Published

1

Sep

2008

Report

Customer Centricity and the Role of IT

Introduction – What is customer centricity?

There is a general trend that we have observed in business organizations of every type: they are becoming more ‘customer-centric’ – that is, providing their customers with a higher-quality, more personalized and  integrated experience, particularly over the Internet. Generally speaking, customer centricity means moving away from the traditional, inside-out, ‘we know best’ orientation of most companies, and towards an outside-in perspective in which the customer is placed at the centre of the relationship, and the supplier’s organization boundaries are largely transparent. Customer-centric firms also recognize that customers live in a wider business ecosystem, where communities, aggregators and other actors play an increasingly important role.

Customer Centricity and the Role of IT

We usually find that IT needs to change to support changes in the business and its organization. But in this case the reverse also appears to be true. When a company begins to do substantial business over the web, customer centricity often becomes an imperative and begins to drive larger cultural and organizational change within the firm.

Achieving true customer centricity requires a number of specific organizational goals, actions and skills that few firms or their IT departments have fully in place today. Technology is blurring the lines between the Marketing and IT functions, as companies and their staff require a double-deep mix of skills that leverages the marketing potential of the web, but also meets the complex information management needs of the enterprise. While historically corporate Marketing and IT often had a distant and not particularly warm relationship, now increasingly they need to function as one effective team. The CIO often faces the choice of aggressively seeking to build this new partnership, or of watching Enterprise IT get passed over in favour of other alternatives.

In the light of our ongoing work into Web 2.0 and the consumerization of IT, we are also interested in marketing in the Internet age. Whereas in the past marketing has mostly meant advertising, brand management, and customer relationships and targeting (for example, through CRM), in the Internet age it is becoming much more interactive, more integrated with the day-to-day business, and much more technology-intensive. Such cultural changes have shaken the marketing profession and created many new players and opportunities that Enterprise IT must increasingly be aware of.

Figure 1 – Participants in the Customer Centricity and the Role of IT research project

  • Airlines
    • European major
  • High-tech products
    • Automation
    • Medical systems (2)
    • Office systems
  • Financial services
    • European banking group
  • Insurance
    • British insurance group
    • Continental insurance group
  • Chemicals
    • American major group
  • Advertising
    • Global group (3)
    • Web advertising firms (3)
  • Media
    • European majors (2)
    • American major
  • Hospitality
    • American major
  • Pharmaceuticals
    • American major
  • Services
    • European automobile club
    • Yellow pages group

This report summarizes the findings of a recent LEF research project investigating the approaches firms are using to become more ‘customer-centric’. This project also explored the broader question of what marketing means in the Internet age, and this report leverages our ongoing work on Web 2.0 and the consumerization of IT. The types of companies participating in the project, including many LEF EP members as well as other firms, are listed in Figure 1.

Figure 2 – The journey of customer centricity

Figure 2 – The journey of customer centricity

As shown in Figure 2, firms should think of customer centricity as a journey, beginning with smart web sites and continuing through rising levels of integration all the way to totally personalized and memorable experiences. For different stages of the journey, the figure lists example organizations.

The lower levels of centricity involve more standardized systems and self-service, with less customization, longer processes, more complex interactions and a generally less-intelligent experience than is found at later stages in the journey. Most e-commerce sites (such as 3M in Figure 3) are at this level.

Advanced customer centricity (as seen at Amazon, described in Figure 4) is defined by an experience that exceeds the customer’s expectations, with attributes that include the following:

  • Explicit and efficient processes that intuitively make sense to the customer.
  • Recognition that one is already a customer with specific interests and history.
  • The right mix of personal and impersonal service and recommendations, as viewed by the customer.
  • No hassle; no need to cope with, or compensate for, the supplier’s own dysfunctions.
  • Smooth leverage of ever-improving Web 2.0 and consumer technology.

Most firms have a long way to go on the customer centricity journey. They need an array of new IT and analytical skills to create and manage the new web presence. Then, behind these, they need customer-centric systems and management techniques (for instance, customer profitability) that rarely exist today. Finally, they need muscular cross-unit governance to achieve the coordination needed to appear integrated to the customer. These many aspects of customer centricity are explored in the following pages.


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