From time to time, a topic is pitched as the next “big thing” and we struggle to figure it out. And as soon as we think we understand it, another topic emerges and leads every discussion, but leaves people both nodding and questioning.
I remember when the Internet of Things (IoT) was the topic that was changing everything because “things” could now talk to each other. Rather quickly, it was replaced by the Industrial Internet of Things (IIoT). A few people could explain the potentials, the challenges, and the differences. It seemed that everybody was talking about it and incorporating it into strategies and targets. This generates a lot of movement. The question is, where is this movement leading and when do you know you’ve arrived?
Customer-centricity, although certainly not new, is a similarly much-discussed but less-understood topic. We all know the adage “the customer is king”; yet customer-centricity both means a lot more than that and is challenging to implement. It is integrated into many companies’ strategies and values. Still, people are uncertain about what it really means, what needs to be done, and how to measure it. Along the way, customer-centricity is quickly reduced to a Net Promoter Score, Customer Satisfaction Index, or Customer Journey, and when it hits an existing process, it is easily swallowed up by it.
I have my own definition of customer-centricity. First of all, customer-centricity is not a process; it is a mindset and a part of a company’s DNA. Second, the core of customer-centricity is about leaving behind the product’s view and the company’s interests and taking on the customer’s perspective, in all of its complexity.
I see many companies trying to understand how their product can better help alleviate customers’ challenges. In fact, customer-centricity is about understanding the customer and their challenges first, then adapting the services or products to meet the customer’s challenge. This requires a lot of willingness to change and flexibility across all dimensions.
The ultimate key-performance indicator of customer-centricity is customer loyalty. Customer satisfaction is not the same as customer loyalty. The characteristics of customer loyalty are:
- Repeat purchases
- Future-oriented strategies
- Focusing on customer behaviors
- Long-term goals
If you truly understand the processes and the challenges your customers deal with daily, and you find ways to improve their daily life, you are on the road to creating loyalty.
Why aren’t we seeing more successful customer-centricity projects?
Business is built on processes. It’s not easy to change a process, as the implications can be unpredictable. In a perfect world, processes would be built on business, business would change with customer challenges, and this would lead to the frequent adaption of relevant processes. A nightmare you might say; a consequence, I reply.
What does true customer-centricity look like?
Let’s not overstrain our creativity and instead keep it simple. The chemical industry has many regulations and complexities. Imagine you produce commodities. All you want is to run your production at maximum utilization, as 96% utilization is already heavily impacting your margin. The moment you run out of warehouse capacity, you immediately start campaigns and tell your sales force to increase activities to sell more. Customer service is working hard, but customers aren’t buying.
The reasons could be many. After some investigation, you discover that your customers would like to buy, but they do not know how to store additional product. You keep offering good prices, but it doesn’t change the situation. Chemical production is based on accurate planning because companies do not buy chemical products like a person buys smartphone-charging cables.
What if you could offer your customers warehousing services in your network? By understanding the production process and what happens with your product once it arrives at the customer’s site, you could even collaborate with your wider network to re-engineer the product so that it could go directly into production without being stored. This requires flexibility on both sides, but the result is a win-win situation.
It is not the product, but the customer situation and challenges that make this a truly customer-centric example. It’s still an exception and requires a lot of effort and pains, but the first step is to start talking about it. There are many other examples of customer-centricity, and the good thing is you do not always need to look for the “big thing.” Plenty of smaller topics might be right at hand if you look.
The final word on customer-centricity
There are many pieces of the puzzle to become customer-centric; there’s a single-customer view, a 360-degree customer view, a customer-relationship management (or controlling) report, a customer big-data sheet, and so on. I compare it with the circular economy, as it is nothing a single person can achieve. It requires the willingness and the capability of an entire company to make customer-centricity happen. It is a question of DNA and leadership, and whether you decide to put your product first or to take the time to stop, listen, and react properly to solve your customers’ challenges. And all this while making a profit and driving growth. Easy is different.
This demands the orchestration of a flexible, real, end-to-end process enhanced with deep customer insights along the value chain. This often pretends to be present but, in reality, is not due to limited customer trust or simply because people assume rather than ask.
Customer-centricity in the chemical industry certainly puts you in the champions league. Challenge yourself: How good are you in living a customer-centric mindset? What needs to be done to position your company as customer-centric? The next time you read your company’s strategy or your president or a board member asks for feedback, raise your hand because you now have questions.
If it would be easy, it wouldn’t be fun.
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