The customer centric evolution
It used to be easy, you were the owner of the local general store. You knew your customers by name because they came into your shop twice a week, on the same day, at the same time.
These days, being ‘customer centric’ is much more complex because your customers come from all around the world.
They browse, purchase, and return without ever setting foot in your store. They connect with your brand online, on their mobile, and through apps or social media.
You’re competing with brands that don’t have bricks and mortar stores, or brands that are international conglomerates.
This doesn’t make customer centricity any less important – quite the opposite. It means retailers need to work smarter to create personal connections.
However in recent times, customer satisfaction has almost taken a back seat as retailers become more focused on building e-commerce solutions, co-ordinating international logistics, or upgrading POS technologies.
Digital disruption and greater competition is shaking things up.
Disruptive businesses such as Uber and Airbnb threaten the status quo of incumbent businesses because they are born with the customer at the centre of the business model.
We’ve come full circle.
Australian businesses acknowledge they need to get back to basics and replicate the intimate and personal customer relationships common in the age of the general store.
So what’s the problem?
Becoming customer centric is not as easy as it seems. It’s a long term commitment and results won’t happen overnight.
Experian conducted research which involved 20 CMOs from leading organisations and more than 100 senior marketers about how they are driving customer centric change.
The research found customer centricity requires a continued commitment from the entire business, most importantly the CEO, an ability to consistently prove ROI and a level of sophistication in your approach to data and analytics.
The research also found the three things which are holding Australian businesses back are fear of failure, lack of resource, and lack of skilled talent.
Overcoming these roadblocks
So how can retailers overcome these hurdles and put the customer back at the centre of operations where they belong?
Firstly, retailers need to understand that mistakes and failure are a part of business.
Our research found only 12 per cent of less mature organisations are working in organisations that accept failure.
This puts them at risk of falling behind competitors that aren’t afraid to push boundaries.
Rather than getting hung up on failure, organisations further along the customer centricity curve say they grow and learn from the experience.
Retailers can use their influence to create an environment that accepts failure by celebrating the learnings that come from mistakes rather than sweeping them under the rug.
Our research found 50 per cent of business leaders in less mature organisations rated themselves “not very good” at customer centric initiatives, showing a worrying gap in confidence and expertise.
One of the ways the CMOs in our study are overcoming this is by working outside their comfort zone and pushing themselves into new areas. Challenging training opportunities can also help to supplement the gap. And finally, the age old question of resource – only eight per cent of the least mature organisations have sufficient budget for customer centric initiatives – compared to 88 per cent of the most advanced organisations.
Mature organisations have sufficient budget because they have been able to successfully prove and measure the benefit of customer centric activities.
While a range of measures are used to report on customer experience, at the root of it, customer centricity is a means for ensuring business success, which means it is firmly couched in fiscal terms.
When creating a measurement framework, while it is important that measures are linked to financial performance, they must move past traditional fiscal metrics to ‘life cycle’ measures that demonstrate how customer centricity develops valuable long term customers.
By measuring key performance indicators, such as customer satisfaction and retention and by securing quick wins, CMOs are empowered to secure adequate budget for customer centric initiatives.
A final warning: evolve or perish
Once a soft metric, customer experience has now become a stakeholder priority.
Many organisations are in the early stages of the customer centric journey, however there is an underlying recognition that the customer experience must evolve if organisations are to survive.
Regardless of maturity level, businesses have significant day-to-day challenges when rolling out customer centric initiatives.
What is clear, is that the risk of inaction is far outweighed by the opportunities customer centricity presents, particularly through customer retention, customer loyalty, and customer satisfaction.
Mature organisations are in a better position to understand and demonstrate a return on customer centric initiatives and are more successful at securing the required budget and resources.
It’s clear customer centricity is a cause worth investing in. Customer centricity provides a competitive edge for retailers in a cluttered and challenging market.
It allows businesses large and small to engage the customer in a way not dissimilar to the corner store and those that do it well, will reap the rewards.
David Chinn is GM at Experian Targeting, responsible for driving the overall business direction, strategy, and execution for the consumer insights and targeting division, at Experian Marketing Services, Australia and New Zealand.