2022 04 21 Cognosis Illustrations 4 Leadership

Creating a customer-centric culture is a tough challenge that relies on clear direction from the top. Olivia Buckle-Wright explains 4 approaches for bringing impetus for change. 

Customer centricity sounds like simple common sense. After all, which company doesn’t want to grow closer to its customers and put their best interests first? However, creating a customer centric culture is easy to say, but very hard to do. According to research, nine out of 10 companies know they should put the customer needs at the heart of their business strategy. They see customer experiences as a source of competitive advantage. But when pressed, only 14% of business leaders are prepared to claim that their companies truly focus on the customer.  This gap is a source of lost opportunity - industry leaders in Net Promoter Scores (NPS) gain almost three times higher total shareholder return, compared to the stock market average.

Don’t confuse customer centricity with customer awareness. It takes more than thinking from your customers’ point of view. Truly customer-centric organisations obsess about exceeding their customers’ current and future expectations. Their culture puts customer needs at the core of decision making and execution – across all functions. It becomes automatic to ask: “What next for our customers?”  

There are several strategic choices that a company can make to improve customer centricity, but top of the list is a shift in leadership. This direction needs to come from the CEO and executive, who should own and role model customer centricity (not defer to sales and marketing). Leadership teams that consistently challenge what they do, with the customer in mind, will deliver better results.

Change requires the right mindset: tenacity, understanding, empathy, customer insight and consistency at every level and department of the organisation. Be warned: embedding a new leadership attitude can be disruptive. It won’t happen overnight. Benchmarking is critical to see where you really sit versus the competition, especially for companies not used to hiring in talent from customer centric businesses. But, without that new talent, there’s a danger you will continue to think as you've always done.

Customer centric leadership means more than giving customers what they asked for or reacting to research. It's about a leadership team that is set up to ensure better delivery against the unmet needs of the customer in the future.

Leading the transformation

There are four critical components for leadership and culture that will start to change your business. The first is a leadership team that is obsessed with championing the customer. One of our own clients, a large UK business, is on a journey to become more customer centric. The marketing director has taken this obsession to heart, challenging his people on every aspect of the work they bring him. Does it truly represent the customer? Does this innovation meet unmet needs or just do things the way we always have? Where’s the proof the customer wants this? Ideas that would have sailed through before were revised and improved countless times.

The next is about adopting a customer back mentality. Leaders constantly return to the customer problem in search of a new solution, rather than taking a product forward approach. Many businesses take a product centric approach, often unwittingly. To meet a perceived need in the market, leaders will try find other ways to sell the same product, rather than change or replace it.

The financial group Barclays is another firm that decided that they wanted to become more customer centric. The leadership team commissioned a comprehensive piece of research and data analysis to show how a more customer centric approach would deliver gains to the bottom line for Barclays.

As a result, they identified two very large spend items on their retail bank customer experience that would never ordinarily get through the business case hurdles. They were too expensive or didn’t promise the standard return on investment. Through the lens of customer centricity, however, these two initiatives became business critical. The leadership team recognised that in terms of securing sustainable growth, they absolutely made sense – and gave the green light.

Third is how leaders can create a culture of proximity and empathy with customers. The financial software firm Intuit is a pin-up for customer centricity. Their leadership team launched an initiative called Follow Me Home, which mandates that every employee spends 10 hours a year with a customer. All staff will observe the customer as they use a product, interrogate them about what works well, why they did that, how to make it better, whether they have any ideas of their own. Leaders spend a huge amount of money and time making sure they truly understand their customers, gaining immediate, first-hand feedback from the people who actually use their software. Better still, they can run ideas past them, before they go into development.

And the last one is communicating honestly and transparently with customers – and having the strength to do that, even through tough times. Traditionally, business leaders take a guarded approach to ‘company secrets’ such as salaries, supply chain provenance and intellectual property. However, CEOs are increasingly seeing the benefits of leading the conversation by sharing information openly, because that’s what customers and employees want to see.

US software business Front provides an email service that allows brands to communicate with their customers. But promoting transparency is just the start for founder and CEO Mathilde Collin. She uses transparency as a strategic tool to build the right culture and grow the business. The goals, metrics and progress indicators of all employees, no matter how senior, are shared internally, while the product roadmap and fundraising decks are made open to public scrutiny. Could your company do that?

Businesses that can combine a truly customer-centric mindset with strong commercial acumen will join an elite band that achieve sustainable growth and out-perform their competitors over the long-term. The change starts with strong and visible leadership. 

The Sustainable Growth Index by Cognosis correlates the behavioural and cultural traits of 1,400 listed companies. The companies that focus most on the customer have outperformed their competition over 15 years. 

Companies that combine purpose and customer centricity see the largest gains in long-term sustainable growth. Matching a customer-centric culture with a powerful growth strategy unlocks optimised total shareholder return. 

Working closely with industry-leading corporations, our consultants create bespoke and targeted action plans for building a customer-centric culture. Discover how we can help drive sustainable growth in your organisation.

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To learn more about customer centricity for your business, please get in touch with Daniel Hall:

daniel.hall@cognosis.co.uk