Do you know what gets in the way of customer centricity?
If you answered “no”, I aim to help you identify and avoid common mistakes and how to solve them.
Over the past years, customer centricity has become popular, no matter the size of the company. However, I have experienced common mistakes done when embracing customer centricity and I want to share them with you.
Before I unveil them, let’s be clear what I mean with “customer centricity”
What is Customer Centricity?
Customer centricity is the ability to situate the customers at the heart of the business. It is building a long-term relationship with your customers, creating a connection with them that goes beyond a short-term business gain.
Amazon is a successful example. Through personalization they create relationships with customers. Customers receive a curated list of item recommendations to buy, based on an algorithm with different data sets such as purchase history, cart items, recently viewed items, etc.
With this, the shopping experience becomes more convenient, creating a long-lasting bond and improving the customer experience (if you bought a bike, makes better sense to get a helmet recommendation rather than a laptop).
We see our customers as invited guests to a party, and we are the hosts. It’s our job to make the customer experience a little better — Jeff Bezos, Amazon.com Founder
Customer centricity should not be seen as a strategy but rather as an organizational change that affects the entire organization, and not only customer facing teams (ie. product, sales, marketing, customer service). You should adopt customer centricity as a core value, with every employee, executive, and board member embracing that the company exists for the customer and that the only way to survive long-term is creating value for the customer.
Despite the term “customer centricity” has become widely popular in the recent years, there are common mistakes I have noticed. Let me share them with you.
Mistake #1: Not Measuring Customer Lifetime Value (CLV)
The common mistakes for companies is they don’t measure Customer Lifetime Value.
CLV is the total amount of money a customer is predicted to spend with your business during their lifetime. This metric helps businesses make the right decisions on how much money to invest on their customers. Without CLV you can’t say your business is customer centric.
Through CLV you can predict how valuable a customer is and can know who your “best” customers are. This will help improve the ways you acquire new customers and retain them.
If you ignore CLV, you don’t know whether you are spending your budget wisely. You could be spending too much in customer acquisition, acquiring low-value customers that might churn even before making any purchase. To become customer centric, incorporate CLV on your decisions.
I learned the importance of CLV when I worked at Amazon. For every plan made, the main question was “how much CLV will your plan drive?”. Keep this question in mind to identify the most valuable ideas. It will help you prioritize what to implement and to which customers.
If your business does not have a CLV implemented, I recommend you do the following:
1. Start measuring CLV. Take your customers and divide them by segments (by gender, by age, by longevity in your business, by purchase behavior, etc). Then, apply the CLV formula:
CLV = (Average Purchase Value x Average Purchase Frequency) x Average Customer Lifespan.
To calculate the Customer Lifespan, use: 1/(1-Customer Retention Rate)
2. Improve your CLV. There are multiple ways to improve it. Here are some ideas:
Reward your most loyal clients
Implement a loyalty program
Use campaigns to increase your most valuable customers’ retention
Offer a referral program
Create targeted and personalized campaigns
Keep customers engaged
Optimize your customer and provide an appropriate service
Mistake #2: Organizational Silos Limit Data Sharing
No matter the size of your business, organizational silos will impede you from becoming customer centric. Such silos happen when the organization lacks of communication and collaboration between departments. This can lead to a fractured view of the company’s objectives, allowing each department to operate isolated.
The outcome of an organizational siloed company is poor customer experience. When different departments of a business lack customer understanding, the deliveries will not be customer centric.
I recently made an online purchase from a well-known brand. I paid for an item but did not receive any confirmation, neither on the platform nor on my e-mail address. I only received a “case number” on the platform. However, it was not clear if it meant “confirmed order”. I called customer service and was redirected to 5 different departments, none of which oversaw my process and had no idea what a “case number” meant. After 30 minutes waiting, I was annoyed and irritated. To make it worse, the solution given was to wait 48 hours and reach again in case I didn’t received an e-mail. The confirmation e-mail came 24 hours later. As a customer, I will not purchases on this platform again.
My experience was a clear indicator this very well-known brand was not customer centric. Each department was only responsible for what they did and were not prepared or knowledgeable enough to provide a solution for their customer.
A customer centric company would ensure that customer service is able to understand the customer’s problem and have the right tools to provide a solution. If customer service team is unable to solve it, they should know who to contact and come back to the customer with a solution in a timely manner.
A solution to my example would have been for the first customer service agent to open an internal ticket to the right team, and then come back to me with the solution. Doing so, builds trust and makes the customer feel the company has built a bond between the two parties.
Mistake #3: Not Handling Customer Feedback
Customer feedback is information customers provide to inform you about their experience and satisfaction level with your business. Feedback can come from multiple channels such as e-mail, social media, customer support, third party platforms (ie. Trustpilot), and so on.
Feedback allows your development teams to improve the customer experience. Knowing how to handle customer feedback improves customer loyalty and decreases customer support cases.
I have often seen, mainly startups, a lack of feedback strategy. Implement such strategy because as your business grows, your feedback will grow too. With so much information inflow in your business, should you pay attention to all? The answer is NO.
There are companies who receive feedback and add it as part of their product backlog, keeping it there with no action taken because the product team has “urgent” goals to prioritize. When this happens, feedback is not handled and the company is not customer centric.
You need to understand who is providing feedback. For example, feedback from heavy users, high-spending customers, or trusted long-term is more important to handle than feedback from inactive customers. Nonetheless, no matter who gives you feedback, you should also reply to your customer making sure they are aware that their information has been received.
To build a customer feedback strategy you need to:
Ask your customers for feedback
Categorize feedback into different meaningful buckets for your business
Identify the most valuable and feasible to implement feedback
Prioritize the most valuable feedback and include it as part of your development
Follow-up with customer who gave feedback so they know you listen to them
We all need people who will give us feedback. That’s how we improve — Bill Gates, Microsoft Co-Founder
Mistake #4: Lack of Customer Experimentation
Think about a scenario in which a product development team is working on a new product. A roadmap is established with all features required. The Product Manager has prioritized all the work (from very urgent to urgent, of course). Developers are working non-stop to meet the tight deadlines. The product launches with all planned features, but fails to meet expectations; customer are not interacting as planned.
The previous scenario happens often. Product teams are so focused on developing features and meeting a tight deadline that they forget to include the main stakeholders’ view, the customer.
To ensure your product meets the customers’ expectations, you need to perform customer experimentation tests. Testing helps your determine which features are most valuable. You can spend time developing amazing features that you think are great for the product, but if your customer does not see value in those features, the result would be wasted resources developing low value features.
On my first day at a previous company, I saw a roadmap full of features to develop, but none with a reason to be there. They were thought as “cool” to have on the product. The platform had several features developed that had little to no customer interaction. I was told that one specific feature took six months to be developed but less than 0.5% of customers interacted with it. What went wrong? The answer: it was not tested to determine the customer impact.
Include experimentation tests as a way to understand customer interaction with potential new features/products. There are several ways, but I recommend 2 types:
1. The 1% test: Roll out a test with a simplified feature version to max 1% of your customers. Analyze how customers interact with the feature. Define success metrics to evaluate the value created, such as increased ticket value, decreased churn, increased purchase frequency, etc.
I have performed several of these tests and allowed me to disregard many features on my pipelines as well as helped me decide when to invest on high value features.
2. The clicking test: Roll out an image or a fake button, and track how many clicks are registered. This gives you an idea of the intention that customers want to know what’s behind this image/button. I have been reluctant in the past with this type of test because, to an extent, affects the customer experience. Nonetheless, it has proven to be very effective.
When I worked for a gifting platform (you select a gift and send it to someone else). I tested a fake button to identify if users were interested to buy a gift for themselves. The results were positive and I rolled out this new feature.
Wrap Up
Every decision you take, no matter if strategic or tactical, should be taken with the customer as its core. The risk of not doing so, is losing relevance through time and becoming obsolete. To be customer centric is to be customer first. Make sure to avoid the mistakes covered on this article so your business and team can ensure to truly be customer centric.
Whatever you do, think on the impact that your actions will bring to your customers.
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