As a customer-first strategist (just like you I hope), I spend a lot of my time searching how to better measure customer centricity for my clients. I also do a lot of analyses on what customers really want today. I’m always trying to understand the exact solutions customers need, desire and dream of having.
My regular searches include customer service, customer satisfaction, customer care and similar topic areas. Google is my best friend! However, I recently came across some surprising facts, which prompted this post. I believe they show a serious problem in the business of looking after our customers today. Read the article and then let me know whether or not you agree with my analysis.
Wikipedia, another online friend of mine, doesn’t have a definition of customer centricity! If you look up the term, you get redirected to customer satisfaction! Try it for yourself and see.
My other go-to source for definitions is businessdictionary.com which defines customer centric as:
“Creating a positive consumer experience at the point of sale and post-sale.”
It then goes on to say
“A customer-centric approach can add value to a company by enabling it to differentiate itself from competitors who do not offer the same experience.”
Now although I find the definition limited, since it refers only to sales and post-sale activities, I do like the fact that it mentions three important elements of customer centricity:
- A positive customer experience
- Adds value to a company
- Enables differentiation
This clearly identifies three huge benefits of becoming (more) customer centric:
1. A positive customer experience has been shown to increase both loyalty and advocacy. As we all know, it costs five times more to acquire a new customer, as it does to keep a current one. Therefore loyalty is an incredibly valuable benefit for a brand.
According to recent research by Bain & Company, along with Earl Sasser of the Harvard Business School increasing customer retention by just 5% can increase profits by between 25% and 95%. OK a very wide range, but I’m sure we’d all be happy with even a 25% increase in profits, wouldn’t we?
One further piece of research, this time from Marketing Metrics, shows that the probability of selling to an existing customer is 60 – 70%, whereas the probability of selling to a new prospect is less than 20%.
Clearly placing more attention on keeping our current customers satisfied brings greater rewards than going after new ones. And yet that is what most companies set as a priority. Any ideas why?
2. Adding value to a company also increases the ROI of its marketing investments. This is something that marketing is constantly challenged to prove these days. With the risk of seeing their budgets cut if they are unable to provide convincing arguments to their bosses.