s deck describing where they position the customer in the digital ecosystem. Take a minute to find that graphic, pull it up on the screen or print out that slide and ask the following question:
Where is the customer?
The answer separates rhetoric from reality in terms of the organizational approach to customers, the customer experience and competitive position. There are basically three places you can find the customer on this slide.
At the center of the picture or at the middle of a process where capabilities, products and services surround the customer. Customers at the center.
At the top of a pyramid, where capabilities, products and services support the customer. Customers from the top.
At the bottom of the graphic, where customers look up at the universe of available products and services. Customers from the start.
These basic positions visualize the relationship you want customers to have with the company, its products and services. Each model, shown in the picture below, depicts a fundamentally sound approach to customers and their relationship to the company, its products and its service. Equally each model colors the way leaders think, talk and act in the customer area. While we are all familiar with the strengths of each model, it is equally important to look the limitations of each model. That is the focus of this post.
Putting the customer in the center
Being customer centric means putting the customer at the center of everything right? Yes, but this also paints a target on customers by surrounding them with products and services. Putting customers in cross hairs of this business model influences the way organizations think, talk and act. Thinking about the customer in the middle presumes that you know who are the right customers to fit your model. Getting the right customers is a function of targeting. Telling customers they are the center establishes an expectation for a total solution. Acting on that promise requires the company to wrap itself around these expectations to deliver the desired experience.
No one likes to be a target, but that is a limitation of this model. Surrounding customers with company capabilities presumes that the company knows what is best. Centricity establishes the view that company is easy to do business with (ETDBW) because it meets the customer needs. However, this view assumes that a compelling experience comes from following prescriptive rules. Concerns about usability and the user interface experience are symptomatic of this limitation, as is trying to ‘fix’ the customer or the way they interact with the company.
Placing the customer at the top
Customers First! It is an imperative that makes sense in a customer centric world. In this model, the company aligns itself and its operations to customer needs. Understanding customer needs and having the agility to adapt becomes the central issue when customers sit at the top of the business. Like the customer centric model, this shapes the way companies think, talk and act.
Crowning the customer as king puts the organization in service of its customers. Executives use this way of thinking to drive an internal imperative – customer satisfaction. The challenge with this way of thinking is latency between customer need and company response.
Latency opens the door for initiatives and speaking ‘in the name of the customer’. But leaders can take actions based more on internal interpretation of the ‘voice of the customer’ without necessarily responding to clear customer demand. In these cases the customer becomes the proxy for executives doing what they think is in the best interests of the customer. When that happens, executives are co-consorts with customers at the top of the business.
The customer as king works when the king speaks with one voice. That was possible when mass markets defined different kingdoms that aggregated individuals into groups. But this changes as markets fragment and social media creates a cacophony of voices, placing structural pressure on a customer first business model.
Putting the customer at the bottom
Growth starts from the bottom and the source of growth is the customer. This is part of the logic for putting the customer at the start of the business model.
In a customer bottom-up model, the company looks outside in starting with what the customer wants to achieve rather than an inside-out view of how they support the customer. The company places its products and services along the way, offering them in attractive ways recognizing the power of customer choice. This is the world of digital marketing and digital business models, particularly for the so called ‘over the top’ companies.
Being the object of customer choice is the essence of a customer first business model. Companies following this model recognize and think that capturing the customer in totality is challenging at best. Instead they talk about offers in the context of customer aspirations and goals rather than their own features and functions. They see the demands of the non-stop customer. They recognize that customer intent evolves, requiring co-evolution as the customer today is not necessarily the customer of tomorrow.
Starting with the customer is nothing new. The other two models start with the customer, but more as an object of the company rather than the subject of the value proposition. It’s a subtle but important difference, particularly when it recognizes that change requires constantly restarting, re-inventing and re-imagining value.
Locating the customer in the business model matters.
Customer centricity is a hot topic in the digital world where customer needs constantly change, re-arrange and appear fragmented and fickle. Where companies put the customer biases their view of the market. The challenges of making these models work take the majority of executive attention. It is equally important to recognize the bias and limitations of each model, particularly in a digital world.