As Customer IQ specialists we’re frequently asked “What’s the difference between customer-focused and customer-centric?”; and “Can a company be customer-focused and not customer-centric, and vice versa?”
So we thought it would be worth sharing here how we see it. Let’s start with our definitions...
Customer-focused organizations provide products and/or services that customers want, but do not drive all operations around the customer.
Being customer-focused is usually a strong contributor to the overall success of a business and involves ensuring the company puts its customers' satisfaction first. Customer-focused organizations usually maintain effective customer relations and service programs.
The customer is always right, and the customer comes first.
Customer-centric is a way of doing business with your customer that provides a positive customer experience before and after the sale, and through all touch points along the way, in order to drive repeat business, customer loyalty, and profits.
A customer-centric organization puts the customer at the center of the organization and all business decisions start by asking, "How will this decision impact our customers experience?"
Customer-centric means making the customer's life easy and the interaction with the brand convenient; designing and implementing processes that are focused on delivering a positive experience to the customer; making it as easy as possible for the customer to learn about you, buy from you, get your support whenever and wherever they need it, and enables them to build an affinity relationship with your brand.
With these definitions in mind, Nordstrom is a good example of a customer-focused company and Sephora is an example of a company that has quickly evolved from being customer-focused to customer-centric – they effectively balance technology and data to deliver delightful customer experiences across all digital and physical touch-points; they engage their employees in the process of creating customer experiences that surprise, delight, and galvanize customer loyalty; and they promote customer-centric thinking vertically and horizontally throughout the company. Sephora proactively puts their customers at the center of all business decision making.
Dr. Peter Fader, author of Customer-Centricity: Focus on the Right Customers for Strategic Advantage, adds that companies that are truly customer-centric leverage data to calculate each customer’s lifetime value, identify their best customers, and ensure their satisfaction. Fader’s philosophy doesn’t profess organizations should ignore customers that are not classified as their “best customers," but he suggests spending less time and energy focused on this set of individuals.
At C[IQ] we agree with Fader that to be truly customer-centric a company must leverage data to make informed decisions about how to create a customer-centric experience. We also support Fader’s view that there isn’t an “average customer”.
However, unlike Fader, we believe a customer’s value isn’t always determined by their CLV (customer lifetime value), regardless of the approach to calculating that metric.
We help our clients explore all data available to ascertain each customer’s uniqueness – each has a different propensity to buy; to respond to different types of messages; and to be an advocate for your brand. Each of these characteristics must be taken into consideration when assigning “value” to a customer. Customer-centricity doesn’t mean ignoring customers that don’t spend as much; it means knowing when and how to leverage the “value” of each customer relationship to be a more profitable company. (We'll talk more about a customer’s value in another article.)
By understanding the unique “value” of each customer a customer-centric company can allocate its product development, distribution, marketing and customer service resources more effectively to drive profitability. Smart spend is essential; all companies, no matter their size, have limited resources. With this in mind we believe the best customer-centric brands do three things:
- Harness data to understand the value of each customer;
- Leverage customer knowledge to design and deliver products and services that surprise, delight; and
- Engage customers in a manner that increases loyalty and advocacy to maximize long-term company value and profitability.
So, being customer-focused is not the same as being customer-centric. Rest assured, customer-focus is the first step toward customer-centricity, but not all customer-focused companies evolve to become truly customer-centric. More about that soon.