How to Build a Customer Centric Business: The Complete Guide
By Talo Thomson
Published on August 2, 2022
Everyone wants to feel heard and understood. As a company, this applies to how your customers feel about your brand. Are you listening to what they need? Are you responding to these needs as you develop new products and services? Moreover, what’s the customer journey like, as they experience it?
Modern businesses may have hundreds of touchpoints across a customer’s lifetime. Every touchpoint represents a chance to delight that customer and reinforce loyalty. Similary, every touchpoint offers data that can help you improve that customer experience, from the number and duration of support interactions to the intuitiveness of your website. Analyzing this data can build your ability to anticipate a customer’s specific needs.
But customers aren’t data; they’re people. Customer centricity uses data to help organizations engage with people and build brand loyalty. Internally, it empowers those across your business to provide better service and a more tailored customer experience. Let’s explore what customer centricity is, why it’s important, and some best practices for building a customer-centric business.
What is customer centricity?
Customer centricity is the discipline of deeply understanding and delighting customers. Gartner describes it as “the ability of people in an organization to understand customers’ situations, perceptions, and expectations.” But why has this practice become so popular? Because customer centricity is good for business. Harvard Business Review found that customers who have a good experience spend 140% more than others. Also, 64% of companies with a customer-focused CEO are more profitable than competitors and enjoy nearly double the customer retention rate.
Great experiences, thoughtful customer service, and personalized offers are all examples of customer centricity. Rather than simply pushing products, customers want to be met in context to their needs. This makes the digital channel even more powerful, but only if customer data is used wisely. By considering the buyer’s journey across the marketing, sales, and customer service funnels, you can build long-term relationships that enhance revenue and enable long-term growth.
Why is customer centricity important for businesses?
Customers drive business success. Building an organizational culture around customer satisfaction creates happy customers, which in turn makes a profitable business.
So how do you become customer centric? When creating a customer-centric strategy and culture, every step of business development should include a focus on the customer.
Customer Centricity in Practice
A customer-centric business focuses on finding its core customer base. Define your products, services, and strategies from customers who gain the most value from what you offer and who return that value to your business.
In practice, this means:
Collecting data about your customers
Reviewing customer data to gain insights
Defining a high-value customer
Focusing on customer problems and challenges
Responding to customer feedback
Training employees to think about what customers need and don’t need
Building out future plans that focus on evolving customer needs
No company can be all things to all people. As a business, it’s a good idea to prioritize and focus on the customers who help generate the most revenue. When you’re building a customer-centric business strategy, it is best to avoid:
Treating customers as a generalization about an “average” persona
Chasing after all customers
Spending too little on high-value customers
Making assumptions about evolving customer needs without the data needed to support it
Ongoing analysis of customer needs is essential. Whether you pursue surveys, focus groups, or research in the field, it’s important to continue learning about your ideal customers and how their needs are shifting. As Paul Leinwand points out, “The greater the engagement with customers, the more you learn; the more you learn, the more you improve the value proposition; the more you improve the value proposition, the more trust you generate (by delivering on your promise), and the more you gain engagement and an opportunity to learn.” (Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future, page 71.)
Organization-centric Culture vs. Customer-centric Culture
Organizations and customers have a symbiotic relationship. Organizations offer a product or service. Customers recognize that it solves a problem. Your organization continues to evolve this already-appreciated product or service based on customer feedback and changing needs.
However, you may need to shift your perspective to make sure you’re really creating a customer-centric strategy and culture.
Businesses are often started to solve a specific problem. However, once you start building a customer base, it’s important to shift away from how you perceive the problem to how customers define it for themselves.
In an organization-centric culture, strategy focuses on:
We need to sell something to our customers.
We need to build relationships with our customers.
We want to make money from our customers.
While none of these objectives are bad, it’s a case of starting with “we” and ending with “customer” when thinking about strategy.
Moving toward a customer-centric culture means thinking about the customer before you think of your business.
In a customer-centric culture, strategy focuses on:
The customer needs to solve something, and we can help them.
The customerexpects a certain type of relationship from us, and we need to provide it.
Th ecustomer needs to see the value we provide before paying us.
Even though the outcomes of both may be the same, shifting your thought process is fundamental to success.
What Are The Benefits Of Customer Centricity?
A customer-centric strategy enables organizations to build brand loyalty, which ultimately generates more revenue. Deep customer understanding enables companies to better tailor value propositions to individuals and opens the door to cross- and up-selling opportunities.
Explore some additional benefits that a customer centric approach can unlock:
All interactions across the buyer’s journey should speak directly to pain points and benefits of your product or service. This doesn’t just make the customer the hero in your brand’s story; it answers their key questions and demonstrates your understanding of their challenges (which in turn accelerates their transition from prospect to customer).
Using data to understand customers’ needs allows you to:
Provide meaningful educational marketing materials.
Communicate in a way that rings true for your audience.
Ensure that customers have the information they need.
Accelerate the sales cycle.
Reduce customer acquisition costs.
Improved Customer Experience (CX)
If your brand sets expectations during the buying journey, it’s vital those expectations are achieved after a purchase is made. Failing to fulfill customer expectations will cause your brand to suffer. This means that customer service and success experiences need to match the promises set early in a buyer’s journey.
Using data to understand your customers’ experiences means:
Reviewing customer feedback after an interaction. What’s not great and needs work? What’s good but could be better?
Focusing on what made an experience positive to try to reproduce it.Why was this campaign successful? What can we learn?
Gaining visibility into areas of improvement. What do people dislike? How can you address it?
Establishing and monitoring metrics that validate improvements.Are we improving click-through rates?
While any purchase is good for business, repeat customers are what enable you to maintain profitability levels and continue to grow. Happy customers pay it back and pay it forward with their loyalty. Not only do they continue to purchase from you, but they recommend your products and services to others.
Using data to retain customer loyalty enables you to:
Incorporate evolving needs into your growth strategies.
Iterate products or services that don’t currently meet customer needs.
Develop new products or services that respond to market changes.
Give customers the confidence to advocate on your behalf.
What are the challenges businesses face in implementing customer centricity?
Siloed Customer Data
Customer centricity touches all aspects of your business, from marketing and sales to product development and customer service. The problem many companies face is that each department has its own data, technologies, and information handling processes. This causes data silos to form, which can inhibit data visibility and collaboration, and lead to integrity issues that make it harder to share and use data. Teams may also struggle to trust data, which can slow down processes as they investigate its origin and any transformations.
Legacy Technologies and Manual Processes
Customer centricity requires modernized data and IT infrastructures. Too often, companies manage data in spreadsheets or individual databases. This means that you’re likely missing valuable insights that could be gleaned from data lakes and data analytics. A modern data stack ensures transparency and collaboration across job functions and departments, enabling smooth data handoffs across the organization.
Customer Data Privacy And Security
Modern customers care about data privacy. While customer centricity builds loyalty, a data breach can instantly undermine that strategy with even the most loyal customers. Legacy technologies, siloed data, and manual processes make securing data and protecting privacy much more expensive and risky.
After investing to develop these critical customer insights, a security breach can quickly damage trust and compromise the value of that data. An active data governance program helps maintain robust data privacy and security processes, empowering data leaders to consider where sensitive and personally identifiable information (PII) data is stored, transmitted, and processed, while also keeping that data secured more effectively.
How To Build A Customer Centric Business: 4 Best Practices
The benefits of creating a customer-centric business strategy and culture far outweigh the costs. Here are 4 best practices for building a customer-centric business:
#1 – Find the Technologies To Support Customer Centricity
Before you put any processes in place, it’s important to have the right tools to get the job done. Fundamental to any customer-centric strategy is your Customer Relationship Management (CRM) platform.
To support the CRM, it’s important to have technologies that:
Provide analytics for insight into business performance.
Leverage intelligence to anticipate customer needs.
Automate business processes to reduce or eliminate manual tasks.
#2 – Use Data To Understand The Ideal Customer
With the right technology in place, you can start digging into the data. This helps you find high-value customers so you can focus on their needs.
As part of this, it’s important to have analytics to help you identify:
Customers who generate the most revenue.
Customers with a long-term relationship.
Customers who report a high satisfaction with your services/products.
:#3 – Review Customer Experiences To Assess Your Strategy and Culture
Measuring your customer-centric strategy means knowing whether you’re meeting customer expectations or not.
Reviewing data is important to gaining insight into whether:
Products and services lived up to expectations set during the buyer journey.
Customers are satisfied with customer service and customer success representatives.
Customers trust your brand and organization.
#4 – Use Data To Define Product Roadmaps and Services Offerings
Products and services must evolve with the changing needs of customers. What you provide today may not solve tomorrow’s problems. For this reason, it’s important to continuously engage in customer and market research.
Some data to consider incorporating includes:
Product/service usage data.
Customer advisory board feedback.
What are real-world examples of customer centricity?
Customer centricity means being customer-obsessed, and anticipating rather than reacting to what people want.
What if a grocery store could offer personalized coupons to customers based on their unique purchase history? Albertson’s loyalty program team used data as the foundation of their customer-centric program by digitizing and personalizing their traditional grocery store flyers. They started by:
Finding the right customer data.
Understanding and trusting the algorithms.
Collaborating with another team to accelerate the plan.
Using Alation’s curated data catalog, the company’s California-based data analysts efficiently collaborated with their peers in the Philippines to optimize their analysis efforts. Alation helped to streamline the process, as the data catalog connects information, articles, and conversation with helpful metadata.
The results of this project were:
Time-savings ROI of 3000%.
Data analyst onboarding time was reduced by 83%, from 1 year to 2 months.
Data discovery was conducted 67% times faster.
300% more redemptions from personalized email campaigns over paper campaigns.
$300,000 in additional funded redemptions
Spark New Zealand
As the leading telecommunications provider in New Zealand, Spark’s customer-centric business strategy relies on:
Creating a simple, intuitive customer experience and digital journey.
Using customer insights to deliver the right products at the right time.
Delivering a smart, automated network with advances in 5G and internet of things (IoT) technology.
Internally, Spark was able to democratize data, creating a single source of customer data by integrating Microsoft Azure, Snowflake, and Alation’s data catalog. Together, analysts, data scientists, and the company’s customer-facing teams collaborated to improve marketing campaigns, customer engagement, and products—ultimately improving customer centricity.
The results of this project were:
50% gain in analyst productivity.
75% faster onboarding of analysts and data scientists.
500 potential Alation + Snowflake users across the company.
How does a business measure customer centricity?
Measuring your customer centricity requires collecting and analyzing data from across the entire customer lifecycle. First, define the key metrics you’d like to track, and then identify the necessary data required to track those metrics. Here are a few typical metrics for gauging customer centricity:
Customer Value Score
Your customer value score requires two types of data:
How often a customer purchases from your company.
The revenue that customer generates.
For example, you may have a customer that makes a small purchase every week or a customer that makes big purchases a few times a year. At first glance, the large customer may appear to generate more revenue because the individual purchases are larger, but if you dig deeper, it may be that more frequent yet smaller purchases add up over time.
The customer value score will highlight which customer profiles matter most to your business and help you focus on the right market segment.
Customer churn shows how many customers are lost over time. It doesn’t forecast the future, but it does help identify areas of improvement for products and services.
For example, you might have four different product offerings. If you find that one of them has a high customer churn, you’re not meeting customer expectations for that product. As you make improvements, tracking customer churn will help you determine whether the business is meeting expectations and satisfying customers. If you see a decrease in customer churn over time, you’re on the right customer-centric path.
Net Promoter Score (NPS)
NPS answers the question, “How likely are you to recommend the product/service?” This metric shows whether your current customers are willing to advocate for your brand.
The three categories of NPS are:
Detractors: These are unhappy customers who can disparage and hurt your brand by sharing negative experiences.
Passives: These customers are satisfied but they don’t have a deep investment in your product or service, meaning they could jump to a competitor.
Promoters: These are loyal fans that plan to keep buying and will talk about you to everyone in their network.
A high percentage of promoters often means that customers are satisfied and you’re meeting their expectations. On the other hand, passives and detractors provide a lot of visibility into customer needs that aren’t being met effectively.
How Alation Helps Businesses Become Customer Centric
Customer centricity is about people and relationships, but it scales only by relying on data instead of anecdotes and one-off conversations. Data gives you the insights to build these interpersonal relationships. It will also help you determine what’s important to customers and what enables your business to compete in the marketplace.
Alation’s data catalog makes customer centricity trackable, easier, and more effective. It enables you to ensure data is integrated and trustworthy, so you can build customer data lakes with only valuable content. For self-service analytics to succeed, all users must trust the integrity and usability of the data. Alation aggregates and analyzes data collected by phone, text, social media, chat bot, email, or in-person, eliminating fragmented data silos and conflicting customer information.
As you build out your product and services roadmaps, Alation gives you the ability to access real-time data from internal and external sources. We deliver a single location for discoverable, trusted data so customer teams can easily identify new partnerships or market segments. In the data catalog, an omnichannel view of customers enables analysts to discover holistic insights across the customer journey and build personalized products that build deeper connections with customers.
Customer trust is central to your customer-centric strategy. Alation provides a comprehensive set of governance and data protection capabilities that promote an ethical data culture so that you can satisfy customer data privacy expectations. With data as the foundation of your customer-centric business strategy, Alation enables you to use your data to gain meaningful insights that drive better outcomes.
Curious to learn more about data-driven customer centricity? Read the Nebraska Furniture Mart Case Study to see how they use Alation to improve customer impact analysis.
- What is customer centricity?
- Why is customer centricity important for businesses?
- What Are The Benefits Of Customer Centricity?
- What are the challenges businesses face in implementing customer centricity?
- How To Build A Customer Centric Business: 4 Best Practices
- What are real-world examples of customer centricity?
- How does a business measure customer centricity?
- How Alation Helps Businesses Become Customer Centric