Want to stay competitive? Keep customers as your North Star

Every CEO will say that their customers are at the heart of everything their business does, but while they might talk a good game, not everyone practices what they preach. Despite good intentions, the needs of the customer are constantly at risk of being eclipsed by more pressing, and more visible demands for attention such as managing cashflow and logistics or simply overseeing daily operations.

And this oversight can spell disaster if not recognised and corrected.

In The Practice of Management (1954), Peter Drucker wrote: “The purpose of business is to create and keep a customer.” But this is easier said than done in today’s modern industries. The balance of power has shifted – today’s customers are more informed, more vocal and have more choices than ever before, requiring organisations to work harder to keep their customers’ attention and loyalty.

At the same time, customer behaviour is changing rapidly – more consumers are buying groceries and takeaways online for example. More challenging still, the pandemic has turbocharged a shift to digital, forcing many companies to swiftly switch gear and adapt their practices almost overnight to keep up.

It's clear there are significant challenges to being this customer-centric. But managing to keep your customers as your North Star as your business evolves will return immeasurable benefits. So how can organisations accomplish this? In a recent webinar I hosted for Imperial College Business School’s Executive Education department, I shared some key lessons with an audience of business leaders all facing the same problem – how to effectively keep their customers at the front of their minds amid multiple organisational pressures, a rapidly changing business environment and a constantly shifting world around them.

The first, and most important step for business leaders is to truly understand the perspectives of their customer base and how they engage with their organisation…

Understanding your customers

Thanks to web data and customer satisfaction surveys, it’s never been easier to know how consumers behave, how long they linger on a webpage and how they rate your service.

Companies can use many other quantitative research tools, such as conjoint analysis, to really drill down into consumer preferences and gain a more accurate understanding of their habits. But business leaders should be wary of relying too much on this. There are dangers in exclusively focusing on data which can be easily quantified from standardised questions and simple rating scales. Consumer fatigue can set in for example, with satisfaction surveys now eliciting fewer responses and less engagement, making them less effective.

Ironically, it’s the questions that businesses don’t ask their customers that could actually provide the most valuable information – thoughts and feelings can’t always be expressed as a number and big data doesn’t always reveal the truth of someone’s experience.

Businesses need to find ways to allow core customers to express what they feel spontaneously, and engage with them in a more open-ended way. Companies are beginning to devise more imaginative ways to ask the same basic question: "what do you like about our company?" allowing customers to be emotive and wider-ranging in their responses, but such activities shouldn’t stop there.

It’s not enough to take a snapshot. Business leaders need to observe the full customer journey, understand their experience and be able to react to it. Businesses need to weigh up whose feedback they want, possibly prioritising their most valuable and loyal customers, and focus on gathering qualitative, not quantitative, information from them.

Keeping customers front of mind

And then there’s the second challenge, acknowledged at the beginning of this article: how, amid logistical, strategic and financial pressures, do you keep customers at the top of your agenda?

A good example to look to here is the hospitality sector, which truly understands the importance of customer-centricity as it truly lives and dies by customer response and as such has become exceptional at meeting and anticipating customer needs. Also, with the advancements made in smart devices and AI, so too have big players in the tech industry become unparalleled in anticipating and providing for customer needs. But other sectors and businesses seem to be kept so busy with the day-to-day challenges of simply operating that, often, the customers are neglected.

The recent closure of Debenhams, a retail business that had operated successfully for nearly 250 years, serves as a valuable lesson for what can happen to even the largest of high street retailers when they don't pay enough attention to what their customers want. The rise of online shopping was not the only reason for Debenhams’ collapse. A failure to innovate, to offer customers something different to other high street retailers and to keep pace with the latest trends have all been blamed for the department stores demise.

With both the rise in e-commerce and the current global pandemic limiting opportunities for businesses to connect with their staff and their customers in person, the challenge of knowing exactly what the customer wants keeps getting harder. So how can businesses keep customers front of mind, especially when staff are working remotely? In the past, in the traditional office environment some companies have done this by installing prominent displays of client photos and stories, which act as visual reminders for staff who might not have direct contact with clients of who they’re really working for.

Companies need to find new concrete ways to reduce the distance between staff and clients, by facilitating easy engagement. Collaboration platform Slack does this well amid remote working by collecting and sharing customer stories in newsletters to their staff to give an idea of the people behind the data.

Making customer-centricity part of your culture

It’s not enough for companies to simply declare their customers are paramount, they need to consider the organisational changes required to make this happen.

Customer value needs to become a core part of organisational culture and reflected from the leadership down. Companies must hire candidates who can empathise and truly understand customer needs and concerns. Leaders of smaller organisations should consider whether there is room in an organisation for a consumer champion, responsible for customer insights, research and advocacy. Larger companies should look into empowering managers to incorporate this at local levels.

What gets measured gets managed, as the adage goes – so what are the benchmarks that show a company is achieving its goal of customer value? One popular measure is net promoter score, which measures how willing customers are to recommend a product or services to someone else. And even low scores can provide valuable learning for leaders, as dissatisfied customer feedback serves to show an organisation how not to do something next time.

We have seen great strides in customer awareness over the last two decades. New companies tend to do better for their customers than larger corporations – they can’t afford not to. But as companies grow, different needs compete for attention, and in the race to be bigger and better than your competitors it’s easy to lose sight of the people who really make that possible, your customers.

It’s hard for businesses to make changes when they are firefighting, and they did plenty of that over the last two years. It was a tough time, but many economists are forecasting a resurgence of the roaring twenties over the next few years. With the turbulence that businesses face at present, it could be too easy to lose sight of this simple truth – the customer must be at the centre of everything. After all, how can you survive without them?

Dr Rajesh Bhargave is Associate Professor of Marketing at Imperial College Business School. His research and teaching specialises in the area of consumer behaviour. The webinar “How Consumer Centric is Your Organisation?” is part of the Imperial Future Matters series, produced By Imperial College Business School’s Executive Education department. It can be viewed for free via the website.