The Impact of Customer Centricity in 2023
Customer satisfaction plays a critical role in business profitability. According to a CallMiner report, businesses in the US lose around $35 billion annually due to poor customer experience. Another survey revealed that 86% of customers would leave a brand after two poor experiences. Such data has pushed businesses to consider the impact of customer-centricity in 2023.
Customer centricity refers to a business strategy that considers customer needs as the central factor. The business strives to restructure in ways that would allow it to enhance customer experience, boosting loyalty and lead generation.
How Challenging is Customer Centricity?
Customer centricity may seem simple, but it is a lot of work. Customer demands change frequently, and there are cases where their needs are relatively buried. Therefore, it falls to the brand to realize the changing patterns, create a relevant product or service, and show consumers how it fulfills their requirements.
The task is rewarding but requires dedicated effort, accurate information, and a relentless attitude. Thankfully, pulling it off can result in an 80% increase in revenue for the business.
The Impact of Customer Centricity in 2023
Customer-centricity is here to stay because it is a profitable choice. The key now is to know about the impact of customer centricity on business strategy and determine ways to incorporate it into our operational models. Following are the top ways in which this orientation is changing organizational outlook in 2023:
- Prioritizing Actionable Insights
Insights have been central to decision-making for decades, but they are no longer enough. Businesses are switching to prioritizing ‘actionable’ insights to optimize their efforts for improving customer experience.
Yet, only 32% of CX professionals feel they have access to the information they need to understand customers’ needs and previous interactions, according to Oracle.
This preference has led to a change in marketing research patterns, with strategists demanding more concise and relevant information. Thus, marketing research has become more data-centric and increased the reliance on qualitative and quantitative methods compatible with this demand.
- Rising Significance of the Chief Customer Officer
Chief Marketing Officer (CMO) looks after the marketing activities for a business and has one of the most important positions in an organization. However, customer centricity seems to be pushing Chief Customer Officers (CCO) to the front, given the significance of customer relationship management.
Consumer experience can no longer be considered just another part of the marketing function. Like a supply chain, it requires dedicated focus and attention as a separate function, especially since it can drastically affect a business’s revenue.
CCO is expected to take the helm and work with the marketing team to optimize the customer experience. 74% of customers show a slight inclination towards buying based on experiences alone, so this shift can improve profitability.
- Balanced Relationship between Businesses and Consumers
Competition, economic burdens of the pandemic, and purchase behaviors have shifted the dynamic between businesses and consumers. The latter has gained a lot more bargaining power than previously belonged to companies, pushing their relationship into a balanced position.
‘Paradoxical demands’ are a great example of how this shift changes organizations. Paradoxical demands are when customers desire two somewhat mutually exclusive features in their products or services.
For example, more people want companies to create sustainable products or services and shift to eco-friendly operations. However, they also want their items to be more economical and offer value for money. Demand is challenging for companies since sustainability typically increases the cost of production, making it difficult to deliver economic solutions.
However, several businesses have no option but to consider ways to meet people at least mid-way considering their bargaining power has been reduced.
- Greater Focus on Customer Retention
Selling to existing customers is less expensive than acquiring new customers. This knowledge led to the popularity of customer loyalty, and business focuses on retaining customers. The task is technically the same, but it has become more challenging.
Customer churn has increased multifold in the past few years, and companies need to do more to keep people loyal to their brand. Hence, a significant percentage of the budget is allocated to enhancing customer experience.
- Focus on Product and Service Personalization
Mass production has transformed business forever, but things are starting to change again. More customers prefer product and service customization and choose options that offer this facility. While the personalization strategy is relatively easy for niche brands, things become more challenging for industries like fast-moving consumer goods (FMCGs).
However, the personalization trend is here to stay, and more businesses are trying to incorporate it into their business models. The extent of customization may differ, but most companies will likely need to shift to remain profitable.
- Creation of Profitable Consumer Segments
Segmentation has allowed businesses to improve communication and engagement with their consumers. The interest-based segments are especially useful in providing insightful information about what makes some of your target audience buy a product or service.
However, businesses will need to take segmentation further by creating profitable segments and making them central to business strategy. The more a specific segment spends on your product, the better it is to customize options to their preference.
- Increase in Customer Engagement Efforts
Lastly, the impact of customer centricity will lead to increased customer engagement efforts from the business. They will try to leverage technology to increase interactions and maintain positive relationships, building on it to boost brand equity.
The digital arena will likely be the primary channel for this strategy, but companies can choose other ways to achieve their goals.
Tips for Taking Advantage of These Trends
As a business, you must focus on these developments and adapt to stay relevant in your industry. Following are some tips to help you add customer-centricity to your overall business operations.
- Conduct In-depth Training for Customer Service
Your customer service staff will be an indispensable resource when you shift to customer-centricity. Their training and performance will directly affect the results; hence, you must organize thorough training to ensure they follow your requirements.
You can leverage eLearning to increase training effectiveness and add mock situations to test how they would react in real life. A StuDocu study shows E-Learning can increase a trainees retention rate by 25% to 60% and takes less time to complete.
- Incentivize Customer-Facing Jobs
There’s no denying that customer service jobs require a special degree of patience and skill to manage. However, they are typically assigned to junior-level staff in most cases, making it difficult for them to have the motivation to give exceptional performance.
Businesses need to consider incentivizing such jobs to encourage more people to apply to them. You know their performance can significantly affect revenue, so it is worth the cost and time investment.
- Gather More Digital and On-ground Data
Gathering more relevant data will always be fruitful because it will help you get a more accurate picture of ground realities. You can obtain this data through social listening and Google and Facebook insights.
You can also outsource research to third parties, or conduct it yourself through surveys, focus groups, interviews, etc.
- Rely on Customer Data Management Tools
The latest innovation in customer data management tools is incredible and can optimize your efforts to improve customer experience. You can use them to schedule campaign communication, segment your engagement, and obtain insights into your marketing campaign performance.
They can also provide suggestions on improving your performance, highlighting trends and patterns to capitalize on.
Overall, the impact of customer centricity will lead to significant changes in business operations in 2023. Companies will increase customer engagement, prioritize customer satisfaction, and focus on customer retention strategies.
We have yet to see how this shift will affect product development because it is unlikely to remain unaffected.
ClicData has covered this change further in other blogs, and we encourage you to check them out for detailed information. You can also contact us to learn more about customer data management tools and set up a meeting for further discussion.