Customer centricity is defined as "a strategy that aligns the development and delivery of a company's products and services with the current and future needs of its highest valued customers in order to maximize these customers' long-term financial value to the firm."
Not all customers are created equal, which means that they don't all deserve and equal share of your organization's valuable time and resources. To be clear, this doesn't mean you should "fire" your worst customers or ignore them wholesale, but it does mean that you should know at what point you're throwing away valuable resources on customers who aren't valuable enough to deserve the level of attention you're giving them.
A product-centric approach ignores customer heterogeneity and wastes valuable resources on chasing down product sales to anyone and everyone, at any cost.
By focusing on its highest-value customers, Best Buy was able to differentiate itself from online retailers and reinvent itself in an otherwise cut-throat business.
You often have more control over the kinds of customers you bring in as opposed to trying to change them after they've been acquired.
Bezos founded Amazon in the dawn of the internet after becoming intrigued with the exponential growth of online usage and sales. A year after founding Amazon, he was in Chicago at a national publishing conference, where he hung a sign at Amazon's booth boldly proclaiming that the company was "Earth's Biggest Bookstore." This daring statement caught the attention of Roger Doeren, chief operating officer of Rainy Day Books, a Kansas-based independent bookstore. As reported by the New Yorker, Doeren was puzzled by this claim and questioned Bezos on where, specifically, his bookstore was located. Bezos replied, "Cyberspace!" and then went on to say that he intended to sell books as a way of gathering data on affluent, educated shoppers. The books would be priced close to cost, in order to increase sales volume. After collecting data on millions of customers, Amazon could figure out how to sell everything else dirt cheap on the internet.
The "streetlight effect" is a form of observational bias that causes people to look for things wherever it is easiest to see them. This idea is applicable to many demographic-based marketing practices.
If you want to actually gain insights into what your customer's spending habits are, how much value they contribute to your company, or any other revenue-centric data point, demographics are the wrong tool.
When it comes to developing less-valuable customers, you need to have the right expectations -- they are unlikely to become top-tier customers no matter how much love you show them.
Getting a customer to add fries to their order is a classic example of cross-selling. Given that existing customers are about 50% more likely to try your other products than new customers, you should absolutely make sure these patrons know all about your full menu of offerings.
Strategic account managers (SAMs) must make relationship management their main concern -- anticipating, preempting, and addressing the major pain points and potential sacrifices of their best customers. To this end, the most effective SAMs are trusted collaborators, problem solvers, and project managers and are able to bring innovative solutions to the table, all in service of playing a high-touch, defensive strategy at the top end of the customer-value pyramid.
In the customer-centric world, not recognizing who the high-value customers are -- regardless of which products they have bought -- is a cardinal sin.
There is now widespread agreement and corroboration from experts across multiple fields that the value customers bring to the balance sheet is real, that is should be measured, and that is should be reported to (and demanded by) investors!
For the most part, Wall Street judges the worth of firms in two ways: top-line growth and bottom-line growth. A firm's top line is the gross revenue generated from the sales, and the bottom line is the net income, or profitability, of the firm. A note from Investopedia on the subject: Both these figures are useful in determining the financial strength of a company, but they are not interchangeable. Bottom line describes how efficient a company is with its spending and operating costs and how effectively it has been controlling total costs. Top line, on the other hand, only indicates how effective a company is at generating sales and does not take into consideration operating efficiencies which could have a dramatic impact on the bottom line.
Today, if you're not lean and agile in the technology and product development fields, you're irrelevant.
In general, it is essential to get cross-functional buy-in for customer centricity (or any strategy) to succeed, and there is no better way to do so than to make its incentive compatible for as many employees as possible to embrace CLV and begin to work with each other to best leverage it.
