Three Questions to Answer When Starting Your Customer-Centric Transformation
By: Chris Chapo, Analytics Leader
Many companies see the opportunity to leverage customer-centric transformation to fuel completely new ways of working across all aspects of the enterprise. They hear the success stories of how digital natives (like Amazon, Netflix, and StitchFix) built their entire business models around customer-centricity. But it can be tough to know where to start, especially when there are different definitions of customer-centricity.
As we see it, one of the core tenets of customer-centricity is that a company’s core business processes are designed to deliver different products and services to different types of customers vs creating a “one-size fits all” approach for an average or typical customer. Also, customer-centric companies optimize their strategies and operational decisions to focus on those customers who differentially are more valuable than all other customers.
However, transforming a company to adopt these customers-centric ways of working is not something that happens overnight. Those who are successful pick one area to get started. The hard part is determining where to start.
Many attempt the traditional impact-versus-effort approach, yet struggle to find something that is compelling and practical enough as a starting point. An alternate approach is to identify those initial opportunities that have the highest likelihood of success, building organizational buy-in and the momentum for change. Using this approach, three key questions to zero in on include:
- “Where can we most quickly drive value?”
- “What areas are not being addressed at all?”
- “Where do I already have a willing partner?”
For example, let’s imagine the story of a typical multi-channel retailer. One of their aspirations is to reimagine their entire customer communication and promotional strategy, shifting from general company-wide discounts and promotions to a “segment of one” communication strategy with personalized offers beyond the traditional discount lever. While this certainly is a bold and compelling end state, bringing this vision to life requires significant investment in terms of systems/analytics as well as significant re-engineering of existing processes.
"An alternate approach is to identify those initial opportunities that have the highest likelihood of success, building organizational buy-in and the momentum for change."
When answering these three questions to determine how to get started, this retailer identified a couple of areas where they could make quick progress with business owners who were open to beginning the journey to customer-centricity with approaches that were not currently being addressed. Here are two examples of the types of “small bites” that this retail could take to get started:
- The retailer would perform analytics on the general effectiveness of promotion types for KPIs like margin or customer acquisition to develop a cheat sheet of rules to apply to their existing promotional planning activity, essentially creating some guardrails like “do more of this” and “do less of this”.
- The retailer would perform some digital experiments (in email and on their ecommerce site) to a small percentage of customers offering different structure and promotion depth to develop an understanding of what is most effective for different customer segments. An example of this could be a “mystery offer” where most of the concerns that might come up around brand relevance and fit could be mitigated while still building a solid foundation of insights on which to build.
As the example of our retailer illustrates, these starting points are much more digestible and the impact they have on the business will help win over skeptics and risk-averse partners, while creating the momentum needed to move forward. Now, time to ask yourself these three questions and get started!
Illustration by Nicole Fleming. Images by Ben Janes and Nathan Dumlao
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