By Stefan Hellberg
Market orientation. Customer orientation. Customer focus. Customer first. Customer Centricity. Since the 80’s, companies have been addressing the importance of satisfying the customer. However, over time, this initiative has become more and more critical. Growing competition and improved customer knowledge has raised expectations. Today, corporations are increasingly held accountable to deliver on their promise and the repercussions can be serious.
Managing a customer-driven organization is not easy. It requires a coordinated company effort and there are many obstacles to success. Two of the major issues include:
- Decentralized and segregated decision-making- otherwise known as “silo” behavior
- Uncoordinated and incomparable performance indicators
Bridging Functional Borders
A customer centric organization is the product of a chain of dependent decisions and actions (behaviors). As the saying goes, the chain is no stronger than its weakest link (or function). Therefore, a company must consider the overall flow and process contributing to customer centricity. Four important steps include:
- Understand the customer, their business and specific expectations: A common enterprise-wide understanding of the customer, their business and expectations is critical. This is easier said than done. It requires an organized approach that engages the key functions that contribute to the overall customer experience.
- Develop and Shape the Promise: Next, a company needs to shape their offering to meet the customer’s business needs and expectations. Each functional department plays a role and needs to contribute their part.
- Communicate and Deliver the Promise Every Day: The next step involves communicating and delivering on the promise every day. To be effective, each department must be coordinated and committed to meeting customer expectations within productivity targets.
- Manage the Promise: Finally, it is critical to manage the process and ensure that each function and individual understands their critical role in this chain of behaviors. If each employee and division doesn’t contribute, the company will ultimately fail to deliver on its promise to customers.
Only a Company-Wide Performance Indicator Can Measure Success
A company’s success in customer centricity is gauged through measurements, but not all measurements are the same. Strong functional goals and objectives are not enough. Instead, there must be one common, company-wide measure that evaluates each unit’s performance. It sounds simple, but in reality, it is difficult to achieve.
While many key indicators measure performance, not all are linked across functions and even fewer capture the actions critical to meeting customer expectations. At any given company, common performance indicators include:
- Sales and marketing measure customer satisfaction, and in the last 8-10 years, customers loyalty
- Manufacturing measures delivery precision, delivering the right product/service at the expected quality
- Logistics measures delivering time
- Product Development measures the number of new product and new specifications launched
Some of these indicators are more common than others. Delivery precision is a ratio every employee impacts, and therefore, can be broken down to measure all parts of the company’s value chain. Customer loyalty has become a more interesting ratio than customer satisfaction as it better illustrates the customers’ willingness to recommend the company to other potential customers and buy more in the future. Going forward, as customers’ expectations continue to increase, it may be time to measure how the company impacts the customer’s business results.
Customer Centricity in Action
Customer centricity is a rapidly rising and high-ranking business priority. At the same time, increasing customer expectations makes satisfying the customer more difficult to achieve than ever.
At BTS, we have supported a number of companies in their search for customer excellence by building business acumen and creating strategic alignment among key resources. In 2011, we partnered with Atlas Copco to improve their customer centricity by addressing the challenges discussed in this article- bridging functional borders and using a common measurement and approach.
To be successful, each individual in the organization needs to understand the interdependencies influencing the overall customer experience, how their role fits into the process, and what they need to contribute, so that the company ultimately delivers on its promise to the customer. To measure success, companies must apply a common performance indicator to determine how each individual and function is contributing to customer satisfaction.
About the Author: Stefan Hellberg is an Executive Vice President at BTS.