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Paul Papas

Consultant, IBM - Consulting

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Is customer centricity a fundamentally flawed business strategy?

Focusing on customers is a natural mission for any business. However, if you only think of them as "customers" and not as people are you limiting the value you can provide?

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    Salim Solaiman 50+

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    Mar 27 2011: In my earlier post I missed your people centricity point. Well if I take non target customer group as people of your proposition following are the points why customer centricity is better than people centricity.First different person has got different buying motive , all don'i look for same benefit for any given product. It's really difficult mention a single product or more specifically brand (companies now don't sale product they try to sell brand) which can satisfy all people, so targeting people as a whole by compnay rather will end up wastage of resource (if they have enough to do so) and effort.Secondly no company enough resource to target people as a whole. Even if they have will they be profitable. Ultimately the business has to increase it's return on investment as well as shareholder value.
    Thirdly comes the point of people's afordability. Not all people have same affordabilty and business organisation has to make profit. Though some companies trying to the reach the level below their currently afordable target group in different means.
    However though from strategy perspective companies are trying to customer centric , while in execution they also reach non targeted customers which you may call part of people. Because to be real customer centric in execution business has to have the capability of very solid segmentation and targeting of the people to find out their customers which again depends on the capabilty of people who executes which in many case does not happen.So I would say Customer Centricity is the right business strategy though its difficult to execute.Last not least CSR activities of companies are people centric , so it's there even.
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    Christine Kinser

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    Mar 21 2011: One example of seeing the whole person -- beyond the "customer" label -- and narrow view of customers -- is the whole sustainability movement associated with CPGs, Retail, etc. In many ways though, I think of the return to knowing and understanding customers as the complete human beings that they are is a return to what the world once had .... with the local grocer, banker etc. Now that we're virtual and global how do we bring back that kind of relationship between businesses and their customers?

  • Revett Eldred 10+

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    Mar 20 2011: I'm not sure Apple conducts very many focus groups, and I am quite sure no customers ever requested the Mac or the iPod or the iPhone or the iPad, but the company is spectacularly successful. Is that customer centricity or not, in your opinion?

    • Paul Papas

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      Mar 21 2011: Apple is a great example of moving beyond "customer" centricity. If they had looked through a narrow lens and thought of their “customers” as buyers of mp3 players, then they would have launched the ipod as just a stand alone mp3 player with new features and functions. But they did not, they looked broadly at how "people" want to buy/explore music and ended up with itunes. A dramatically different outcome.
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      Harald Jezek 50+

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      Mar 21 2011: Revett, I agree. But then, Apple is not just a company, but Steve Jobs. I'm not sure if Apple could be same without Jobs.
      Facebook would be another of these examples. These are companies that rely on the vision of one (or a few) person to become what they are.
      Zuckerberg probably never had in his mind to create a multi billion company, but just wanted to provide a social platform for his audience.
      In other words, every company should put itself in the shoes of the consumer before creating a product/service.
      My experience working for a Fortuen500 company was that it often goes the other way around. A company creates a product and then tries to convince the market of its merits. This sometimes works, but more often it doesn't.
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    Debra Smith 200+

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    Mar 19 2011: This is an interesting issue in business because it is a trend and yet it can be a trap. Lafley formerly CEO of P&G is a master of the customer centric focus. He cut things like R&D in house to allow more input from customers, supplier and others who have a different perspective of what is needed. They went so far as to have cut outs of the typical customer at meetings.
    Many companies are insufficiently focused on the customer. That it why this has become such a trend. Their processes and their paperwork were taking priority over customer needs and front line people lost the understanding that satisfied customers represent a revenue stream and not just a one time purchase.
    The downside has to do with over identifying with the customer and not sufficiently on the business. I have made errors in this way. I have promoted customer ideas and wants to produce new products and then when they were available it turned out that the customer was not as dedicated to the idea as they had indicated. For example many places demand scent free products and yet when they have a choice they will still buy the lemony scented one. because they find it more appealing.
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      Harald Jezek 50+

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      Mar 19 2011: The problem is that customers often don't know (consciously) what they want. Therefore, surveys and focus groups are a double edged sword. This doesn't mean one shouldn't listen to customers, but instead of taking the customer literally, one has to know how to read between the lines.
      However, often, companies don't listen to the customer at all and just come up with a product or service that nobody is interested in. This happens often in large companies and I think it's a result of inflated egos.

  • Paul Papas

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    Mar 19 2011: Take a pharmaceutical company as one example. When they view people only as patients i.e. users of their product, then the only thing they think about is enhancing the product, stronger formulations, etc. This is a great thing, a critical thing to drive innovation, but is it limited in its thought. In other words if that same company thinks of the patient as a person, does it expand their thinking from enhancing its products to better treat disease to offering products and services to help people manage their health. So does customer centricity drive innovation in one sense, but limit it in another?
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      Harald Jezek 50+

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      Mar 19 2011: I think it really depends on the scope of a company. Their are companies, that offer a relatively narrow range of products or services. And then there are companies with a more holistic approach.
      I give you an example from my field of action.
      I own a salon/spa. Now there are salons/spas out there that just supply the particular service the customer was asking for, such as a facial, massage, hair cut, etc.
      My business is a bit different in the sense that we take a more holistic approach. For us, it's not only important to provide an excellent service, but we want to give the customer the sensation of well being, even if he didn't explicitly ask for it.
      While this holistic approach works in my business, it might not work everywhere.
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      Debra Smith 200+

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      Mar 19 2011: HI Paul,
      If pharmaceutical companies were as customer centric as they should be they would be doing research on the other half of the population to make sure that women's bodies metabolized the drugs in the same manner that men's bodies do.
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    Krisztián Pintér 200+

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    Mar 19 2011: how is it different? customer is a man who buys stuff. it is not degrading in any way.
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    Salim Solaiman 50+

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    Mar 19 2011: In a era of competing brands/ products with low or no differentiation customer centricity became one of the key business strategy. Custormer centricity that is practiced now a days to my feeling actually does not mean coming up with more sustainable or meaningful products which are in long run will be good for society in as a whole from the perspective of its impact on environment & society in totality. It rather means understanding the customer better than competitors and meeting their need competitively and successfully. If customers at large are not educated / informed/ conscious enough to understand or take care of the long run implication (which actually is in most cases customers are not at large) of the product / service they buy, the value of the product / service will be defintely limited to fulfill the short term gain or feeling of gain of customers. In real sense I feel comapnies are driven by shareholders demand of higher return , so customer centrcity is only a path to be more shareholder centric. From that perspective in current era of consumerism thats an effective way to win market share.

  • Paul Papas

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    Mar 19 2011: Companies view people through what is essentially a pretty narrow lens. Retailers traditionally view people as “shoppers,” airlines see them as “travelers,” pharmaceutical companies see them as “patients.” But people are all of those things and more, with more complex needs. Is this "customer" focus limiting companies' view of what’s possible in terms of new or enhanced products and services and new ways of engaging with people.
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      Harald Jezek 50+

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      Mar 19 2011: I think companies have to view their customers through a relatively narrow lens, because usually a company is not a bazaar but provides only a limited range of products and/or services.
      So, sticking with your example, if I'm a retailer of electronics for example, my goal would be to provide people (current and potential customers) with the best purchasing experience I can come up with. I can't see why the fact that a customer might also be a patient or an air traveler, should in any way influence my strategy as retailer.
      But then, perhaps I still didn't understand your question.
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    Harald Jezek 50+

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    Mar 19 2011: Paul, please clarify your question a bit. If I look at customers (potential or actual) then I see people.
    If you make a difference between customer centric and people centric, what exactly do you mean with that ?
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      Jack Mason

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      Mar 21 2011: For my money, its not just a matter of seeing customers as people, not just as buyers, but also enabling them to be active participants in every part of a business, from product development to support services.The centricity needed is to for companies to serve customers in every dimension, to deliver a kind "surround soud" kind of satisfaction and trust.
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        Harald Jezek 50+

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        Mar 21 2011: I agree, unfortunately this is rather the exception than the rule.
        Apparently, the larger a company gets the more disconnected from the customer.

    • Sophie Wrobel

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      Mar 23 2011: Dale Carnegie discussed back in the 70's how important approaching a person on a 'person' level is the key to winning friendship, building a relationship - and closing sales. Then came along the 'automation' movement in which, in an attempt to streamline revenue flow, various corporations attempted to replace these personal relationships with automated processes. And now with the emergence of social media, these 'automated' corporations are rediscovering the value of friendship and personality.

      Perhaps a clearer way to phrase the difference between customer-centric and people-centric is the difference between the 'automated' approach to streamlined revenue as opposed to the 'friendship' approach to building relationship. While smaller companies have tended to maintain the latter throughout the years, and thus may not notice a large gap between 'customer' and 'person', larger companies are likely rediscovering this connection - and particularly for those companies, such a distinction is particularly relevant, and revisiting the origin of human social behaviour is a critical step in recognizing the value of people once again.
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        Harald Jezek 50+

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        Mar 23 2011: In my opinion, what you say, depends largely on the kind of products a company sells.
        If you sell stuff that's highly technical and needs a lot of explaining, demonstrations or other kind of support, automation wouldn't work.
        On the other hand, automation works well for Amazon, eBay and similar. If i want to buy a book, I usually know what I'm looking for and if Amazon even gives me a summary of the book, ratings and home delivery, then I really don't need a sales rep trying to build relationships with me.
        Where personal interactions are still needed, Dale Carnegie is still right. You always buy more likely from a friend than a stranger.

      • Paul Papas

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        Mar 23 2011: Sophie - what a great response! I love your quote "revisiting the origin of human social behaviour is a critical step in recognizing the value of people once again". This question and your response seem to be highlighting an interesting paradox. Increasing the focus on trying to meet customer needs might in fact be having the opposite effect of what's intended. Focus by it's nature limits whats in view. If taken to far or too long you lose the foundation for all behavior - context.
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