Valuing the customer. Putting the customer first. Being customer centric. In today’s business environment, we hear these terms on a daily basis. But do you know what they really mean? A customer-centric organization is one that offers more than goods and services; it focuses on creating an entire customer experience, both before and after the sale, in order to drive repeat business.
However, executing a customer-centric strategy doesn’t happen overnight. It has to be part of every aspect of your organization, as we explain in this issue of Promotional Consultant Today.
What does it mean to be customer centric? According to Superoffice.com blogger, Steven MacDonald, customer centricity is not just about offering great customer service. It means offering a great experience from the awareness stage, through the purchasing process and finally through the post-purchase process. It’s a strategy that’s based on putting your customer first, and it’s at the core of your business.
To move towards a customer-centric strategy, MacDonald recommends these four best practices:
- Capture customer insights. Brands that are committed to customer centricity are passionate, and truly believe the customer comes first. They believe that without the customer, they cannot succeed in business (which is true) and they want to see the world through the customer’s eyes. Marketers inside customer-centric organizations understand what customers want, and use customer data to capture customer insights and share this across the organization.
- Design products and services around the customer.Brands that are committed to customer centricity focus on what the customer wants and needs, and develop products and services around that.
- Build the right relationships. Brands that are committed to customer centricity focus on building relationships designed to maximize the customer’s product and service experience.
- Adopt a customer strategy. Brands that are committed to customer centricity analyze, plan and implement a carefully formulated customer strategy that focuses on creating and keeping profitable and loyal customer.
How do you know if you are achieving customer centricity? Just look at the numbers. Not every organization will have the same customer metrics to measure customer centricity. However, the two most important customer-centric metrics that should be carefully monitored are churn rate and customer lifetime value.
Churn rate: Acquiring new customers can cost up to five times more than keeping existing customers, and a two-percent increase in customer retention has the same effect on profits as cutting costs by 10 percent. To calculate the churn rate, measure the number of customers who left in the past 12 months divided by the average number of total customers (during the same period).
Customer lifetime value (CLV): This is the measure of the profit your organization makes from any given customer. To calculate CLV, take the revenue you earn from a customer, subtract the money spent on serving them and adjust all of the payments for time value of money. Another way to calculate it is to take the average order value and repeat purchase rates. For example, if your average order value is $100 and the repeat purchase rate per customer is 20 percent your estimated CLV is $120.
Being a customer-centric organization unlocks the true potential of customer value. As MacDonald says, always put yourself in the shoes of the customer and minimize customer effort and maximize customer value.
Source: Steven MacDonald is an online marketer based in Tallinn, Estonia. Steven currently works as a Digital Marketing Manager for SuperOffice.