the essentials of customer centricity
TRANSCRIPT
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THE ESSENTIALS OF CUSTOMER CENTRICITY
Professor Peter FaderCo-director, Wharton Customer Analytics InitiativeThe Wharton School, University of Pennsylvania
[email protected]: @faderp
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“Customer Centricity: Focus on the Right Customers for Strategic Advantage”
• The traditional product-centric business model is showing some cracks• Commoditization, well-informed customers, globalization, etc.
• Customer centricity is a promising alternative but is not clearly understood• Many firms that are touted to be customer centric really aren’t…
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Adapted from Treacy and Wiersma, “The Discipline of Market Leaders,” 1995
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What is customer centricity?
Customer centricity is a strategy that aligns a company’s development/delivery of its products/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.
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“Customer Centricity: Focus on the Right Customers for Strategic Advantage”
• The traditional product-centric business model is showing some cracks• Commoditization, well-informed customers, globalization, etc.
• Customer centricity is a promising alternative but is not clearly understood• Many firms that are touted to be customer centric really aren’t…
• Celebrate customer heterogeneity: distinguish the profitable customers from the less profitable ones
• It’s all about customer lifetime value (CLV)
• It’s a complex transformation
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Galbraith (2005), Designing the Customer-Centric Organization
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“Customer Centricity: Focus on the Right Customers for Strategic Advantage”
• The traditional product-centric business model is showing some cracks• Commoditization, well-informed customers, globalization, etc.
• Customer centricity is a promising alternative but is not clearly understood• Many firms that are touted to be customer centric really aren’t…
• Celebrate customer heterogeneity: distinguish the profitable customers from the less profitable ones
• It’s all about customer lifetime value (CLV)
• It’s a complex transformation
• And can fundamentally change the way we look at many functions in the organization – not just marketing
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Customer centricity as an organization-wide strategy
• Marketing• Acquisition/retention/development > branding
• Finance• Customer equity as a legitimate component of corporate valuation
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Customer centricity as an organization-wide strategy
• Marketing• Acquisition/retention/development > branding
• Finance• Customer equity as a legitimate component of corporate valuation
• R&D and production• Measure/incentivize by incremental CLV, not volume
• Salesforce and front-line staff• Measure/incentivize by incremental CLV, not satisfaction
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Reflections on customer centricity
• Who is the customer? Can your organization come up with a single, consensus answer to this question, or can you at least reconcile the roles/relationships of the different potential customers?
• What are the major barriers to account for?
• What resources can you utilize to overcome these barriers?
• Thoughts about what competitors are doing in this area?
• Does it make sense for your organization to become customer centric?
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Professor Peter [email protected]
www.petefader.comTwitter: @faderp
Customer Centricity: Focus on the Right Customers for Strategic Advantage”
http://bit.ly/FaderCC
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