Organisations need leaders, people who can make the complex clearer. People who can unwrap the interdependencies across the organisation and make the pathway towards improved performance seem like a ray of light. Customer centric leadership unlocks this potential.
Organisations need leaders because the organisation is full of organisms – people – who are looking for some leadership. People looking for their leaders to connect the work they do with a meaningful purpose. People wanting to make a positive difference in the lives of other people (often, customers). And ensuring the world is a better place with their organisation in it.
Leaders who recognise the principles of customer centricity and how to apply these to their organisation, teams and customers – are the ones that can lift the performance of the organisation through connecting with the people of the organisation.
Customer centric leadership has the following five key principles. These guide customer centric leaders to greater levels of performance and employee engagement.
1. Businesses Exist for Customers
Organisations exist because there is a customer that requires the services or products they provide. This applies to for-profit, non-profit, and even government.
The Department of Health exists because there is a population of people that require their services to live fulfilled lives, to enjoy a greater quality of life.
Local Government services are there to meet the needs of the rate payers and residents (customers).
Businesses exist to exchange value with customers. By providing value for customers the business receives compensation for this value. If there is a two-way value exchange that both parties value then the business will thrive. If this two-way value exchange is tilted towards the business, then they will lose customers and reputation.
Too many businesses and organisations today are focused on themselves. Internal politics and dealings, rewards and punishments, that make the game seem like it is all about them, rather than their customers.
The Customer Centric Leader that recognises this first principle brings a perspective to the organisation that recognises a co-existence with their customers. This in turn brings about a sense of humility. Of being in service to others. Of working towards mutual benefit, value for customer and value for the business. Rather than a sense of arrogance that the leaders can do what they want for their own benefit.
The Customer Centric Leader that recognises this first principle also brings clarity to the outcomes the business is striving towards.
2. It’s all about People
People bring businesses to life. Everyone who works (and/or volunteers) at the organisation produce the culture of the business, which is inextricably linked to the survival and success of the organisation. And it is the people – employees – that interact with customers and design products and services for them.
Customers are people that provide the revenue (and profit) for the business. Profit comes from the decisions customers make: purchasing, how much advocacy they provide, how they choose to interact with the business. The product and/or service offered provides value (or not) for the customer and in return the customer contributes to the business.
It is critical therefore, that the leader can connect the people within the organisation to other people – the customers, or the community that we serve. People cannot connect to, the ‘number of services we provide’, or the ‘great product’ we produce, or becoming the ‘world-class’ organisation, and especially profit. The people within the organisation cannot find meaning in increasing dividends to shareholders or financial bonuses for executives.
People within the organisation can connect and find meaning when they see and feel the value their customers get from what they do. This difference we make to our customers and the world around us is where we find the meaning in our work. The feeling of making a positive difference through the work we do is where we find true employee engagement.
The Customer Centric Leader will ensure the vision and purpose is locked in on customers and the value they gain from interacting with us. The Customer Centric Leader is focused on genuine connections with customers based on value (not products or services).
Organisations and businesses thrive when people around them flourish.
3. Not all Customers are Equal
This principle may appear obvious however, most businesses treat all their customers the same. When we recognise that our customers can represent different value to us – not just in financial terms, but also in advocacy – we realise we probably should not be treating all customers the same.
Customers vary in what they value and how they perceive the value they get from organisations. This will lead some customers to vary how they extract the value they want from businesses. These variations can cost the organisation. These costs often go unnoticed, and are perceived as a cost of doing business, rather than attributing the cost to the specific customers that create this additional cost.
Your Customer Strategy
Customer Centric Leaders ensure their customer strategy clearly identifies specific customer groups. These customer groups can be defined by their role with you, but more importantly they are defined by the value they get from you and their connection or attitude towards you.
If you were a retailer for example, the customers that purchase from you because they value your brand and what you do, are worth much more to you than the customers don’t really care for what you represent and ‘cherry-pick’ discounted products. These customer groups value different things and represent different value to you. Do not treat them the same. Nurture and grow the customers that value what you do. Your cherry-picking customers could get swift service, reducing your cost to serve them.
In the example just provided, for each customer group we identified a ‘customer intent’ – what our intention is with each group. Firstly, to nurture and grow the group that gets what we are about. Secondly, with the cherry-picking customers, reduce our cost to serve them.
Customer Centric Leaders understand their customer groups, their intent with each customer group is clear and they can articulate a value proposition that will resonate with each group.
4. Businesses are Systems that Deliver Value
All our organisations are a collection of systems and processes. These systems and processes ideally support the people in the business to provide value to their customers. When we look at our businesses in this way, we can ensure we align the processes, systems and resources we have to consistently deliver value for customers and at the same time maximise the results for the organisation.
I first learned about systems thinking from Peter Senge (systems scientist, MIT Sloan School of Management). The founder of quality and continuous improvement, Dr. W. Edwards Deming, always contended that the vast majority of performance improvement opportunities lay within the processes and systems of the organisation (not the people).
Recognising that our organisations are, in so many ways, driven by the processes and systems, the Customer Centric Leader ensures that there is alignment across these processes and systems that delivers value for the customer. That these processes and systems deliver a smooth experience for the customer (even across functions and silos). That they deliver the intent we have for each customer group. That the alignment concurrently delivers the maximum outcome for the organisation.
Customer Centric Leaders ensure there is alignment of resources (processes, systems and people) to maximise the delivery of value for the customers and the business.
5. The Need for Progressive Improvement
We need to have progressive improvement across all our resources, because the expectations our customers have of us is regularly changing. Their expectations from us will rise as they experience smoother and easier interactions from other organisations.
The increasing expectations of your customers drives the need for progressive improvement. As well as the changing landscape of rivals seeking the attention of your customers.
‘Progressive’ refers to the iterative nature of this improvement. To me it is not: an annual plan to improve, develop actions for that improvement and deliver over the coming year. Gaining performance improvement is far more iterative (perhaps in three-monthly cycles). This approach also allows the organisation to develop a culture of learning, learning how to improve. Not judging people by the actions they perform.
‘Improvement’ here refers to ensuring we have a clear intent with each customer group that is evidenced with clear outcomes and performance measures. Also, Improvement is then progressive. Improvement here is also recognising the optimal balance that is required between the outcomes of the business and the outcomes with customers. Actively managing the tension between value for customer and value for the organisation.
Customer Centric Leaders will then ensure our improvement efforts are aligned with the delivery of customer value.
Customer Centric Leaders will also make sure our focus is on making progress towards our outcomes/results, and that our leaders regularly communicate the progress we have made with evidence.
Summary: The Five Key Principles that guide Customer Centric Leaders
1. Businesses Exist for Customers.
Customer Centric Leaders consistently put the focus on the customer and the value we need to deliver for them.
2. It’s all about people.
We connect with customers on value (not what we do, the value customers get from that). Our vision is locked in on our customers and our purpose is about the value we deliver for customers.
3. Not all customers are equal.
Customer Centric Leaders know the customer groups. They what they are trying to achieve with each group (documented in the Customer Strategy). And they have clear value propositions to communicate with customers.
4. Businesses are systems that deliver value.
Systems, processes and people are aligned across the value delivery system.
5. The need for progressive improvement.
Customer Centric Leaders recognise that the expectations of customers change. They ensure improvement efforts are aligned with the delivery of customer value. They communicate the progress we are making.
How customer centric is your organisation?
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Learn more about this customer centric approach on this page.