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Guide to customer-centric work: How to make your customers kings
Customers are queens - customers are kings. The concept of customer orientation has existed for a long time, but the topic has never been discussed as intensely as it is today. Businesses need to stay competitive in today's global marketplace, which is a huge challenge. They are therefore looking for new ways to gain new customers, to bind existing ones to the company in the long term and to stand out from their competitors. It is therefore not surprising that the term customer orientation is googled around 2000 times a month in German-speaking countries alone.
Customer focus has become a buzzword and one of the most important points in many business strategies. Companies are constantly in a balancing act between a product- or solution-oriented approach of the past and a customer-oriented approach for the future.
This article describes the importance of customer orientation in today's economic environment and gives step-by-step instructions on how to integrate customer-oriented work into your organization.
Definition of customer orientation: two perspectives
By definition, customer orientation is a self-explanatory term. The focus is on customers in order to achieve a positive customer experience, which in turn leads to high customer satisfaction. In reality, however, it is much more complex. Customer orientation must be viewed from two different perspectives. A perspective makes the customer the focus of all activities of a company. Every step serves customer satisfaction, increases loyalty and attracts new customers. The other perspective first identifies the company's key customers and then builds products and services around them. It's about identifying the needs and desires of customers and solving their problems.
The North Star: four strategies for customer-oriented work
1. Define customer orientation as a priority in the organization
Customer orientation must be lived by the entire organization. A customer-oriented strategy must be driven forward and fully supported by the executives. If this is not the case, it signals that customer orientation is not the main concern of the company. As a result, the concept is likely to be drowned and forgotten in the daily hustle and bustle and in various silos. If the support from management is not fully guaranteed and felt, the necessary finances will probably also be missing.
As soon as the management has assured their support for a customer-centric business focus, an organization should implement agile working in order to put customer orientation fully in the foreground. Agile working optimizes the collaboration of teams and together creates added value for customers. This means that customer needs should be at the center of the activities of every team in the company. Agile organizations can demonstrably adapt more quickly to changes in market conditions, shift priorities more quickly if necessary and sustainably improve cooperation with customers.
2. Seize loyalty leadership
Loyalty leadership means focusing all efforts on customer loyalty by ranking existing customers based on their loyalty and long-term business potential. This also means that the incentives for acquiring new customers must be changed towards loyalty and that employees should be rewarded for acquiring permanent customers.
Marketing investments and other resources need to be carefully weighed and shifted to campaigns that are likely to attract loyal customers. Loyalty management works not only for customers, but also for employees, delivery companies, dealers and other stakeholders. Activities include, for example, training and support, or financial and other incentives. Therefore, in addition to focusing on marketing investments, achieving loyalty leadership requires executives to invest heavily in customer service tools and skills in order to provide superior service.
3. Collect and evaluate customer data
Activities need to be measured, otherwise the customer experience cannot be improved. For many companies, it is a challenge to connect customer focus directly to business performance. The reason for this is that customer focus is seen as a qualitative measure, while KPIs are quantitative. However, as soon as a company fully concentrates on solving customer problems, the correct and important measured values will already be found. Using customer satisfaction metrics at all touchpoints helps identify problems and enables companies to resolve them quickly.
However, a measure of loyalty and emotional engagement should also be used to understand whether a customer loves the product and is loyal to the brand. With the help of a customer relationship management system (CRM), the company can find out who the right customers are and how they can increase their added value in order to find other customers like them. The Net Promoter Score (NPS) is a central measuring point for the perception of your organization by customers. Customers rate a service or product on a scale from 0 to 10:
It pays to find out why these customers are dissatisfied in order to improve their experience with your brand.
There is actually no need to focus on the average, although many companies still do.
Promoters should get the utmost attention from companies as they could be brand ambassadors and are most likely loyal to your brand.
4. Establish a customer-centric culture
All of these are very important strategies to achieve a successful customer-centric approach and optimize the customer experience. However, the organization will still fail if you don't build a customer-centric corporate culture. According to a survey by HBR, a customer-centric culture is an important basis for high-quality customer experiences.1
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Breathe Customer Centricity: How to Build a Customer-Centric Culture
In order to be perceived as a customer-oriented company, customer centricity must be lived in every corner of your company, not just in the departments with direct customer contact. Every employee should work in a customer-oriented manner, which is why customer orientation should play an important role in the corporate culture as well as the mindset and values of the company. Customer orientation is deeply rooted in the core of the organization, is strengthened by the management and willingly lived by all employees in their day-to-day work.
Historically, most corporate cultures are sales- or product-driven. A conscious decision for a customer-oriented culture is required. But what makes a corporate culture customer-oriented? According to an article published in the Harvard Business Review, there are six ways to build a customer-centric culture.2 We have summarized these six points for you:
Every employee should work in a customer-oriented manner, which is why customer orientation plays an important role in the corporate culture.
1. Operate customer empathy
Behind this catchphrase is the ability to identify a customer's emotional need, understand the reasons for that need, and respond to it effectively and appropriately. Managers have to fully support and live empathy themselves in order to establish it as a core value.
2. Customer-oriented recruiting
The clientele must be at the center of everything an organization does, including the hiring process. The customer-oriented attitude and thinking of potential employees should be evaluated during recruiting.
3. Democratize customer insights
Employees need to fully understand the company's customers in order to develop a customer-centric mindset. Adobe Systems, for example, has set up wards for employees without direct customer contact so that they can listen in on customer calls and better understand customers' needs and weaknesses.
4. Facilitate direct interactions with customers
Even if it's not obvious, every employee has an impact on the customer experience. Organizations therefore need to ensure that employees have the opportunity to interact directly with customers for all functions, not just those with customer contact. Involve employees in support and sales discussions, customer visits and events.
5. Combine work culture and customer results
Create a relationship between work culture and customer results. As soon as managers and employees understand the importance of a customer-oriented culture, you should create incentives for customer-oriented behavior. IBM found that two-thirds of positive customer experiences are generated directly through employee engagement.
6. Link compensation with customer experiences
The link between customer orientation and a compensation program underscores its importance for the company.
Examples of customer centricity: Best practices from customer centric companies
How can a customer-oriented strategy be implemented? Here are a few examples of how the various aspects of customer focus are put into practice:
Amazon is also known as the most customer-centric company in the world. One of the strategies is to work with personalized recommendations based on previous purchases, recently viewed items, or items in the customer's cart. In this way, Amazon offers an improved customer experience and increases the convenience for existing customers. These efforts lead to a high level of customer loyalty. The Amazon Consumer Behavior Report 2019 states: "Amazon is the destination for searching and buying."3
66% of customers first look for their products on Amazon, 95% are satisfied with their search results and 74% also buy there. In addition, Amazon Prime membership is an important factor for customers. 73% of daily online shoppers also check Amazon in addition to other sites and 83% of them actually buy from Amazon. So Amazon has made it into the customer journey of potential customers. By listening to customers and serving their needs, they increase customer loyalty. This is a great example of how customer focus can pay off.
Mercedes-Benz focused its strategy for the North American dealership on finding a connection between customer satisfaction, loyalty and profitable dealers. After they had better understood their customers, they finally also listened to their employees, understood their needs and trained them accordingly if necessary. They began measuring employee engagement and found that their dealers lacked the skills to interact and guide employees. As a result, Mercedes-Benz founded a management academy. As a next step, the company improved emotional connections with its dealers by setting up an ambassador program.
McDonald's is a great example of asking customers what they want and then responding to that feedback. Based on customer surveys, McDonald’s introduced healthier meals and extended opening hours. In addition, they put extra effort into what is known as social listening to find out what their customers really want. For example, selected restaurants offer breakfast all day.
McDonald’s has worked consistently on its products and services. The company used technology in a variety of ways, for example to post customer-oriented messages on social media or to use kiosks for orders. This enabled the waiting times to be shortened. And in some markets, McDonald’s is working with UberEats to meet emerging needs from potential and existing customers.
The software company Sherpany lives and promotes a value and customer-oriented corporate culture. All employees focus on customer benefit by addressing their problems precisely. Each team member makes a full contribution and is responsible for maintaining and expanding customer satisfaction. We have set up a number of projects and programs to constantly develop our customer-centric approach. The cooperation should be based on reciprocity: The customers get an insight into our company as well as our products and services and get to know our employees. At the same time, we get to know our customers better and are constantly developing our offer based on these insights. Here are some examples:
- The Sherpany product portal offers customers an insight into the next development steps in meeting management software for executives. Customers can also give their opinion directly and even vote for new features and product improvements. This allows you to have a say in the future of software.
- Sherpany employees meet their customers regularly for so-called “review and planning” meetings. Potential for improvement and individual needs are addressed with all customers and the feedback is reflected in the software and services from Sherpany.
- Sherpany recently started an ambassador program to involve “Sherpany fans” more actively. It offers customers exclusive insights into meeting management and the science behind it. The program gives ambassadors special access to events, stimulates regular exchange and turns them into role models in their organizations.
- With the Sherpany Pioneer program, customers get early access to new functions and can try them out before anyone else.
The positive effects of customer centricity
Why is it worth building up customer centricity or maintaining and expanding this customer centricity? Well, here are some perks that are worth putting the customer at the heart of a business for:
1. Increased customer loyalty
A high or at least increasing customer loyalty is the key to corporate success. To do this, concentrate on the right customers. According to a study by Frederik Reichheld, the inventor of the Net Promoter Score, an increase in the customer loyalty rate by 5% leads to a profit increase of between 25% and 95%.4
2. Cost savings
It might not seem obvious at first, but loyal customer relationships keep costs down. This is because long-term customers often buy more and more expensive products and services from a company they trust, while operating and purchasing costs decrease. Long-term customers switch to a competitor less often, spread word of mouth and thus help in acquiring new customers. Customer-centric companies are 60% more profitable than companies that are not customer-focused, according to Deloitte research.5
3. Reduced employee turnover
A customer-oriented culture also creates satisfied and loyal employees based on trusting relationships, fair performance feedback, mutual communication as well as training and support if required. If employees are happy with their job, they have no reason to leave the company. This in turn reduces the cost of recruitment.
Customer orientation: not just an empty phrase
The rapidly changing VUCA world of today - our environment characterized by volatility, uncertainty, complexity and ambiguity - with its tough global competition and increasing customer requirements leaves companies with no choice but to adapt. Companies need to embed customer focus in their corporate culture in order to remain relevant and to be successful. However, this requires committed leadership and strategies so that all employees really live customer orientation in their everyday lives.
Becoming a truly customer-centric organization is indeed a great business opportunity as customers reward brands with loyalty, loyalty, and word-of-mouth recommendations. A customer-oriented culture is the basis for a flourishing and healthy organization with happy and committed employees. Customer orientation is therefore the guarantee for a real win-win situation. Before that, however, an organization must identify the right clientele for itself.
1 'Closing the customer experience gap', Harvard Business Review Analytics Services, April 2017.
2 'Six ways to build a customer-centric culture', by Denise Lee Yohn, Harvard Business Review, October 2018.
3 'The 2019 Amazon Consumer Behavior Report', by Feedvisor, March 2019.
4 'Prescription for cutting costs: loyal relationships', by Fred Reichheld, Bain & Company, 2001.
5 'Wealth Management Digitalization changes client advisory more than ever before', Deloitte, July 2017.
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