November 17

The Customer-centric sacrifice

Every company I have worked for has had within its stated values something about putting the customer first. Whether that is termed as “Customer First”, “Passion for Customers” or “a Customer-centric approach”, they all posit the same thing — that the customer should come first in relation to what a brand chooses to do or not do.

Brand’s self-delusion

According to Bain, most companies believe that they deliver a superior customer experience. And yet that perception is not shared by customer

Bain Consulting
Less than 1 in 10 customers agree brands are delivering great customer experiences.

It’s pretty damning but why is it this way?

Competing stakeholders dilute, divert or oppose customer focus

Most companies have multiple stakeholders or targets that can pull them off the righteous path. For example, we might be able to generate incremental revenue from something that is not customer-centric (or even customer harming) to meet short-term shareholders or analysts expectations.

Whether that’s £1 added to the line rental of older mobile tariffs just to hit a quarterly revenue number. Or getting Credit card customers who are paying off their debts to stop doing so as it makes the company less money. Or adding unwanted extras to a highly sought after product to rack up extra margin. I’ve seen them all.

Customer-centricity requires sacrifice

Customer centricity is about what you won’t do just as much as it’s about what you will. Bill Bernbach, one of the founders of global Ad agency DDB, is quoted to have said:

“More and more I have come to the conclusion that a principle isn’t a principle until it costs you money”.

Putting customers first is a principle and there are great examples of brands sacrificing revenue today for better customer experience and longer-term gains.

Southwest Airlines — Southwest Airlines in the US don’t charge anything for changing a flight or for checking in a couple of bags. This puts them at odds with the rest of their competitors and they are constantly under pressure from investors and analysts to introduce these charges and generate incremental revenue.

Southwest have resisted (so far). They see adding these charges as not right for their customers and brand. In fact, on one conference call, an analyst actually complained Southwest was putting customers before shareholders (!) Their approach seems to have worked however as they have reported 47 consecutive years of profitability.

Patagonia — a brand that definitely lives and dies by its principles. It promotes repairing its clothes over buying new versions. It sells pre-owned versions of its clothing through WornWear. It could, in theory, make more money by not doing these things. But it’s doing all right thanks. According to TIME magazine:

…sales quadrupled over the past decade and recently surpassed $1 billion. Young people are clamoring to work at the company’s main campus. More than 9,000 people applied for 16 internship positions last summer.

In addition, people are choosing not to engage with brands who are not putting customer first:

  • The big six energy firms in the UK are haemorrhaging customers — As of Q3 2019, they had 7 out of every 10 customers for electricity & gas supply. In 2004, they had a combined market share 100%.*
  • 2 million monthly users abandoned Facebook in Europe between Q1 and Q3 2018. This was in part due to the lack of care around customer data and what Facebook does with said data.
  • The rise of Uber and Lyft has had a massive impact on the Los Angeles taxi industry. In its first 3 years of operation the number of L.A. taxi trips arranged in advance fell by 42% and the total number of trips has plummeted by nearly 30%. This is as a result of the new players operating a much more customer-centric service against the older taxi service.***

Be true to Customer First or don’t talk about it

So if you truly want to be Customer First, don’t just think about developing insight, doing research or building efficient customer experiences. Think about what you do currently that you shouldn’t. Ask yourself ‘How does this activity or choice benefit our customers?’ and if you can’t give a decent answer then don’t do it or stop doing it.

But if you don’t feel like you can make every sacrifice required yet, I implore you to treat your employees with maturity and honesty and don’t pretend you are ‘Customer First’ when they can clearly see that you’re not. You will come across as disingenuous and your values as hollow

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