Customer Focus
What Is Customer Focus?
Customer focus refers to figuring out who the customers are, what they want, when and how they want it, and what they're willing to pay for the value provided. It can help you acquire customers, retain them, and reduce costs.
A few factors make product focus no longer enough. Technology allows other companies to quickly copy products, globalization allows companies in lower labour cost areas to be more competitive, consumers now have access to a wealth of information including offerings and prices, and lastly customers often base their decisions on trustworthiness (reputation), value, and service quality (reliability).
Customer centricity is about talking to customers not from the viewpoint of the product, but from the viewpoint of the customer, with curiosity and humility. Customers can be consumers, organizations, or internal. Their needs also change with time, so continuous communication is important.
Tools (CRM) are important, but not enough. You need to apply the knowledge gained. Value is not provided via email promotions, or seasonal discounts, but by meeting the needs of a set of customers. More often than not, the real challenge is not in collecting more data (e.g., stress analysis, customer satisfaction, sentiment), but getting to know the customer faster (problem resolution, value-added engagement).
Get Feedback From Customers
Set up "listening posts" like market research (demographic, lifestyle), focus groups (test ideas), customer service (analyze complaints), follow-up calls and surveys, websites (general feedback), and social media (monitor what people say).
To learn about customers, get out on the field and observe customers, capture the data, and analyze it. You can then anticipate customer needs by understanding their choices, tracking their customer experience (placing orders, asking questions, complaining), learn with customers (seminars, conferences), and predict their needs (tech, new markets).
Reconsider customer loyalty, research found that:
- loyal customers are often less profitable (they exploit the relationship)
- loyal customers believe they deserve to pay less
- loyal customers only attract other customers if they feel (and act) loyal.
Therefore customer loyalty needs to be evaluated along with profitability. These two dimensions are not correlated, and have a weak/complicated relationship. Ideal customers are both loyal and profitable.
Loyalty can be measured as time between purchases, and profitability is a customer's average generated profit. These can help estimate the likelihood of a customer buying again. Don't make the mistake of valuing revenue, value profit instead. Here is a simple customer categorization strategy:
| Category | Profitability/Loyalty | Fit between offer/needs | Profit Potential |
|---|---|---|---|
| True Friends | Profitable/Loyal | Good | Highest |
| Butterflies | Profitable/Not Loyal | Good | High |
| Barnacles | Not Profitable/Loyal | Limited | Low |
| Strangers | Not Profitable/Not Loyal | Little | Lowest |
Then, for each group, develop a loyalty strategy:
| Category | Loyalty Strategy |
|---|---|
| True Friends | Don't over-communicate, reward loyalty with exclusivity |
| Butterflies | Get as much as you can from purchases, then stop investing |
| Barnacles | If you think they can spend more, offer related services |
| Strangers | Identify early, don't invest |
Don't underestimate the potential of customers to be promoters or detractors. Once you've found your ideal customer, mine them for info like what they want, need or require. Then, proceed to personalize the offer.
Deliver Additional Value
Start by brainstorming. Defer judgement, build on others' ideas, hold one conversation at a time, stay on topic, and encourage even wild ideas. Consider including customers, non-customers, and competitors' customers.
Then, narrow down ideas by choosing the ones that are essential, within constraints (size, time, cost), and compatibility with pre-existing services. Lastly, develop prototypes to clarify the concept.
Purely extracting value from customers is very negative. Negative practices include setting rules they expect customers to break, making it hard for customer to understand rules, and relying on contracts to prevent customers from defecting.
Golden rule: treat customers the way you want to be treated.
To provide value, map customer journeys, find parts of journeys where customers could receive more value than they're getting, and identify ways to deliver that value.
Find pain points, ask questions like:
- What hidden costs do our customers incur as they buy or use our offerings?
- What hidden risks do our customers encounter in doing business with us?
- What hidden costs and risks are preventing potential customers from doing business
- with us?
Don't be afraid to redefine your services. Challenge your assumptions, ask if the scope matches the needs, refine strategies, and have the right people to deliver the right things.
Customers who have an easier time gathering and comparing information about their purchases are more likely to follow through, buy repeatedly, and recommend offerings. To provide this value companies must help customers navigate information (minimize research), build trust (trustworthy advisers), and make comparing options easy. Remember that some customer want to be teased with exclusivity and entertainment.
It's good to make your service a competitive advantage. There are three forces influencing how customers feel: the sequence of encounters, their duration, and the rationalization (cause-effect). Bad experiences needs to be over early, and customers must always finish journeys strong. Companies should segment pleasure experiences, and combine pain points. Customers are happier when they are given choices, and are able to perform repetitive, familiar tasks (rituals).
Build A Customer-Focused Team
Customer focus is everyone's job. Every department has a part to play, including accounting, logistics, procurement, development, IT, and HR.