A simple search for “customer centricity” on Google yields more than a million results. Go ahead and read them. I’ll wait.
Back so soon?
If you’ve managed to read any of those links, you have certainly picked up on a mixed bag of what constitutes customer centricity and an even broader swath of ideas for how to implement it in your organization. Let me boil it down into two very high level requirements for implementing customer centricity.
- You must be able to tell your customers apart. More specifically, you need to be able to identify customers that are of high or low value to your business. Use behavior to model value, and then, identify characteristics of your most and least valuable customers. You may apply simple criteria or you may get much more sophisticated with it. The better you can assess the future value of any given account, the better prepared you are for implementing true customer centricity.
- You must be able to do something with this information in your business operation. This makes sense, right? What good is figuring out which customers are most valuable to you if you are not able to do anything about it in providing services to them? Once you know which customers represent a higher value versus a lower value to your business, your operation must be such that you can adjust the components of service at key points based on these classifications. Feel free to spend $100 to make a $1000 customer feel the love, but don’t spend the same on a $10 customer. This can be tricky to operationalize at scale.
If your business has a more granular level of control over your prospect and customer experience touch-points on an operational level, you will want to invest more heavily in creating an accurate customer lifetime value (CLV) model. Fine tune it. Similarly, if acquisition or servicing tends to be especially expensive in your business, you will find it valuable to get your CLV model right.
Predicted CLV can effectively set a ceiling on appropriate acquisition costs. Once a customer is onboard, residual CLV (rCLV) can guide you in understanding an appropriate willingness to invest in ongoing customer relationships. Customer centricity lets you manage customer assets like stocks in a portfolio and optimize for profitability.