Insights / Article

How to Know Whether You're Really Customer-Centric

May 03, 2022

Contributor: Mark P. McDonald

Too often internal issues prevail — and that’s a problem.

What is the last and most important consideration your organization uses to make tough decisions? This is indicative of where it focuses.

In a prior post, I outlined the various options or centricities an organization can use — customer, product, competitive and internal — all of which describe how organizations see themselves and act. Ideally an organization has one center, but too often they are situationally selective, meaning they pick and choose centricity when it suits them. Understanding your centricity, even if at only a given moment in time, is important.

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We tell ourselves we’re customer-centric

Given a choice, most companies want to say that they exist to understand and meet customer needs. Gartner defines customer centricity as “the ability of people in an organization to understand customers’ situations, perceptions and expectations.” When an organization sees itself this way, it feels good about itself and its role in society. After all, where would you be if you did not attract, retain and grow customer relationships?

While most companies would like to start with customer centricity, many become customer-centric only after addressing other concerns — product, competitive, financial, internal, etc. Consider customer-centric retailers with adversarial relationships with their suppliers and employees. Amazon justified the fuel-inflation surcharges it placed on its resellers as a customer-centric move. It is not; it is a pure power play, a form of competitive centricity. When asked why they are hard on suppliers, Amazon responds by citing the need to offer the lowest price to their customers. Lowest price does not mean lowest profit for Amazon or any other company.

How do you know if you are customer-centric? 

If your organization is customer-centric, the following rings true:

  • You engage and listen to customers about the good, the bad and the other. You acknowledge those whose needs best match your company’s current products or services. Too often we only hear customers when they validate our worldview, plans or internal bias. Talking to customers is not the same as listening to customers. 
  • You admit that your products and solutions will not solve every customer problem. There is always one more thing to do, and you will do it for the customer.
  • You change your internal structure, adjust compensation or reallocate resources in the face of customer needs.

Download case study: A Digital Transformation Journey to Improve Customer Centricity

You are situationally customer-centric when you drag out the voice of the customer as rationale for a decision in your favor. Customers become a smokescreen or proxy for internal power struggles. This turns customer centricity into customer cynicism.

Many organizations are initially internally centric 

Customer centricity is what organizations publicly profess; internal centricity is what most persistently practice. These two are opposites. You’re internally centric and caught in an internal battle for priorities, plans and resources if:

  • You believe you know more than your customers or anyone else in the organization. When you assume you possess greater insight and are the smartest, biggest or most important stakeholder, you figure that you have a superior position relative to customers and others. 
  • Beating out — and looking better than — another group within the organization is more important to your career than beating the competition. Your organization sees such forms of divisional Darwinism or success theater as the route to creating good leaders.
  • You think, budget, plan or “strategize” by putting your group first. You are only able to compromise after you are confident your concerns are addressed (e.g., your budget request earns approval). 

Financial centricity is a form of internal centricity. Organizations that run themselves “by the numbers” use finance and budget as the language of internal competition and centricity. The CFO is the ultimate decision maker, and the organization makes choices based solely on metrics, not on intentions, customer needs or strategies.

Organizations with large corporate staffs, high walls between groups, or paternalistic relationships between executives and the rest of the organization tend to be internally focused. Great companies that become internally focused fail as bureaucracy builds faster than revenues or profits, greater control becomes the only answer, and success rests with who you know or likes you more than with what you do. When this is the case, an organization is internally centered — no matter what their marketing says.

In short:

  • Every organization likes to think it is customer-centric, but in most companies customer centricity occurs once internal issues are resolved. 
  • The criteria below can help you determine whether you are customer-centric or internally centric.
  • If you are internally centric, it’s important to address the risks of operating in this manner.

Mark McDonald, Ph.D., is a Distinguished Vice President and a Gartner Fellow within the Gartner for General Managers team. He is responsible for the research focused on the application of technology to business, its products and services.

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