Far from all companies have all the necessary components to be called customer-centric.
Thus, we can see that it makes much more sense to start with your customer, and not with a product. If you are shaping your company from the customer’s perspective, it will certainly focus on the customer’s needs and desires.
4 Best Practices for a customer-centric company
If a customer oriented business becomes your policy then it means that you will do your best to anticipate your customers’ needs and desires providing products and services that you even didn’t think of yourself. So, a customer-oriented business creates products, services, policies, and finally, a culture that are directed to maintain a high level of customer satisfaction, as well as creating a fantastic customer experience while helping customers to achieve their goals.
There are four Best Practices to customer centricity that really deserve maximum attention:
- The companies that engage in customer centricity policies are passionate and true to the idea that the customer is king. They believe that there is no true business success without a true clientele; therefore, they try to look at the world through their customers’ eyes. Marketing experts in such companies know what their customers want and they use customer data to collect all the information about their clients, encouraging every employee to put their customer in the first place.
- The companies that engage with customer centricity concentrate on what their customers need and want. They center their product and services on their customer.
- The companies that have signed up for customer-centric policy concentrate on developing a relationship with their customers, in order to enhance the product and service experience of their customers.
- The companies that live the customer centricity analyze, plan and implement a thoroughly prepared customer strategy, which is designed specifically for creating happy and loyal customers.
How do we measure success for a customer-oriented business?
There is no a single metrics for all the companies which would measure the level of a company’s customer centricity. Yet, there are two metrics that surely deserve your non-stop close attention. These are churn-rate and customer lifetime value.
Gaining new customers is becoming increasingly difficult. Therefore, instead of spending more on the customer acquisition companies try to invest more in the existing customers. The reason is as follows: gaining new customers can cost a company fivefold what it costs to retain the existing customers. A 2% growth in customer loyalty has an equal effect on profit as a 10% cost reduction. On average, a company loses about 10% of their clientele every year (also known as customer churn).
Companies with a high retention rate grow faster. The key to success is figuring out the reasons why customers leave and why customers stay.
In order to calculate the churn-rate, you first calculate the number of clients who have left your company over the last 12 months and then divide this number by the average number of your customers (over the same period of time).
Customer Lifetime Value (CLV)
This is the most valuable asset of a client for any customer-centric company. Revenues generated in the retention phase are often referred to as customer lifetime value or CLV. Customer Lifetime Value measures the profit that is brought to the company by a single customer account. It is a very important metric and is used while making important decisions about marketing, sales, product development, and customer support.
In order to calculate CLV, you take the turnover that you produce with your customer, and subtract all the customer acquisition/care costs, subsequently customizing all payments to the time value. Another way to calculate CLV is to take your average purchase value or invoice value and repeat the order placements. For example, when your average order value is €100 and the average purchase frequency rate is 20% per client, your estimated CLV totals to €120.
The Customer Lifetime Value calculation helps you to understand why it is more reasonable to invest in your customers’ retention. It offers your business a fantastic opportunity to have a better vision of your customer portfolio and a better understanding of the customer segmentation.
Conclusion and perspective
The road to a customer-oriented organization is a complex one, and it doesn’t take you to your aim overnight. Exactly all of those already available and pending possibilities of digitization enable you to master customer centricity. Cast away all hesitation; you will see that even the smallest changes in your business processes can create a considerable benefit to your customers as well as your employees.
The customer-oriented company is the holy grail of sorts, which opens the true potential of the customer benefit. Try to put yourself in your customer's shoes as often as possible, encourage your employees to try on this role as well, which will allow you to maximize the customer value for your company.
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