WHAT IS THE IMPACT OF CUSTOMER-CENTRICITY IN BUSINESS?

Customer-centricity relays the ideology of putting the needs of customers first, or, in other words, making customers the epicenter of your business. This ideology is fundamental to the success of businesses across the globe.

As Flavio Martins, author of "Win the Customer," rightly points out, "customer-centric companies understand that the lifetime value of a customer is more important than the value of a single transaction."

Knowing how it impacts your business is crucial. As you go through this article, you'll learn what this ideology is, why it matters, its positive impact on your business, and what an ideal customer-centric business looks like. Without further ado, let's begin.

What is customer-centricity, and why does it matter in business?

Can you imagine how our solar system is, with the sun and the planets at its center? This is what being customer-centric is really about.

Customer centricity is a business approach that puts the needs of customers before anything else.

This approach intends to leave customers satisfied through a series of flow-like actions, including understanding what your customers need, tailoring your products or services to meet their needs, and building long-lasting relationships with them.

As Jeff Bezos, Executive Chairman of Amazon, famously points out, "We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better."

There's barely any business that'll thrive without being customer-centric.

As John Goodman, an American actor, puts it, "A customer-centric approach can drive profitability, growth, and competitive advantage."

In essence, you are to make customers the epicenter of your business, and meeting their needs your drive, especially when you want to have a chance to compete in the marketplace, gain their loyalty, and make a profit.

The Positive Impact of Customer-Centricity in Business

Being customer-focused is a priority that businesses don't get to play around with. This is because they know the magnitude of the benefits it brings them.

While this is a fact, let's also consider some other positive impacts it can bring to your business and why being customer-centric should be your A-game:

1. Customer loyalty and retention

In the customer journey, the point where they become loyal to your business is often referred to as the ultimate sign of a successful journey.

But the fact is that there can never be loyalty in the first place if you never consider their needs as a priority.

When your business is about putting the needs of your customers first, retaining them and earning their loyalty will not be difficult. It doesn't just stop there. They'll go ahead and bring other customers too.

Fred Reichheld, author of "The Loyalty Effect," puts it best: "Loyal customers don't just come back; they don't simply recommend you; they insist that their friends do business with you."

When customers start to insist that others patronize your business because of how you treat them, you're really winning.

2. Competitive advantage

The desire of every business, and yours as well, is to have a competitive advantage over competitors.

This drives businesses to offer products and services that are different from what their competitions are offering, in ways that are different from what their competitions offer them.

For you to stand out in the marketplace, you need to be customer-centric.

As Seth Godin, marketing guru, puts it, "In a crowded marketplace, fitting in is a failure. In a busy marketplace, not standing out is the same as being invisible."

By being a business that's driven by meeting the needs of customers, you can effectively carve out a unique position in the marketplace that gives you the advantage you desire.

3. Business growth and profitability

It's almost impossible to see a business that effectively meets the needs of customers that does not grow.

Although business growth metrics are not solely dependent on customer-centricity, they definitely play a crucial role.

When customers are happy and satisfied with your services, they'll increase their patronage, and you'll make more profit. This follows a study conducted by Bain & Company. They found out that increasing customer retention rates by just 5% can increase profits by 25% to 95%.

What a huge return! And this is because customer retention and profitability are all related to meeting customer needs.

As Philip Kotler, marketing author and professor, points out, "The most important thing is to forecast where customers are moving and be in front of them."

By remaining customer-centric, you'll stay ahead of the curve and also experience growth in your business.

4. Improved brand reputation

Branding speaks a lot about a business, and how customers perceive your business will inform their decisions to either patronize you or not.

They cannot be forced to believe what you're not. It's only normal that they would want to know that your brand is out there to make their lives better through the products or services that you offer.

By focusing on your customers and their needs, you can instill a perception in them that speaks of trust and integrity. This is one way to win their loyalty.

5. Efficient marketing and sales efforts

When your business focuses on the needs of customers, you'll know how best to reach out to them. Reaching out to your customers and eventually making sales requires some well-thought-out marketing and sales strategies.

These strategies will determine if your efforts will be efficient or not.

As Brian Tracy, self-development author and motivational speaker, points out, "customer-centric sales efforts focus on understanding customer needs and providing tailored solutions rather than pushing products or services."

Knowing what and where the interests of your customers lie will make it easier for you to craft strategies to market your tailored products effectively to them.

The Challenges of Becoming a Customer-Centric Business

A business that focuses on pleasing its customers may have experienced some hurdles along the way.

Here are three major challenges you'll likely face and will have to overcome to make your business customer-focused:

1. Building a culture and getting others on board

One major challenge you'll likely face in becoming a customer-centric business is building the culture that promotes it in the first place. It's not so easy to create a culture in a workplace and just expect everyone to follow it.

This is because you cannot force or easily change a culture just like that. You'll have to get your employees on board. They'll have to buy into your vision for creating a customer-centric culture.

They have to be actively involved in evaluating decisions that influence the customer experience.

They can answer some questions, such as "Will this product benefit our customers?" and "Will this process remove the unnecessary hiccups that our customers experience?"

If the answers to these kinds of questions are not positive, then you'll have to reconsider your decision. Employees need to feel they matter in the decision-making process.

When they do, they'll be willing to go to any length to satisfy customers and build solid relationships.

2. Shifting from a product-centric ideology

Companies that are into offering products are majorly concerned about how their products are fairing in the market.

Sometimes they get so caught up with introducing more products into the market that they loose sight of how their customers are responding to the products.

Hence, making a shift from being product-centric to customer-centric is essential, but you may witness some hiccups along the way.

While this is true, a steady, gradual transition from this ideology may be the way for your business to fully become customer-centric.

3. Balancing short-term goals with long-term vision

Sometimes, being customer-centric may not fulfill your expectations. One of such expectations will be to make an instant profit.

This is why many businesses see it as a challenge to prioritize long-term customer relationships over short-term profit. It may appear simple, like this challenge is on the surface, but it runs deep.

Businesses may find it difficult to strike a balance between their short-term goals (making profits) and their long-term vision (customer relationships).

The fact remains that customer-centricity is an approach to a long-term relationship that comes with its own rewards as well.

By balancing your aim to make profits with gaining customer loyalty and retention, your business can become customer-centric.

What does a customer-centric business look like?

We've discussed both the challenges and positive impact of being a business that focuses on customers and meets their needs.

So let's talk about what an ideal customer-centric business looks like. An ideal business that prioritizes customer needs has the following components:

1. A customer-focused culture that's driven by the desire to meet the needs of your customers.

2. A deep understanding of the needs of your customers.

3. An action-oriented process for tailoring products and services that meet their needs.

4. A seamless customer service and experience in their journey.

5. A proactive customer engagement team that anticipates hiccups in the customer journey and offers an immediate and direct response.

6. Employees who are onboard with a customer-centric vision and trained to handle the needs of customers with the utmost priority.

7. Always learning and improving to match up with the trends and to make the customer experience at its best.

Conclusion

Always remember that customer-centricity is an ideology that you can embrace, not just because it's a necessity to thrive in your business but also because it is a culture that shows your core values as well.

By dealing with the challenges of living the ideology, you can make your business the ideal one that treats customer needs with the utmost priority.