In today’s market, competition is fierce and customers have increasingly high expectations. The businesses flourishing are the ones embracing customer-centricity, and placing the customer at the center of every decision they make. Customer-centricity begins with a foundation of reliable data — this allows brands to understand every facet of a customer’s journey and their wants, needs, and preferences. Armed with this knowledge, brands can craft segment-specific campaigns and effectively personalize, boosting loyalty and improving buyers’ experiences.
Professor Peter Fader, the Frances and Pei-Yuan Chia Professor of Marketing at The Wharton School of the University of Pennsylvania, sets the record straight about all things customer-centricity.
Help us define customer-centricity, as it relates to your own work.
When we invented marketing as we know it back in the 1950s — the era of Mad Men, soap operas, and big, scalable mass media — marketing energies and resources were concentrated on figuring out what pitch to use that would get the customer on board. When marketers realized that their customers weren’t all the same as each other and that they each have different wants and needs, companies weren’t happy. It meant more expense, more complexity, more uncertainty, and it didn’t scale. So they ignored it. They continued to try just to shout very loud, with one message that would be as appealing to as many people as possible. And that really has been the guiding principle for marketing for the last half-century.
My view is the opposite of that, instead of saying, “The customers are different. How can we align them around our product?” we should embrace the reality that customers are different, and that some are going to be inherently more valuable than others. So instead of trying to be everybody’s best friend, marketers should strive to understand those differences at a deep level, figure out which customers are best aligned and born to be with them, and then build their business around them.
What do you think people misunderstand about customer-centricity?
In a sense, this is just about aligning with the reality of the 80/20 principle. It’s not a theory. Over 20+ years of modeling and analysis, data consistently reaffirms that a small minority of customers are responsible for an outsized portion of revenue and growth.
How does this idea of customer-centricity differ from traditional definitions of customer service or customer care?
Customer service is a classic example of the one-size-fits-all approach. There’s this fashionable idea, inspired by the late Tony Hsieh and others, that every customer should be treated with the same level of care and attention. It’s a noble idea, but it’s neither efficient nor effective for a business to try and surprise and delight everyone at once.
Customer service and customer experience are a function of the product. It’s important to have high standards for it. But customer-centricity is about understanding who can live with the basic standard and who warrants some extra attention, knowing where to draw the line and manage both simultaneously.