Putting the customer first is easier said than done. Customer centric leadership is a wonderful concept, but does it work in practice? The answer is yes, assuming you adopt the process across the entire organization and execute well.
According to recent Gallup research, when you are able to build emotional bonds with customers, you can realize a 23% increase in per-customer revenue. They call out two key elements that can impact customer centricity, “the way executive leaders organize their business around the customer and the way they make decisions that drive value for the customer.”
For starters, the first thing that executives need to do is engage with customers and prospects more than 3% of their time. Until they begin to embrace the customer experience and tie incentives to long-term customer satisfaction, the disconnect between saying you’re customer centric, and actually being customer centric will continue to exist.
Additional recommendations include ensuring executives are actively involved in customer and service strategy design. They should be accountable for the follow through on any initiatives. They also recommend making customer experience a part of every leadership position, regardless of role. Baking customer experience into everyone’s responsibility helps make it second nature.
Executives should also include customers in decision-making. Creating ongoing customer communication channels to get feedback on new initiatives and share experiences with each other builds trust. But to do this, you first need to focus on employees. Unless you build a customer centric vision throughout the company, politics and hidden agendas can undermine efforts.
The Gallup findings are supported by a recent Russell Reynolds’ survey. Their research highlights not only the impact that customers are having on business, but the evolving nature of the customer base. Of the executives surveyed:
- 75% say their business has already been disrupted due to customer behavior changes
- 70% expect their customers’ needs to change significantly over the next three years
- 48% expect their customers will change significantly over the next three years
- 43% believe that their current customers are not the customers they will need to stay competitive in the future
- 60% believe that they will have to target a different set of customers
- 70% believe that they will need to attract a more diverse set of customers
One-third of those surveyed said their customers have changed significantly over the past three years. Loyalty has fallen, price sensitivity has increased, and not surprisingly customer bases are becoming diverse. Even with these changes, three-quarters of respondents believe they have a better understanding of their customers over the past three years.
Unfortunately though, just 1.4 in 10 feel they know their customers really well. Two reasons for this are corporate culture and a lack of progress in their digital transformation. To combat this, 80% are planning to invest more in customer centric initiatives. Most of the spending is focused on digital programs including data analytics, digital channels, and cross channel customer experience.
Beyond getting up to speed with technology, you have to make sure your company is ready and willing to adopt a customer centric mindset. Culture can be a significant hurdle to success. Without executive leadership embracing and modeling a customer centric model, you can expect pushback, apathy, and stalled initiatives.
A final thought, adopting a customer centric approach doesn’t mean you can forget about the bottom line. According to Gallup, “The ability to quantify the ROI of customer engagement to Wall Street is necessary. An astute use of customer analytics and data-based insights are indispensable. But executives must cease being passive users of customer data and research — and become actively and deeply immersed in the world of the customer.”
To learn more about developing a customer centric leadership approach and creating a positive culture, send us a note, and one of our executive recruiters will respond directly to your inquiry.