EMC SquaredKey Take Aways

What is customer-centricity?Not just a marketing or sales program, but a

comprehensive, company-wide initiativeMore than just a “mind set”; it is an intentional and

well-executed series of practices and structures that affects the entire company

It is NOT just being “customer friendly”For example, Amazon says its mission is

“to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices,”  http://www.amazon.com/Careers-Homepage/b?

ie=UTF8&node=239364011

In order to be truly customer-centricCustomer orientation

From internal focus to external focus on the customerValue proposition and product strategy

New product development should be informed and vetted by customers

The product the company sells should provide a full solution to problems customers face

Selling approachConsultative approach that involves listening and joint

problem solvingMarket research and customer intelligence

Deep, comprehensive knowledge of customer needs and problems

In order to be truly customer-centricBusiness practices and processes

All of the business processes of the company need to be realigned to support customer needs

Organizational culture and structureShift in cultural norms, formal structures, and

reporting to support a culture of customer-centricity

Metrics and incentivesReward customer-centric behavior with

metrics such as customer satisfaction, customer lifetime value, customer retention and churn

When will investments in customer-centricity pay off?When customers are willing to pay for high

levels of customer service or a better pr0ductWhen products are commodities and service

is needed for differentiation

Amount of effort on this varies with the size of the companyFor a startup, you can spend 1 hour talking to

1 customer Ask about problems, ask what they don’t like about

you, this requires a “thick skin” and it’s painful but extremely helpful

For a huge company, like AB or Purina, there is a huge amount of customer research done all the time

Customer focus

When customers are willing to pay for high levels of customer serviceCustomer friendly = Treat each customer the same, and

provide great service to everyone (“One size fits all”)Customer centric = Pick and choose your best

customers, and offer more for the better onesWhich customers are the best?

Those with the greatest lifetime valueCustomer Lifetime Value (CLV) = contribution margin per

year (m) X expected life of the customer (L) – cost to acquire the customer (AC) B2C customers not as profitable, so not worth investing as much

in acquiring them vs. B2B customers Software margins are better than hardware margins Customer-centricity programs can increase the life of a customer

Another solutionOffer different products and services that will

appeal to a wide range of customer typesStripped down model, little service for those

who are price-sensitiveModels with many features, great service for

those who are less price-sensitiveAB Inbev refers to this as creating a

“recession proof” company

Marketing Analysis (The 5 C’s)

Customers Company Competitors Collaborators Context

MarketSegmentation

TargetMarket

Selection

Product andService

Positioning

Product & Service Place/Channels Promotion

Pricing

CustomerAcquisition

CustomerRetention

Profits

CreatingValue

CapturingValue

SustainingValue

General Framework for Marketing Managers

Marketing Mix (The 4 P’s)

Another example of customer centricityHarris Interactive asks consumers who are familiar with the

company 20 questions across 6 dimensions to measure the overall reputation of the companySocial responsibilityVision and leadershipFinancial performanceEmotional appealProducts and servicesWorkplace environment

http://www.harrisinteractive.com/Products/ReputationQuotient.aspxAmazon is number 1, which is interesting because they say

they want to be the most customer centric company in their mission statement, and it is paying off

Another example of customer centricityGE recently went through a process to make itself more

customer-centricTo do this, it increased the role of marketing

Marketing used to be just about sales support (lead generation and trade shows) and communications (advertising and promotions)

It is now an integral part of GE and consists of Strategy and innovation (helping develop new products) Branding and communications Sales force effectiveness (helping the salesforce) New world skills (social media, etc.) Market knowledge (trends, competitor intelligence, etc.) Segmentation and targeting (picking the best segments) Value creation and pricing Commercial activation (helping sell new products)

Source, HBR, “Unleashing the Power of Marketing,” October 2010

SummaryCustomer –centricity is not just a marketing

or sales program, but a comprehensive, company-wide initiativeMore than just a “mind set”; it is an intentional

and well-executed series of practices and structures that affects the entire company

It is NOT just being “customer friendly”It does NOT mean that every customer gets

treated the same way, all with high levels of service. Instead, only some receive high levels of service.