This refreshed book review of mine from years ago is still foundational to the concept of our business.  That is why I’m republishing it now as the first post in the Crooked Chimney blog.

In business school, I remember a marketing  professor once driving home the importance of customer heterogeneity by pointing out that the average American has one breast and one testicle.  This somewhat crude example showed that simple averages do not always produce meaningful information for business planning.  Customers are not carbon copies, so why treat them all the same?

This concept of customer heterogeneity and the value of targeted segments is the topic of Professor Peter Fader’s book, Customer Centricity: Focus on the Right Customers for Strategic Advantage.   Fader points out that customer centricity is more important than ever, because technological and geographic barriers are disappearing.  Consumers are more connected than ever, providing more options and lower switching costs.  The nature of competition is changing.

Customer centricity is a long-term strategy that puts relationships ahead of revenue in order to build customer equity for a business.  Getting it right, and focusing marketing investment on the customers that represent the highest returns can be a real differentiator.  Still, so many companies with the best of intentions still get it wrong.  This is reflective of the fact that there is no standard template for customer relationship management (CRM).  Loyalty programs and CRM systems are just tools and not magic bullets.  It takes a deep understanding of the business and behaviors to identify the right data, collect it, analyze it, draw the right conclusions, and take the appropriate actions.  It takes an organization-wide commitment.

NOTE: Customer centricity does not mean a universal focus on customer service.

Fader paints some very successful businesses, such as Nordstrom and Apple, as very much NOT customer centric.  It’s true.  They are service and product centric, respectively.  These businesses do not tailor their offering depending on the customer.  Instead, they put forth a one-size-fits-all approach to managing customers.  It has worked for them.  While some businesses thrive today without a focus on customer centricity, today’s consumers have quickly evolving expectations.  Understanding the fundamentals of customer centricity and employing proper data collection and analytical methods across channels creates new strategic options.

Proper customer lifetime value (LTV) methodologies do not get the attention they deserve in today’s business world, so this book is an important read.  Customers represent assets with value to a business, much like stocks in a portfolio.  You cannot optimize your portfolio to maximize returns without understanding the fundamentals of proper valuation.  This book provides a good overview of the implications of customer centricity and the importance of this type of thinking.

My only criticism is that this book reads like an extended introduction to a much bigger story that I want to dig into.  It raises practical questions and points of debate around the valuation for trade-offs necessary to fully commit or transition to customer centricity.  Just as I was ready to dig into the nitty gritty, I was at the end.  I love data and stats, and I am a segmentation junkie, so I’d love to see a follow-up on this surprisingly often overlooked topic.