Product Centricity is Good, but……

………Customer Centricity is Even Better

Dr. Mary Ritz December 15, 2015

Outline: Business of the Day

Introduction/Background

What it means to be Product Centric

What it means to be Customer Centric

A comparison of Product Centricity & Customer Centricity

Benefits of Customer Centricity

Customer Centric Trips

Q & A

Our World: Almenta International

What? Customers People/Teams

Why? Most important assets to

drive business performance, productivity and sustainability

How? Training Consulting Speaking Engagements

Value Proposition Based on a 5 Step

Methodology (Optional) Grounded in Systems

Thinking Experiential and Action

Learning

Areas of Focus: Customer Centricity Customer Service Customer Experience Leadership &

Management Resilience Emotional Intelligence Conflict Management Effective Communication Teamwork 360 Degrees People Management

If it is WORKING and PROFITABLE, why fix IT?

…. But what if there is something BETTER and GREATER? Imagine the POSSIBILITIES…..

Stuck in the “It’s Working Mode…?”

And we thought the FAX was the best thing that happened to us….

The BLACKBERRY was the smartest phone…

Product Centric or Customer Centric?

Apple

Amazon

Walmart

Nordstrom

Neiman Marcus

Starbucks

IBM

The Ritz-Carlton

Traditional Paradigm

Strategic advantage is based on the product and the product expertise behind the product

Divisions and teams are arranged according to products

Staff are rewarded based on ability to create new products or sell existing ones

The long-term motivation is about product portfolio reinforcement and constantly finding new ways to expand it

The brand is perceived to have greater value than the customer

Profits are maximized through volume and market shares – its

about driving shareholder value

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99% of organizations are product centric and are effective, HOWEVER…….

Cracks in Product Centricity

Globalization/Lost Geography advantages

Technology advances and the speed they are created and copied

Extraordinary competition

Power is shifting into the hands of customers: knowledgeable, social media influence, unlimited resources.

The “Butterfly customer” – not loyal yet very demanding. E.g. MILLENNIALS

The World Economy Landscape

Our world is undergoing rapid transformation, especially in the economic, political, social and technological arenas. In this tide of change and

upheaval, your customers are also stepping into their power and making demands of business the likes of which have never been seen before.

Building sustainable competitive advantage requires you to review your business models and ensure that the customer is central to its design.

Leather, 2013

In today’s economy, companies are being driven to compete globally in order to maintain their competitive advantage. The driving force behind these actions is

the customer who demands more and better. As a result of the tough competition among businesses, the customer experience seems to have become

of great significance – therefore customer management can no longer be treated as “business as usual” - Gestin, 2011

The Opportunity

Given the above facts, there is an opportunity for a business model that is based on a deep understanding of what customers

actually want, when and how they want it, and what they are willing to give in exchange

The Opportunity requires: o A new paradigm shift o Reframing of the mind o A radical way of doing

New, Better & Sustainable

Results FOR

Progressive/Future Paradigm

All strategic advantage is based on the “right” or “profitable” customer

Based on the fundamental understanding that not all customers are created equal

A system and end-to-end operating model offering differentiated customer experience

“Immerse” in customer’s world, understand their “problem” and

provide an “outcome”

Profits are maximized through customer loyalty, customer lock-on, retention, up and cross selling and Customer Life Value

Not driven by shareholder interest only, but based on Triple Bottom Line. “Higher Purpose” philosophy

Value creation is two dimensional: Customer & Organization Employee performance measurements include customer KPIs

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CUSTOMER CENTRICITY: “The eco-system and operating model that enables an organization to design and deliver a unique and

distinctive customer experience”, (Leather, 2013

CUSTOMER CENTRICITY: “The entire business engine takes a laser-focus on the customer, works in collaboration and makes

the customer central to all business decisions creating sustainable profits and great value.” (Ritz, 2015)

Basis of Customer Centricity: Systems Thinking

When the USA stock market sneezes the entire world stock market catches a

flu…….

Think about what happens when oil prices go up or down? How is the world economy affected? What

happens in your organization? What happens in your

household?

Systems Thinking

The Whole is Greater than the Sum of its Parts Systems-thinking views an

organization or situation as a whole comprised of many parts and the same time it is more than the sum of its individual parts.

Principles of Systems-Thinking Each part affects the behavior of the

whole No part has an independent effect on

the overall system

Customer management is a system built on complexity and interconnectedness of people, culture, attitudes, behaviors; etc.

To achieve the customer centricity – an organization must develop

interconnectivity and integration across all business functions

Customer Centricity Hurdles

Traditional model is working , consequently, there is no motive to change

Lack of leadership buy-in and commitment therefore lack of strategy, vision

and planning

No clear understanding: Managed in isolation and independently

Implementation issues: Complex and chaotic

Hard to measure and quantify: Soft-issue

Why Customer-Centricity Matters

Profitability and Sustainability

Two dimensional value creation

Resilience and Relevance

Higher Purpose

Agility

Is the business case strong enough to transition from Product Centricity to Customer Centricity

In the long-term, customer centric organizations outperform organizations that are not

Roadmap to Customer Centricity - Tips

Leadership Commitment and Buy-in: Leadership must be totally customer focused, and not offer lip service. Example: Must commit capital, appoint Chief Customer Offer, “ have customer-in the boardroom”, communicate need for a customer culture, define it and articulate it

Hire the Right Employees: HR becomes a strategic role not a support role. Employees must fit and align with the customer culture. Must take ownership and understand the big picture. E.g. a frontline team member must know how important their role is to the company mission & vision

Vision, Strategy and Planning: Clear and practical vision and strategy that translate into actions /behaviors that can be measured, management should install measures to ensure the vision guides employee mindset – for example, by implementing a code of behavior, Market Responsiveness Index (MRI). Incentives and rewards should align with customer loyalty.

Integrate all Departments: Departments must not work in silos, they must collaborate and align with the customer vision. Customer centricity is not a “department”. Sales, Marketing and Frontline are not sole owners of the customer

Immersing in the Customer’s World: Understand the customer’s world. Know and outstand their

problems and provide outcomes, Example: The FRANK CONCEPT (Frankly speaking) – Oversea -Chinese Banking Cooperation in Singapore.

Drop the one-size fits all mentality: Not all customers are equal, differentiated experiences. Offer

customer options Adopt the Outside-in approach: Listen to customer feedback and act upon it, social media,

surveys, focus groups. See through the lens of the customer. Partner and co-create with customers. Do not let internal processes, systems and procedures limit you. Example: Website developer

Roadmap to Customer Centricity - Tips

Increase Sales and Profits by focusing on Customer Needs and the Right Customer: Market segmentation, identify Customer Life Cycles, identify most profitable customers, Customer Loyalty, Advocacy/Lock-on., Customer Life Time Value. Agility to create new products to meet customer needs. E.g. Neiman Marcus

Empower Frontline Staff: Empower frontline teams members, ensure they can solve customer issues without difficult, they must take ownership of the customer experience, E.G. Disney has created a culture where frontline staff take ownership and deliver excellent service and experiences. Frontline staff are encouraged to have long and deep interactions with guests/customers

Consistent customer experience at every touch point: Adopt the Customer Journey” tool, which traces the touch points a customer has throughout the entire purchasing process. Simple things like clean bathrooms, clean restaurant floors and cutlery/silver ware go a long way, website experience, branch experience, over the phone experience

Roadmap to Customer Centricity - Tips

The California Redwood Trees - reach in all directions, intertwining with roots of other redwoods. Locked together in this way, all the

trees support each other in wind and storms. Like CUSTOMER CENTRICITY – all departments must work together towards a

customer centric organization

Conclusion

Questions?