1. THE ESSENTIALS OF
CUSTOMER CENTRICITY
Professor Peter Fader
Co-director, Wharton Customer Analytics Initiative
The Wharton School, University of Pennsylvania
faderp@wharton.upenn.edu
www.petefader.com
Twitter: @faderp
2. “Customer Centricity: Focus on the Right Customers
for Strategic Advantage”
• The traditional product-centric business model is showing some cracks
• Commoditization, well-informed customers, globalization, etc.
• Customer centricity is a promising alternative but is not clearly understood
• Many firms that are touted to be customer centric really aren’t…
4. What is customer centricity?
Customer centricity is a strategy that aligns a company’s
development/delivery of its products/services around the
current and future needs of a select set of customers in
order to maximize their long-term financial value to the
firm.
5. “Customer Centricity: Focus on the Right Customers
for Strategic Advantage”
• The traditional product-centric business model is showing some cracks
• Commoditization, well-informed customers, globalization, etc.
• Customer centricity is a promising alternative but is not clearly understood
• Many firms that are touted to be customer centric really aren’t…
• Celebrate customer heterogeneity: distinguish the profitable customers
from the less profitable ones
• It’s all about customer lifetime value (CLV)
• It’s a complex transformation
7. “Customer Centricity: Focus on the Right Customers
for Strategic Advantage”
• The traditional product-centric business model is showing some cracks
• Commoditization, well-informed customers, globalization, etc.
• Customer centricity is a promising alternative but is not clearly understood
• Many firms that are touted to be customer centric really aren’t…
• Celebrate customer heterogeneity: distinguish the profitable customers
from the less profitable ones
• It’s all about customer lifetime value (CLV)
• It’s a complex transformation
• And can fundamentally change the way we look at many functions in the
organization – not just marketing
8. Customer centricity as an organization-wide strategy
• Marketing
• Acquisition/retention/development > branding
• Finance
• Customer equity as a legitimate component of corporate valuation
9.
10. Customer centricity as an organization-wide strategy
• Marketing
• Acquisition/retention/development > branding
• Finance
• Customer equity as a legitimate component of corporate valuation
• R&D and production
• Measure/incentivize by incremental CLV, not volume
• Salesforce and front-line staff
• Measure/incentivize by incremental CLV, not satisfaction
11. Reflections on customer centricity
• Who is the customer? Can your organization come up with a single,
consensus answer to this question, or can you at least reconcile the
roles/relationships of the different potential customers?
• What are the major barriers to account for?
• What resources can you utilize to overcome these barriers?
• Thoughts about what competitors are doing in this area?
• Does it make sense for your organization to become customer centric?