An "Acentric" Approach to Customer-centricity
Many organizations are just starting to recognize that the customers' requirements and priorities need to be heard. Here's how your enterprise can get started.
By Sriram Anandan, Senior Functional Expert, iCreate Software
As part of their efforts to be more customer-centric, progressive organizations are investing considerable resources to simplify their product offerings and processes. Despite having invested in good DW/BI tools and technologies, conventional methodologies in understanding customer behavior patterns are not helping, given a dynamic socio-economic environment and traditional complex processes. Furthermore, current products appear only to be alienating customers.
As management guru Peter Drucker noted in The Practice of Management (HarperCollins, 1954), "A company's primary responsibility is to serve its customers, to provide the goods or services which the company exists to produce. Profit is not the primary goal but rather an essential condition for the company's continued existence. Other responsibilities, e.g., to employees and society, exist to support the company's continued ability to carry out its primary purpose."
Although most organizations would tend to agree with Drucker, they know that it is not practically possible to align all initiatives and actions to build a 100 percent customer-centric organization with products and services tailor-made for each customer. Over the years, organizations have begun to recognize that the customers' requirements need to be heard. Subsequently, there has been an increasing focus on the products and processes to this end. For instance, customers visiting a bank branch get frustrated with slow-moving queues. The bank, in an effort to remain customer-centric, responds by encouraging its customers to conduct their transaction online but fails to recognize that there are distinct clusters of customers who are not Internet-savvy or fails to extend the necessary services to the online platform.
The simplicity of product offerings will naturally aid competitive advantage. This is evident in the various stages of customer interaction with an enterprise. If an organization (let's take a financial institution as an example), takes five days to open a relationship with its customers as a standard practice, it will stand to lose the customer to a competitor that employs a value-based segmented approach to opening accounts (where high-value customers are prioritized, for example).
Many financial institutions fail to capitalize on the true value of the customer. This is because most do not have a good understanding of the customers' needs, their priorities, or their timeframe (i.e., short, medium, or long term). The result: they end up selling less than they could, leading to under-optimized financial returns.
These under-optimized returns are due to a lack of data about customer needs and priorities. Institutions have never found it necessary to collect such information; consequently, their business intelligence does not provide insights that are critical to customer acquisition and retention. Traditionally, decision-makers perceive an organization's customer group as a single entity. This is not an optimal approach; the needs of different client segments are vastly diverse. What one type of client needs may not be what others would prefer.
Organizations embarking on a truly customer-centric approach need to first have an exceptional client segmentation model in place. Just demographic attributes are no longer sufficient. For instance, a social-media scorecard (that evaluates a client's standing on his social network) could help enhance the understanding of a customer's value to the organization.
Other solutions could include:
- Loyalty program points
- Preferred channel of contact
- Profitability
- Frequency of purchases and product penetration
- Recency of activity
- Short-, medium-, and long-term client needs documented during all sales and operational interactions, as well as through customer surveys
In fact, to maximize the power of data from customer surveys, questionnaires and interviews could be designed with bi-axial dimensions. For example, "720-degree customer views" could provide an internal, 360-degree view of the customer (what does the customer need?), and an external, 360-degree view of how the customer perceives the institution. This adds an essential layer to the segmentation process.
These are but a few ideas for trying times. Customers serviced by any organization have varying needs. We must go beyond old-school approaches to customer-centricity. Organizations, especially in the financial services sector, can maximize the potential of their DW/BI investments with new thinking to achieve true customer-centricity.
Sriram Anandan is a senior functional expert with over a decade of experience in the banking and financial services domain. A substantial portion of his experience has been while working at the world's largest bank across operations, analytics, and sales functions. Sriram is currently managing consultant with iCreate Software, where he is part of their banking BI solutions architecture team. You can contact the author at [email protected].