The unbearable lightness of customer centricity

Defining your focal customer is possibly the most central – and simultaneously the most neglected – question that you can ask yourself when you are making strategy, rethinking your business model or innovating new products, write Suvi Nenonen and Kaj Storbacka.

All companies claim that they are customer-centric. Go on, open any annual report, strategy presentation or corporate website, and you are bound to find some exclamation about this organisation’s extraordinary emphasis on customers in a matter of seconds. But if nearly all companies are so customer centric, why this abundance of failing strategies, painful customer experiences and flopping product launches?

One of the reasons may be that very few companies truly understand what customer-centricity means. Those who get it right seem to be the ones that are open-minded enough to choose differently and deaf enough to understand.

Find your focal customer
It may sound curious, but we have found that many companies struggle to define who their customer is. Unfortunately, if you don’t know who your customer is (and who it is not), it is mighty difficult to know around whom you are supposed to centre your thinking and operations.

It used to be simple: the customer is someone that gives you money. But as a result of increasingly networked and complex business models, more and more firms are realising that this is an outdated delineation.

In fact most companies have multiple important stakeholder groups, many of which could be labelled as ‘customers’. The key to success is to have clarity of which of these customer groups is the focal customer around whom the firm’s strategy will be developed.

Google views the googler as their focal customer – the idea being that only by ensuring the loyalty of the googler can it secure the cash flow from the advertisers.
Similarly Kone, the world’s second largest elevator and escalator company, views the end-user as their focal customer. Kone’s argument is that its job is to help the buyers and operators of elevators and escalators to enable a smooth people flow experience.

We would like to suggest that defining your focal customer is possibly the most central – and simultaneously the most neglected – question that you can ask yourself when you are making strategy, rethinking your business model, or innovating new products.

Stop listening and start understanding
We are led to believe that we should carefully listen to our customers. But at the same time we hear about hero-entrepreneurs who claim that they don’t care very much about market research, because “people don’t know what they want until you show it to them”, as Steve Jobs said. So what should one do: more customer research or less?

As often in business rhetoric, this question mistakes a process for an outcome. A customer centric company needs deep customer insight, but this insight can be generated through various methods – voice of the customer and traditional customer research being just one of them. Innovative firms are spending more time on ethnographic customer research, which forgoes asking questions and focuses on observing customers in their everyday contexts, with an aim of figuring out how this everyday life could be improved.

Furthermore, firms need to understand the difference between high- and low-interest products and services. It is relatively easy to get well-articulated views from customers about things that they are really interested and engaged in. Not so easy when it comes to low-interest offerings such as electricity or yoghurt.

Customer insight is a key driver of successful innovation, but listening to customers is not necessarily a key driver of customer insight. 

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