Six Truths about Really Putting the Customer First

By David F. Giannetto

No doubt your organization’s mission and vision statements state that your customer is at the center of your employees’ universe. In fact, “customer-centric" has become the corporate buzz word du jour, replacing the previous favorite strategic adjective, "innovative."

Unfortunately, creating a customer-centric organization is an ideal that most companies fail to uphold. And here's a sobering reality check: if you aren't giving your customers the most for their money right now, they won't think twice about dropping you if a better offer comes along.

Becoming a customer-centric organization requires a departure from years of tradition, an honest look at who and what your organization is, and a deep understanding of what motivates your customers to buy from you or from your competitor. Fortunately, the cost involved in making this change is surprisingly low, while the returns are high.

Here are six truths you must accept if your company is to become truly customer-centric:

Truth #1: Right now, your company is product-centric. Most companies still base their operations on the value chain that was popularized by Michael Porter in the mid-80s. The value chain is a string of critical processes that begins with raw materials, or inputs, and ends with a product or service delivered to a happy customer. Thinking this way makes sense because it is easy to place the customer at the end of the process. But this mindset doesn't just affect an organization's structure; it weaves its way into every aspect of how the organization manages itself, and how managers make decisions.

In short, it creates a situation in which employees throughout the organization are focused upon delivering the product or service for which they are responsible. Engineers work to design new products that will keep them one step ahead of their competition. The manufacturing department produces goods to meet customer orders or demand projections. The sales department courts potential customers.

Employees are trained to think in terms of product development, delivery, and value. So unintentionally, the organization becomes product-centric, not customer-centric. Management is comfortable with this view of the world; after all, how can a mainstream management theory like the value chain approach be wrong? But then, when they do try to focus on the customer, they do not know how.

Truth #2: Your employees may not understand the customer. To put the value chain concept in perspective, consider how a power utility works. Power is generated by and delivered to the customer via a complex and often dangerous power plant. The customer must pay for the power, creating the need for back office operations such as accounting, finance, and customer service. The rest of the company's employees consist of highly educated engineers, highly trained and specialized workers, and a management team that is also highly educated and experienced. Together they make up 75% of the organization.

But have you ever stopped to consider that an organization designed this way—and believe me, the power industry has plenty of company—has a lot of people focused on consistency in design, execution, and production, but few focused on the customers and what they want? It just goes to show what a challenge becoming customer-centric can be for most companies. But it is possible; you simply need to know where to start.

Truth #3: Your company's money isn't allocated with the customer in mind. Change isn’t easy. Employees who have power within the organization are reluctant to yield it to those who understand the customer better. This results in a reluctance to shift funding from traditional areas to those that most affect the customer.

So for a power utility, this means that engineers, who have often dedicated their entire lives to the study of their work, must be considered equal to project managers and customer service agents, most of whom do not hold science degrees. Money, resources, and staffing must focus on project management and call center technology, not just on million- or billion-dollar assets. There must be financial recognition that these things equally affect the customer—and when large sums of money are involved, change tends to happen slowly.

Truth #4: To stay viable in today's business world, you must cut the value chain and hop on the "customer-critical path." As you might have guessed, your customers are your partners on this path. And they must start their journey before they even become your customers—while they are still prospects. It isn't always easy for a company to think along these new lines, but consider what a new client would need if he approached your organization for the first time. Ask yourself: “Why did they choose to approach us and not our competitors?” “What will set us apart from our competition?”

Once the customer perspective becomes clear, natural customer groupings will emerge. Try to see things from the perspective of these customer market segments. This is the true value chain of the organization—a string of processes that become critical because they directly affect the customer, regardless of the product, service, organizational chart, academic degree, or bias. Find the customer-critical path and you can guide your customer through your organization in a way that is most meaningful—and profitable—to both them and you.

Truth #5: The customer-critical path offers more options for your customers. Obviously, each customer's needs are unique. This is true even within an industry that has only one real product, like a power utility. The customer-critical path may start in several places in its efforts to meet the needs of several different types of customers—from household customers that simply need power turned on to major projects that require significant project management and pre-planning.

Eventually these starting paths merge at the point where all customers are happy. From there they may take a different path. That is the great thing about being customer-centric. There isn't one narrowly-focused value chain defining your customers. The customer-critical path allows you to easily adapt to your customers' needs so that your company can be useful to them long-term.

Truth #6: Adopting the customer-critical path can transform every aspect of your company. The customer-critical path approach offers a significant value for organizations that adopt it. It allows them to better understand their customers, so that they can be segmented and targeted by products or services with more effective value propositions. This drives the bottom line in several ways: a stronger value proposition increases appeal, which drives revenue. Better service and customer interaction improve the customer experience and increase customer loyalty.

The customer-critical path also becomes a vital decision-making tool for management. It provides a clear, unbiased perspective on how resources should best be allocated. It defines the relative worth of projects, assets, and expenditures, and paints a clear picture of the negative results of not maintaining the customer-critical path.

Conclusion
If your mission and vision statements say your company is customer-centric, follow up those words with real action. Set your organization off on the path to true differentiation and market leadership. Properly crafted, the customer-critical path will reap benefits to both your customers and your organization’s bottom line.

Author Bio:

David F. Giannetto is director of one of the nation's premier Enterprise Performance Management practices and is author of The Performance Power Grid: The Proven Method to Create and Sustain Superior Organizational Performance (Wiley, 2006). Contact him at DGiannetto@PerformancePowerGrid.com or 908-797-9306. For more information, go to: www.PerformancePowerGrid.com


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