Editor’s Note: I admit to having a soft spot for people with iconoclastic views. There are more than enough people in this industry content to follow the herd, not enough willing to say that the herd is moving in the wrong direction. Here we have a good example of the latter, as Maisie Furneaux warns of the problems that can be created by allowing “customer-centricity” to morph into “customer obsession.” A really interesting read.
For a lot of companies, making sure their strategies (and pretty much everything they do) revolve around their customers is the most important key to success. There are so many examples that prove customer-centricity is effective, and it is undeniable that being customer-centric can improve the growth of the company; you only have to look at the likes of Amazon to realize this, and the success they have created out of becoming one of the most (if not the most) customer-centric business in the world.
Don’t get me wrong, customer-centricity is undeniably one of the most important aspects when it comes to creating a strong customer base, but uncertainties start to appear when you see a customer-centric business begin to evolve into the realms of customer obsession; where is the line that, when crossed, means businesses are at risk of losing sight of the bigger picture?
There are some significant differences between businesses that are customer-centric and those who are customer-obsessed. Simply put, customer-centricity is about putting the customer at the forefront, whereas customer obsession becomes more about making the customer the absolute, where every single business decision is based on the customer’s thoughts and actions. One main worry is that businesses who become customer-obsessed maybe focussing far too much on the ‘now’, and not enough on the future.
Risks of Becoming Too Customer-Obsessed
Whilst there is an abundance of proof that customer-centricity is a good thing for your business, there still seems to be a bit of a grey cloud over whether customer obsession is just as great. For me, the prospect creates many more uncertainties.
1. Customers Don’t Always Know what they Want
Becoming customer-obsessed means focussing all of the business decisions around the customers; what the customer wants and what they tell them they need. Every decision is dictated by them, and for them. We all know the saying, “the customer is always right”, but I can guarantee at one point in time you’ve thought, (or probably even said!), “no, they’re not.” The customer is not always right, and they don’t always know what they want – if they did, it would already exist!
2. Lack of Innovation
When a business focusses solely on its customers, only listening to what they say, do and want, a lack of innovation quickly becomes a real risk and opens up many opportunities for competitors to develop and embed a successful strategic advantage amongst the market.
Innovation does still happen in customer-obsessed companies (just look at Amazon), but it is often not as big of a priority, and is always focussed on what will make their customers happy and keep the business relevant. But, depending on the business, innovation and competitive advantage are equally as important as putting the customer first when trying to improve customer loyalty, especially in a world where everyone else is striving for the same thing: to be the one who customers turn to when in need.
Nokia is a great example of a company who were far too complacent when it came to customer loyalty. Despite smartphone innovations, they continued to focus on hardware rather than software in order to please their existing customers; but before long their ‘loyal’ customers began switching to leading competitors, such as Apple, who led the way in innovations. This is a perfect example where customer obsession may help the company grow in the short-term, but unless it is willing to innovate and sometimes go against what the customer is currently saying and doing, they will lose out in the long-term as the customers will all-too-quickly find the new and innovative offerings from those competitors.
3. Not all Customers are Equal
While innovation is important, so is the bigger picture. There are a vast number of prospective customers who aren’t paid as much attention to because of current customer obsession. Understandably, focusing on becoming customer-obsessed wouldn’t have the same effect for all prospective customers; many are likely to gravitate towards companies who have a good reputation with their customers, and so growth is still probable.
But, it’s always important to remember that not every customer is equal, and what will work for one person will not work for another. Focussing too closely on one group of customers may alienate other prospective groups, and eliminate opportunities for exponential growth and success. Airbnb is a good example here; their initial business idea was solely for those who were looking to save money on cheap accommodation (and for others to make money by renting out a bed for the night), but now their customers range from that same target audience to those looking for luxury, high-end houses to spend their holidays in. Without focussing on their current and prospective customers simultaneously, their growth would never have been so great!
4. Customer Loyalty is Over-Estimated
In a world where why hyper-choice is all too common, customer loyalty is far less guaranteed than it ever has been. Choosing to stay loyal is never as straightforward as you’d expect, and you won’t be shocked to hear that loyalty is influenced by numerous factors. It was interesting to find from a recent study conducted by FlexMR, that the main reasons for customers remaining loyal were: price 51.6%, the product 27.7%, customer service 13.2%, and convenience 4.8% – you’d expect with all this emphasis on customer obsession that the customer service and experience would be much higher on that list.
As a customer-obsessed company, it is all about being loyal to the customers and giving them what they supposedly want – but the price can only go so low, and customers often don’t realize what they actually need. So, the real fear is, should these companies really be exhausting all of their time and energy into being loyal to their customers, rather than allowing their vision to focus not only on the customer but the prospective customers who are currently loyal elsewhere? After all, you never know when (and where) the future Apple’s of the world will appear next!