Right now, we are living in the age of innovation. We have lived through the inception of the internet and computers, and continue to bear witness to technological advances made every single day. Everything has grown, adapted, and changed due to this, including business including products, which continue to develop at an unimaginable pace. This rapid evolutionary rate cause consumers’ demands to grow, and soon the advance in technology will not be able to keep up. As a result, business’ ideology must adapt and evolve as well, from a product-centric focus to a customer-centric one. Never before has customer centricity been as important as it is now. It is a completely different approach to business, however, for some cases it will be more worthwhile to change stances.
First of all, it is important to understand that the customer-centric approach is a long-term commitment. It obviously takes time to build strong customer relations, and as a result, it will take some time to make the connections work to your advantage. The basis of customer centricity is evaluating customer lifetime value, which is essentially, determining how much value a customer will bring to your firm in the long run, by analysing data. However, each customer is different and accepting consumer heterogeneity is a very large part of a customer-centric approach. By accepting the differences in the different groups of customers that you cater to, you can more easily adjust your focus and put more effort into targeting the most beneficial group. Of course, cutting off the rest of the customers is not the point of this, but those with the highest CLV will be more loyal and, therefore, more advantageous to your firm in the long term.
According to Professor Fader from the Wharton School of Business, customer centricity “is a strategy that aligns a company’s development or delivery of its products or 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.” In addition to what was said previously, Prof. Fader is saying the in order to be truly customer centric, you firm must solely base its decisions on the needs of the customers. Having excellent customer support at your store does not make you a customer-centric firm. Instead, a global understanding that you will function and orient yourself around the customers’ habits and behaviors is what does. An example of this is the data-driven model adopted by large companies such as Harrah’s and Tesco. They came out as leaders in their markets because they really analyzed the data behind the patterns that customers were creating. They developed a loyalty program to show that they knew what the customers wanted, and were able to, more readily, cater towards their needs. The loyalty program completed their data-driven business model and helped them become truly successful companies in their fields.
The customer-centric approach allows your business to thrive in the long run. It is very different from the product-centric focus, and it will not work for all companies, but it is something that is gaining popularity quickly. Businesses can no longer out-perform and impress consumers as their demands grow, so they are forced to adapt. Loyalty programs have been proven to be very successful in offering firms with a customer-centric position in the market.