Show me the Money! Reflections on the Great Customer-Centricity Debate
I went along to Marketsoft's 'Show me the Money! The Great Customer-Centricity Debate' the other night. It was a chance to observe four of the local industry experts debating the pros and cons of one of my favourite topics - Just what is the ROI of placing your customer at the centre of your business model?
The debate followed familiar lines. Happy customers are profitable customers but the cost of investing the customer is just too expensive.
As with all debates there was a dualism. In this case the choice between investing in your product or service vs. investing in the customer.
Entertaining... but anyone familiar with Treacy and Weirsema's Value Drivers would understand the challenge is far more complex than the choice between product leadership and customer intimacy. There is a third way. Operational Efficiency
Treacy and Weirsema originally postulated that there were three key value drivers that separated the market leaders from the rest of the pack. What's more a market leader could not afford to fund all three value propositions simultaneously so they had to make a choice. Which value driver best expressed their market philosophy? Product Leadership, Operational Efficiency or Customer Intimacy?
The customer centric model is of course a new descriptor for Customer Intimacy. The idea being your market advantage is your special relationship with the customer and it is this special relationship that keeps them happy, sticky and profitable.
The confusion emerges when one assumes Customer Intimacy is merely a question of customer service. For example call centre metrics measure operational efficiency not customer intimacy and this popular confusion points to the heart of the customer centric challenge and the opportunity.
The key to unlocking the customer centric opportunity is to replace the word customer with data. What we are talking about here isn't a customer centric challenge but a data centric challenge.
What products like Marketsoft promise is the potential to turn Customer Intimacy into the industry benchmark. With ground breaking technology like big data and predictive analytics, coupled with old school eBusiness tech like CRM, Call Centres, Data Warehouses and eCommerce there is the promise of Customer Intimacy rapidly becoming a commodity. Admittedly at this point in time a rather expensive one. But prices will fall as these technologies become ubiquitous.
But the technology still represents a significant challenge. The reason being, just like customer intimacy, you either do data intimacy well or you struggle. Those that excel at customer intimacy do so because their customer knowledge is best in class. They are already harvesting, mapping, monitoring and managing customer data far better than the competition.
The same principle applies to product leadership and operational efficiency. Their data efforts are focused on what makes them world class and their information systems and collective organisational intelligence reflects this. It is what makes them the undisputed market leader.
In this context an investment in Customer Centricity is a strategic investment. The question then becomes very simple: Are we investing in this because it is the industry benchmark or because it is our competitive edge?
Are we following the pack or leading it?
Answer that question and you will be able to calculate the ROI on your investment in Customer Centricity very quickly.
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