Customer-focus: to be or not be?

24 03 2012

We have seen how product-centered companies such as Nokia lost track of market demands and continued adding features that customers did not value. On the other hand, we have seen shareholder-centered companies as General Motors where even Jack Welch admitted it would be the dumbest idea to continue with this emphasis in our current context. We have also observed how customer-focused companies like Zappos have exceeded customer expectations by delivering an excellent customer service thus struggling to finance it. The path is blurry and we may wonder where is the balance?

In the era of accelerated information and increasing technology innovations, companies have no option but to become customer-focus. Mr. Ray Kroc – founder of McDonald’s, said it best: “Look after the customer and the business will take care of itself”. Even though I agree with this argument my only question is: Do companies really have to take care of every customer? I believe the word “profitable” is missing from Mr. Kroc statement.

Nowadays companies seem to be customer-obsessed rather than customer-focus. Firms are trying to acquire and satisfy every customer possible regardless of it cost. This is not the right approach. Customer-centric companies are the ones who understand what the customer values and the value that the customer represents to the bottom line. In this sense the firms that capitalize from this approach are the ones that have reorganized their entire operating model around the customer in order to accomplish two strategic objectives: the first, to increase satisfaction levels in order to rise repurchase rates and/or average ticket; and the second, to better allocate the costs that each customer represent in order to identify the profitable ones. With this in mind, in order to capitalize from customers, firms should focus on the ones who are profitable.




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