The first assignment that I give my MBA students challenges them to come up with a list of companies that they believe are customer-centric businesses. The idea is to sharpen their thinking about what defines customer centricity and to highlight the few companies that are executing this important concept correctly and systematically.
Apple is cited frequently—for its sheen of trendiness and user-friendly gadgets—yet in fact the tech giant is product-focused. Other students point to service-oriented companies like Nordstrom. But the anecdote often used to support this assessment (e.g., providing a refund for products Nordstrom didn’t sell) fails to get this department store a customer-centric seal of approval.
Since the term “direct marketing” was coined by visionary Lester Wunderman in the 1960s, this practice has been negatively associated with late-night infomercials, pyramid schemes and products that can’t be sold in the traditional marketplace. Still, one student listed Mary Kay and Avon as customer-centric companies. Impressive. The fundamentals that make those companies work are the same shared by irrefutable successes such as Amazon and American Express.
Customer centricity is not merely about customized products and services. It’s also a celebration of customer diversity. Mary Kay consultants live and die by their ability to leverage individual customer-level data. A truly customer-centric firm also knows that world-class service should be reserved for only the best customers. Its principles warn that rolling out the red carpet for every customer is a crippling waste of resources
For Mary Kay, there is no “the customer.” The consultants’ success is based on their ability to know customers as individuals—their purchase patterns, preferences and financial means—and devoting their valuable time and resources to the most profitable customers. These individuals will build long-term value for consultants through increased sales frequency, cross-selling and retention.
Large retail organizations may feel the “direct marketer” label off-putting, but until they initiate practices that focus on individuals, customer centricity will be a far-off goal for them. For instance, try walking into a coffee-shop chain branch that you’ve never visited, hand them your loyalty card and ask for your “usual.” Unless you receive your beverage with little or no work on your part, that chain’s not a bona fide customer-centric firm.
Customer centricity is a sound, proven, winning strategy—and no, it’s not about just being “nice” to your customers. It’s not about customer service at all, not in the traditional sense. Leaving old thinking and old practices behind, firms that embrace customer centricity target the right customers in the right way to generate the right results. It’s about creating smarter, more strategically focused organizations that celebrate customer heterogeneity and are willing to admit that they can learn an awful lot from direct marketing.
Editor’s Note: Peter Fader is author of Wharton Executive Education Customer Centricity Essentials: What It Is, What It Isn’t, and Why It Matters, from Wharton Digital Press.
