In the past decade, the power of the customer has been amplified to an unprecedented level affecting businesses in every industry. Companies are now in a position where they have to be acutely aware of their customers’ experiences and opinions, but also must gracefully react to them in ever-decreasing timeframes. A recent survey found that 84% of executives believe that customer engagement will overtake productivity as a primary driver of growth and the new basis of competition1. In this environment, it is vital for organizations to develop their capabilities to listen to their customers and to respond to and anticipate customer preferences. The need to better serve customers is now affecting the technology a company deploys, how the company organizes and how every department functions.
Era of The Customer
So what does it mean to be customer-centric? Companies have been talking about how important the customer is to them since the industrial revolution, yet “the customer always comes first” perspective is exponentially different in today’s terms. Whether we call it customer centricity or customer experience, the idea of getting closer to customers is something that virtually all business leaders today understand. In our view, there are three primary reasons for the rise of the customer:
Companies and customers have seen an explosion in information velocity and visibility in recent years. Customers research suppliers and products to a level unimaginable just five years ago. Rare today is the sale where a customer buys without validating pricing options on the internet. More complex products and services now have customer review platforms (Facebook, Twitter, Yelp) that have fundamentally changed the buying experience. Flaws in product or service are immediately magnified. At the same time, companies are better able to understand the behaviors of their customers. They can quickly dissect their motivations and create segmentations that allow effective and timely micro-targeting of customers.
* Competitive density
Technology and globalization have changed the dynamics of competition across all industries. New markets have become available across the globe and companies have had to find ways to differentiate themselves in increasingly competitive markets. This dynamic creates a need to provide services that enhance the products that a company sells to create lasting relationships with customers. It is a fact that the average company can attribute 70% of its revenue to repeat customers2, highlighting that high customer churn can kill growth. In a competitively dense landscape, the ability to provide a superior product and tailored services eco-system is vital.
* Growth in “touch points”
The interaction between company and customer has grown increasingly complex. Social media, web generated content, and mobile applications make it much easier for companies to reach out and listen to the market. Yet customers now expect companies to respond quickly.
Customers make purchasing decisions in multiple settings, in store, at home on a computer, or with a mobile device. This variety of purchasing channels require supply chains to become flexible and connected. Supply chain operations are evolving to incorporate how they impact customer sentiment. The bar is rising quickly.