How to transcend departments to enable customer-centricity
As an agency looking from the outside in, more often than not we’re able to view a company’s silos, their connections, strengths and weaknesses with a clearer view than perhaps someone working internally. And it’s fascinating.
I’ve easily been involved in at least 50 ‘transformation’ projects over the years, working on initiatives to help companies better serve and engage with their customers, and what I want to identify in this article is some of the common barriers to success I see time and time again. I do this so that companies can start to think differently and be better prepared by making small steps internally - with the ultimate goal of achieving pure, silo-agnostic, customer centricity.
I’ve witnessed politics ruin and halt projects, indecisions dilute objectives and inward thinking alienate the end user. But I’ve also witnessed unsung internal champions emerge and absolutely get what it takes to truly deliver excellence.
But it’s more than project delivery - even a successful project nailing all of the original KPIs that it was designed to achieve, doesn’t necessarily equate to the the biggest positive impact. Why? Because most KPIs are business centric, not customer centric.
So when did Customer Centricity suddenly become so important and why is everyone now talking about it? Well let’s go back over the past few decades and see how companies have previously responded to changing customer expectations.
In the 1970s and 1980s, everything broke. You buy a new TV, it breaks. You buy a car, it’s constantly at the garage. Sounds crazy, but this was the norm! Things were shit!
Enter the Japanese, with their “Quality by Design“ production process whereby Japanese manufacturers sought to achieve quality by designing it into the production process rather than simply trying to catch all the errors at the end. The likes of Sharp, Sony and Panasonic all created TVs that didn’t consistently break. People stopped buying British made TVs. ‘Zero Defect’ became the new expectation.
Then in the 1990s, Dell pioneered personalisation. Again sounds normal now to be able to choose and configure a product, but this was a huge commercial advantage back then. A ‘Just In Time’ model of assembling to order (again pioneered by the Japanese) enabled consumers to buy a product specific to their needs. Customer expectations changed.
Roll on to 2000. Global shipping and logistics improved. Differentiation was created by being able to deliver low cost goods to every corner of the world. Guess what, again customer expectations changed.
In 2010 the internet becomes widely available on mobile, creating differentiation by being available 24/7/365. Customer expectations changed.
So over the course of over 30 years, consumers went from simply accepting broken, mass produced, expensive goods, to demanding fault free, personalised, cheap and available products.
So what do we need to do next to achieve differentiation now that most products and services are such commodities?
Customer Centricity. Differentiation is caused by being customer centric. Creating a positive experience.
Why does it fail?
Unlike improving production lines & logistics, no single department can successfully create customer centricity. Why? Because no single department has the responsibility / authority or influence to create the perfect, end to end customer experience.
So for the first time ever, a company can only meet this new rise in customer expectation if the individual departments, with their individual objectives, can learn to play as a team. And that’s not easy.
Companies just aren’t used to a centralised effort. Because until now, it’s been the responsibility and objective of a single department to create that differentiation. The discussing of such problems in the boardroom was relatively easy. There’s an issue? Come up with an objective, and create bunch of actions to kick start a turnaround plan.
I’ve read a lot of investor packs for PLCs, and a good majority put ‘customer focus’ as a strategic priority. Unfortunately, that is then translated by the board into departmental objectives, such as ‘Focussed Product Ranges’, ‘Maintain Key Brands’, or ‘Refine channel strategy’. These are all internal objectives! Who in the boardroom is representing the end to end customer experience? The answer is unfortunately no one.
One more example which highlights the lack of progressive thinking in this area. Open up the job site ‘Indeed’ and search for ‘Chief Technology Officer’. In my local area in Berkshire, 690 job openings showed. Now add ‘customer’ as a search filter on the job specification and that number reduces to 5. That’s shocking. Less than 1% of CTOs have anything to do with creating technology to enhance the customer experience in the description.
So how do we define customer centricity?
Customer centricity is a way of doing business with your customer in a way that provides a positive customer experience before and after the sale in order to drive repeat business, customer loyalty and profits. And a customer-centric company is more than a company that offers good service.
In many ways, Service Design aims to achieve this, but I believe that Customer Centricity is a very specific flavour of Service Design. I see Service Design as improving the quality of interaction with a customer. Customer Centricity is achieving a more end to end positive brand experience. You can have a positive customer experience that wasn’t a high quality interaction, and you have have a high quality interaction that doesn’t necessarily result in a positive customer experience.
Take HelloFresh for example. That business has been service designed to the absolute limit. The app is great, the sign up and onboarding process is marketing perfection, the product is clear and marketing leading, the proposition makes sense. Every form, interaction and marketing channel has been A/B tested to the extreme.
Yet, their two month retention is 30%. 70% of customers cancel after within 2 months. At 6 months retention is down to just 17% (source).
But how come? The brand experience is so positive? Well, if we think about it, the customer pain isn’t when they order, sign up or receive the delivery. In fact all brand interactions are nice and positive.
But the pain happens at a time when the customer is not interacting with the brand. It happens at a time that cannot be A/B tested, where UX doesn’t get a look in. It happens, typically on a Monday morning, when the customer throws away a whole bunch of food they didn’t eat.
The concept works in theory, but in reality, people don’t plan every meal a week in advance. Gotta work late and eat a pizza at work? Then throw away a HelloFresh meal. Last minute invite around the inlaws? Gotta throw away another meal then!
This is a typical example of a company that embraced Service Design, but isn’t yet customer centric. They undoubtedly note their issues to be ‘reducing customer churn’ and ‘reducing cost per acquisition’. But they are business issues. The customer’s issue is they don’t always eat what they've paid for.
I think it’s safe to assume the board focus hard on reducing churn, but have yet to address the real problem which is how to reduce food waste, which is the typical cause for the low retention rate. Turns out, the people who can’t be fucked to cook, are the same people that can’t be fucked to plan a week ahead. Makes sense when you think about it.
There’s a handful of solutions, auto sync into my calendar, or how about credit me if I give my unused meal away to a friend or colleague? Admittedly they lose the specific guaranteed repeating subscription value (which every company loves), but you’ll probably have longer retention and as a side product, a very efficient peer-to-peer referral scheme.
To summarise, Customer Centricity is a deeper extension of Service Design. You are only customer centric when your customers, employees and your performance say so.
Where do you start?
Simply put, take off the PR hat, sales hat, and product hat. Customers don’t care about hats. Everyone in your business has their own hat. But only the customer is wearing theirs. OK, so the metaphor doesn’t stretch perfectly, but you get the point and I’ll now stop saying hat.
I’ll take some example ‘RFPs’ we receive as a means to illustrate my point.
“Development of a Website and Commerce Platform”, which goes on to say “There is a strong sense of community in the games sector and our websites should reflect that by being easy to manage and we would therefore like the following features... Blog (yawn), Customer Ratings (yawn), What’s On (yawn)....the list goes on.
This RFP was written by a COO...
This happens all the time. Features that assume how the customer wants to interact, that assume the customer is loyal to the brand and will dedicate time to it.
Or similarly, a CFO might contact us to recreate a booking system. Great project and grateful to help, but again, the company is buying functionality. How about partnering with an agency to create a customer experience? The brief was to ‘integrate booking with CRM’. This is way too tactical - yes that may be the output, but the customer need isn’t that they want their data stored, the customer need is quite simply, a seamless and useful buying experience. Let that be the brief and take it from there. Else you run the risk of creating a HelloFresh experience, the best CRM integration the world has ever seen, but how can we be sure we’re eliminating every single customer pain along the entire end-to-end journey? Who’s thinking about the customer during this project? Are the KPIs business led or customer led?
It can be tricky, as it’s easy to assume a good experience equates to customer centricity. We work hard on challenging our clients to take a step, or even 100 steps back, and look to completely rethink the approach, and the desired outcome from the bottom up.
Starting with Leadership
Hopefully we can start to see now that unless this starts at board and leadership level, then a company’s silos will just continue to work on what’s important to them. The COO will continue to think about Product Lines, Marketing will only think about landing the right message to encourage a sales, and CFOs are looking to cut costs and reduce churn. All fine, all commendable - but differentiation these days requires a single team and Customer Centricity is a team sport.
There are 6 statements, that if all true, give us the best fighting chance through an effective partnership with elevated thinking driving the outcomes.
There is an existing CXO, or we’re allowed to assume the role of CXO
Ideally, an internal champion, say a Customer Experience Officer, who already transcends departments and only wears a customer hat.
All employees know the implications and are engaged.
From board level to the front line. Employees know the true meaning of customer centricity and think customer first at all times. They never put themselves before the business, and think twice before putting the business process before the customer.
A modern C-Suite
Speak to any service designer in the industry, and their number one challenge is ‘getting stakeholder buy in’. This is crazy. People actually employed within a business to improve how a customer may interact, and their biggest challenge is convincing the people that pay for them that that’s a good thing? We’re super commercial, but when we hear ‘the board won’t see it that way’, we know we have a non customer centric company and an uphill struggle on our hands.
We’re empowered to challenge
Do we feel empowered to give the customer a voice? Can we say to the CTO ‘that’s not good enough’? As if we were a real customer? Most subpar experience or service is a result of inflexible internal systems, that for some reason, seem set in stone.
A service orientated ‘Northern Star’
The company vision and brand promise. If it’s service related, we’re on to a winner. If it’s product related, it’s a harder battle.
Already existing customer KPIs, not just business KPIs
It’s obviously massively important to measure churn, bounces etc. But what that won’t show is customer insights. They are business insights.
Above all, moving towards customer centricity, is changing a culture, not delivering a project.
It’s unravelling 40~ years of thinking, it’s new territory where data needs to be combined with experiences and conversations. It’s learning more about the customer, forgetting segmentation and thinking as a team.