Roadmap to a customer-centric businessExtract from “Customer Genius … Becoming a Customer-Centric Business” bybestselling ...
innovation – their groundbreaking minivan, for example, defining and shaping anentire market despite customer research say...
Customer Value, Business ValueBecoming a customer business is not just about passion, it makes commercialsense.Customer bu...
   20% of your customers give you 80% of your revenue      10% of your customers give you 90% of your profit      A ver...
involved. They have applied the philosophy, but not the disciplines that movefrom a product to customer obsession, and to ...
The product-centric business                          The customer-centric business     Best product                      ...
or philosophies of business – such as moving from a large catalogue of products,to a capability to bring together the righ...
   Agreeing the “to be” state                             Gap Analysis  3. Understanding how this relates strategically ...
1.   Horizons                   2.   Budgeting                   3.   Resourcing                   4.   Aligning7. Identif...
Customer               Customer                                       rewards              leadership                     ...
i. Internal communication                              1. Regular updates                              2. Symbols of chang...
i. Business model                   1. Customer-driven business planning                   2. Customer-driven resource all...
© Peter Fisk. Extract from “Customer Genius : Becoming a Customer-CentricBusiness” by Peter Fisk, published by Wiley Capst...
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Roadmap to a Customer-Centric Business by Peter Fisk


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Roadmap to making the change to becoming a customer-centric business. Extracts from "Customer Genius" by Peter Fisk

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Roadmap to a Customer-Centric Business by Peter Fisk

  1. 1. Roadmap to a customer-centric businessExtract from “Customer Genius … Becoming a Customer-Centric Business” bybestselling author, speaker and consultant, Peter Fisk.Doing business on customer’s terms is obvious and essential.Peter Drucker was one of the first to suggest that the sole purpose of a company isto create and retain customers. He reasoned that since the customer alone paysfor the product or service, the customer the most important entity within thebusiness. Indeed, in recent years, from the eighties bandwagon of total qualitymanagement to the nineties obsession with customer relationship management,organisations have sought to align themselves to customers.However, some argue that a blind obsession with customers has a destructiveimpact on competitive advantage, the focus on competitors is last as everycompany seeks to meet the same needs of the same customers. This itself, theyargue, leads to falling satisfaction of customers as they are faced with an infinitenumber of relevant but commoditised products and services. It also misses thestimulus for innovation, for meeting the unarticulated needs of customers, andfinding better ways to solve their problems.Companies have succeeded with both strategies – Courtyard by Marriott, forexample, was a business traveller hotel concept designed entirely by conjointanalysis-based customer research, focusing on the priority needs of this targetaudience. Meanwhile companies like Chrysler have succeeded through
  2. 2. innovation – their groundbreaking minivan, for example, defining and shaping anentire market despite customer research saying that customers did not want it.The reality is that a successful business does both – these approaches are not inconflict. Having a customer orientation is not about blindly obeying the customer,but about working with them to so that you both understand their needs andambitions, whether they are articulated or not. Similarly an innovation orientationis not about product obsession, customers are increasingly partners in theinnovation process, and all innovations ultimately need customers to embracethem.From Amazon to Zara, P&G to Target, they realise that they need to meet theexisting and emerging needs of their customers, but also drive innovation anddifferentiation. Indeed they realise that a customer orientation is not just aboutbowing to the declared needs of customers, but being selective about whichcustomers to work with, and then collaborating to understand their real issuesand aspirations. They also realise that competitive advantage stems from havingthe better insights, the better customers, and thereby driving better innovationand growth.Perhaps it comes down to words and meanings – early approaches to “customerfocus” were largely cultural and superficial, achievable despite being driven byproducts and internal priorities.Customer focus, customer intimate, or customer driven?These initiatives tended to focus on attitudes and behaviours, and mainly those atthe “customer interface” - a term which itself implied that the rest of the businessis not connected to customers. They were largely about nice words, soft focus,but when it came to the crunch, it was still business first, customer second - howto gain and grow profits first, satisfy and retain customers second.So what’s different?A “customer business” starts with the customer. It works from the outside in, andthen balances this inside out. By starting from the outside in, the business isfundamentally inverted, its priorities are different, and its performance better.No longer can businesses see the best opportunities, engage the best customers,compete most effectively, by standing inside and looking outwards. Products andprocesses, strategies and systems, rewards and relationships must start andrevolve around the customer.Customer-centric is probably the best adjective, if you need one.
  3. 3. Customer Value, Business ValueBecoming a customer business is not just about passion, it makes commercialsense.Customer businesses deliver more profitable growth, are more sustainable overtime, and deliver better returns to shareholders. It can also be a more efficientbusiness, a more flexible organisation, and a more enjoyable place to work.At a strategic level, customers are the scarcest resource of a business.It is easy to secure physical resources from suppliers around the world, except inthe case of oil which we all know is running out. It is relatively easy to securecapital, from conventional investors or more recently from private andparticularly from ethically-motivated sources. It is not so easy to secure the besttalent, as knowledge and ideas become more important. Yet the most difficult tosecure, and most valuable resource is the best customers. These are the goldennuggets of today’s business.At a commercial level, customers are the most valuable assets of a business.Consider the market capitalisation of a business – the collective value of all yourshares, and reflecting the price somebody might pay to buy your business. Thisvalue reflects the future profit potential of your business, and therefore the assetsthat make up that figure are those that are most important in driving future profits.Today, 86% of the value of publicly quoted businesses is intangible (according toBrand Finance), and the most significant intangible assets are typically brands,relationships and ideas. Two and sometimes all three of these are driven bycustomers.At an operational level, the best customers cost less and spend more.Research, to be considered in more detail later, describes your best customers asthose who are prepared to engage in long-term, profitable relationship. It showshow these best customers will typically stay longer, cost less, buy more, paymore and tell others. Their acquisition costs will be lower, falling to zero as theywant to come back of their own accord. Their operational costs will also be low,as they do more themselves. Their perceived value is higher, and therefore theymay pay more or at least seek lesser discounts. A best of all they are greatadvocates – recommending you to their friends, other people like them –building reputation and attracting others.Every business will quote different figures to demonstrate the importance ofcustomers. The numbers and chosen ratios may differ by type of business andmarket. However these are some of the most typically quoted statistics, averagesand generalisations, but helping to make the business case:
  4. 4.  20% of your customers give you 80% of your revenue  10% of your customers give you 90% of your profit  A very satisfied customer will tell 3 other people  A dissatisfied customer will tell 12 other people  A very dissatisfied customer will tell 20 other people  98% of dissatisfied customers never complain, they just leave  65% of lost customers are due to negative experiences  75% of negative experiences are not related to the product  The biggest reason people leave is because they don’t feel appreciated  It costs 3 times more to acquire than to retain a customer  It costs 12 times more to win back a dissatisfied customer  Over 5 years a typical company retains 20% of its customers  5% increase in retention would increase profits by 25 to 55%Most companies are quick to beat their chests about delivering superior value toshareholders, driving profitable growth, reducing risks, improving dividends,and seeing their share prices rise. Of course they can do this in the short term by“slash and burn” approaches to cost reduction and aggressively driven sales. Butit won’t last. The only sustainable route to long-term value creation, profitablegrowth and lucrative dividends, is in creating and delivering superior value tocustomers.  Creating superior value for customers – through deeper insights, more relevant propositions, and personal solutions - is the foundation of a successful “customer business”.  Creating superior value for shareholders – through sustainable growth, enhanced margins, and reduced risks – is the results of a successful “customer business”.“Customer value” is therefore the starting point - not the financial value of thecustomer to us, but the value we create for them, which is obviously a perceptionthat differs by customer, rather than an absolute value. But it is the notional value,the philosophy, and approach that matter.Building a customer-centric businessDefining a “customer business” can sound simple and obvious. It sounds like theright thing to do. And this is perhaps why so many organisations, and particularlytheir leaders, have failed to appreciate the more fundamental differences
  5. 5. involved. They have applied the philosophy, but not the disciplines that movefrom a product to customer obsession, and to turn passion into profitWe understand now that it is about creating value for customers first, andbusiness second. We are ready to embrace pull rather than push approaches toour markets, and to adopt this more holistically in our “outside in” approach tobusiness. We can also make a strong business case for it, based on the significantimpacts on profitability and value creation. The product-centric business The customer-centric business Customer centricity: Turning the business on its sideBut what are the more practical differences? How does it affect the businessstrategy, the performance metrics, and our decision-making criteria? What doesit mean for the way we recruit and manage people, for our key operationalprocesses and systems, and for organisation structure? To be absolutely clear,what does it mean we must stop doing, and what must start doing?
  6. 6. The product-centric business The customer-centric business Best product Best relationship Add value through features Add value through service Competitive obsession Customer obsession Treat customers equally Treat customers differently Wide range of products Personalise solutions Selling and delivering Collaborative and enabling Short term transactions Long term relationships Revenue and volume Profit and value % market share % best customers % new products % wallet share % satisfaction % advocacy New customers, existing products Existing customers, new products Buyer driven, pull Sales driven, push We go to customers Customers come to us Connect with end users Connect with intermediaries Personal conversations Broadcast campaigns Experiential Mass media Engagement and retention Awareness and attraction Externally focused Internally focused Relationship management Product management Market innovation Technological innovation Customer profit centres Product profit centres Agility and responsiveness Planning and consistency Right brain, Y-type people Left brain, X-type people Customer centricity: a fundamentally different approachMoving from a product-centric to customer-centric business is a like flipping theorganisation on its side. It is about aligning the organisation to the customerexperience, rather than product management. It is about managing yourcustomer portfolio rather than your product portfolio. It is about solutions ratherthan products, and relationships rather than transactions. It is about measuringprofitability – with profit and loss reports, the budget allocations, theperformance rewards – by customers and segments rather than by products andbusiness units.The specific differences between a product-centric to a customer-centricbusiness are shown below. Some of them are obvious, whilst others require moreexplanation which will follow later. Some of them challenge ingrained principles
  7. 7. or philosophies of business – such as moving from a large catalogue of products,to a capability to bring together the right solutions, or the replacement of %market share with % share of best customers.How do you make this happen? What matters most? And where should you start?Of course every business is different, and every business will already haveembraced some aspects of customer-centricity. Fundamental will be the strategicdirection, targeting the right performance metrics, and giving people the tools toact differently. However it is the business that combines these many differentfactors that will be able to realise the real commercial benefits.The Roadmap: Making the change to a customer-centric businessBecoming a customer-centric business requires fundamental change to the wholebusiness, not just how it interacts with customers. It therefore requires a managedprogramme, typically lasting 12-36 months, that aligns with the strategic andoperational priorities, and delivers sustained value creation.The change to a customer-centric business must be driven by business leaders,must be managed to mitigate risks, must unlock new energy inside theorganisation and with customers, must make a difference to customers, and mustdeliver results both intermediately and on completion.There are four phases to the management of change to becoming a customer-centric business:Phase 1: Making the case 1. Defining a compelling vision for the future – what does it mean to be customer centric, what will be different, why will it be better?  Customer Centric Vision Workshops  Customer Immersion  What’s possible  What’s plausible  Vision video 2. Evaluating the current business – how effective is it in attracting, serving and retaining customers compared to best practices?  Customer-Centric Benchmarking  Benchmarking competitors and other sectors  Evaluating the “as is” state
  8. 8.  Agreeing the “to be” state  Gap Analysis 3. Understanding how this relates strategically – how does a customer centric focus fit with other priorities, and deliver strategy better?  Business strategy alignment  Mission, values and goals  Business priorities  Financial plan 4. Engaging stakeholders in all of this – prioritising internal and external stakeholders, in both the imperative and opportunity of change?  Stakeholder management  Stakeholder mapping  Engagement plan 5. Agreeing what it will take to make happen – what resources will it take, what does it mean we stop doing, and have to start doing?  Change workshop Customer broader view Business Business narrow narrow view view Business CustomerPhase 2: Making ready 6. Mapping out a programme of change horizons – how will we move from “as is” to “to be” states in a series of phases, phasing investment and results? i. Change planning
  9. 9. 1. Horizons 2. Budgeting 3. Resourcing 4. Aligning7. Identifying priorities – balancing the financial imperatives, what matters most to customers, making it coherent and logical, and finding quick wins. i. Change governance 1. Sponsor 2. Steering group 3. Project team8. Acquiring the needed resources and investment – making the business case, securing the money, people, time, help, to do it? i. Business case 1. Preparation 2. Approval9. Preparing people for change, building commitment – building a desire and internal energy to make change happen, and making it “designed by customers” too. i. Customer education 1. Immersion 2. Big Talk forums10. Engaging customers in the change – so that it is “designed by customers”, they are engaged in both the solution and the partnership process of creating it. i. Collaborative design 1. Journey mapping 2. Needs mapping
  10. 10. Customer Customer rewards leadership Customer Customer management portfolio Grow Segment Relationship Target Customer Customer learning research Support Retain Identify Insight Serve Brand Experience Attract Customer Customer service Proposition Strategy Customise Distribute Communicate Customer Customer cocreation priorities Customer Customer alignment programmesPhase 3: Making it happen 11. Challenging leadership beliefs and behaviours first – ensuring that leaders change too, as they have moulded by the old organisation, structure and values. i. Leadership workshop 1. Business challenge and opportunity 2. Personal challenge and opportunity 3. Personal role in leading change 4. Personal role in changing self 12. Developing pathfinder projects – pilot the change with chosen teams, segments, products, markets to learn from, and demonstrate the impact. i. Pathfinder projects 1. Project selection 2. Experience design 3. Product, process and culture development 4. Test, learn, launch and adjust 13. Focusing on hearts and minds – making change in culture and process at the same time, so that people have the tools to do what they now believe is right.
  11. 11. i. Internal communication 1. Regular updates 2. Symbols of change 3. Forums and feedback 14. Managing the change as a programme of projects i. Project office 1. Milestone deliverables 2. Governance reviews Brands define company or product S C Brands reflect customer aspirations Communicate in mass campaigns S C Personalised interactive dialogue Products standard and discrete S C Propositions that engage needs segments Distributed through defined channels S C Customer partners help create solutions Price based on competitors and costs S C Pricing based on perceived worth Relationships sought by suppliers S C Customers loyal to people like them Innovation drives product derivatives S C Innovation redefines market contexts Strategy based on current capabilities S C Strategy based on best opportunities Measured on financial- based metrics S C Measured on customer- based metrics Overall, we call the shots S C Overall, customers call the shotsPhase 4: Making it Stick 16. Roll out the change programme throughout the business and across all markets – change is not a point but a journey i. Project office 1. Sustain for at least 18 months 2. Embed into business as usual 3. Leadership driven 17. Develop sustaining mechanisms to do business in a more customer-centric way as the normal business practice
  12. 12. i. Business model 1. Customer-driven business planning 2. Customer-driven resource allocation 3. Customer-driven organisation structure 4. Customer-driven marketing, sales, service, support 5. Customer-driven performance scorecard 6. Customer-driven investor relations18. Introduce new performance metrics and incentive structures – so that people are rewarded for customer-centric behaviours i. New KPIs and Targets 1. Team and Individual targets 2. Bravo Zulu style recognition 3. Development framework 4. New training resources19. Ensure that the change delivers business impact – improved products and services, better customer experience i. Deliver change for customers 1. Customised products 2. Personalised service 3. Segmented propositions 4. Customised products 5. Personalised service 6. Improved experience20. Communicate success as an ongoing activity – continuing to adjust and improve, and demonstrate the impact of a customer centric approach. i. Deliver improved business results 1. Impact on shareprice 2. Impact on profitability 3. Impact on sustained growth 4. Impact on brand reputation 5. Impact on customer advocacy 6. Impact on customer satisfaction
  13. 13. © Peter Fisk. Extract from “Customer Genius : Becoming a Customer-CentricBusiness” by Peter Fisk, published by Wiley Capstone.Peter Fisk is an inspirational business author and speaker, consultant and entrepreneur.He is an expert in strategy and brands, innovation and marketing, working across sectorsworldwide.He is founder and CEO of GeniusWorks, the accelerated innovation business, that helpsbusiness leaders to see things differently – to develop and implement more inspiredstrategies and business actions. Customer-centric platforms include GameChanger(accelerated strategy from the outside in), InnoLab (fast customer-centric innovation),and BrandVision (customer insights, propositions and experience design).Peter has written five best-selling book, translated into 35 languages, including,“Customer Genius” on becoming a customer-centric business, and most recently“Creative Genius” described as the essential innovation guide for visionaries, innovatorsand game-changers.He started life as a nuclear physicist before getting into marketing and brands. He thenspent a number of years working in sales, distribution, product development and brandmanagement worldwide. He went on to lead the global strategic marketing consultingteam of PA Consulting Group, and was also CEO of the Chartered Institute of Marketing.Peter works with many of the world’s leading brands including American Express andBarclays, Aeroflot and British Airways, Coca Cola and Cooperative Bank, Lastminute andMarks & Spencer, Microsoft and O2, Pinar and Red Bull, Virgin and Vodafone … as wellas many local and growing businesses.He was recently described by Business Strategy Review as “one of the best new businessthinkers.” 78344 83830