business vision becoming customer centric

7/30/2019 Business Vision Becoming Customer Centric

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Becoming a Customer Centric Organization: Challenges and

Opportunities

A paper submitted to the conference on Service Strategies for Global

Leadership

Organized by

SDMInstitute of Management Development, Mysore

23&24th July, 2009

By

Prof.Shailendra Dasari

Faculty Member

ICFAI Business School

Kanakapura Road

Bangalore-560062

E-mail: [email protected]
mailto:[email protected]:[email protected]


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Becoming a Customer Centric Organization: Challenges and

Opportunities

Make your customer the center of your culture: John Chambers, CEO, Cisco Systems

Introduction

Marketing in the new millennium has become more complex and challenging. Marketers

had come a long way from the product-centric approach prevalent in the early 20 th

century which was replaced by process-centric approach during the last two decades of

the 20

th

century .However the realization that process excellence alone can not make themwinners in the market place had slowly dawned upon them and for the past decade or so

their focus has shifted to becoming customer-centric organizations driven by long term

partnerships with all the stake holders.

Services which have overtaken agriculture and manufacturing sectors in the last two

decades, contributing 50 to 75% to the GDP of developed as well as developing

economies have opened up a host of new opportunities for marketers. Changing needs of

customers due to the changes in lifestyles, employment patterns, family structures;

emergence of DINK 1and DISK2 families; increased life expectancy and mobility of

people of all age groups ; globalization and removal of trade barriers and IT explosion

have thrown open a number of opportunities for service organizations.

The distinct characteristics of services viz. intangibility, inseparability, heterogeneity and

perishability call for a different marketing approach for services as opposed to goods.

While the opportunities services present to marketers are plenty so are the challenges.

1 Double Income No Kids2 Double Income Single Kid


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Objectives of this paper

This paper addresses the following points pertaining to customer-centric service

organizations

1. The need for service organizations to be customer-centric

2. Characteristics of customer-centric organizations

3. The challenges organizational leaders have to surmount for creating customer-

centric organizations

4. How customer-centric and innovation-centric approaches complement each other

5. Success stories of customer-centric global organizations

6. How Indian companies can negate the effect of economic slow down and keep

winning in the market place

1. Need for service organizations to be customer-centric

Customers in the new millennium have many more choices when compared to what

they had a decade or two earlier. It is no exaggeration that most of the marketers,

particularly in the services sector have to slog it out in a market heavily biased in

favor of buyers. Customers today are more knowledgeable, demanding, value-

conscious, very clear about their choices and above all environmentally aware.

Customer centric orientation therefore is no more one of the discretionary options

marketer can toy with but something which is mandatory for the survival and growth

of ones business. The core strength of world class organizations like P&G is a deep

understanding of customer and placing them at the center of all decision making3

Being customer centric, though mandatory, offers the following competitive

advantages to service organizations.

1.1. Service Differentiation-To stand out in the clutter at the market place one has to

differentiate ones self from others. Degree of customer-centricity is indeed a good

differentiator .According to Philip Kotler (2008) to avoid the commodity trap

marketers must start with the belief that you (sic) can differentiate anything 4.While

3 A.G.Lafley and Ram Charan, The Game Changer,(New York: Crown Business,2008)p.134 Philip Kotler, Kevin Lane Keller, Abraham Koshy and Mithileshwar Jha,Marketing Management ASouth Asian Perspective (New Delhi: Pearson Education India ,2008)


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service features, price, quality etc have been the traditional tools for differentiation,

customer-centricity, being an ethos which encompasses all functions and departments

and not just a marketing tool proves to be an effective differentiator.

1.2. Relationship marketing: A way of life -Customer-centric organizations are likely

to pursue relationship marketing, which emphasizes the importance of building up

long term relationships with the stake holders, as opposed to transactional marketing.

As opined by Zeithmal et al (2006) If companies know how much it really costs to

lose a customer, they would be able to accurately evaluate investments designed to

retain customers 5.Customer life time value and life time profitability are the

concepts that help understand the economic value each additional customer that

remains loyal to an organization adds instead of switching over to a competitor.

Findings of research conducted on the subject suggest that a 5% increase in customer

retention can boost the profits by 35-95%. 6

1.3. Mass customization skills- Companies which embrace customer-centric approach

will build up the expertise to manage the complexity and divergence of customer

needs through mass customization. This makes the organization more pro active,

creative and innovative apart from empowering the employees-all of which are

characteristics of a progressive organization committed to continuous improvement.

1.4. Customer as a co producer-Students of Services Marketing know the importance

of service providers collaborating with customers to design, develop and deliver

customized services. Customers who play an active role during the production and

delivery of the service are less likely to be dissatisfied with the quality and utility of

the service. They will also be the brand ambassadors of the service organization and

help generate favorable word-of mouth publicity which is invaluable

2. Characteristics of a customer-centric organization

5 Valarie A Zeithmal ,Mary Jo Bitner, Dwayne D Gremler and Ajay Pandit,Services Marketing :IntegratingCustomer Focus Across the Firm(New Delhi: Tata McGraw-Hill,2006,Special Indian Edition),p.1916 Ibid,p.192


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Customer centric organizations realize that employees are the biggest asset for

maintaining the quality and consistency of service demanded by a customer .They

give lot of importance to recruiting, training, empowering and retaining their

employees. They also maintain open communication channels with their customers.

The following distinct characteristics differentiate them from product-centered or

process-centered organizations.

2.1.Strong internal marketing: Internal marketing intended to maintain a healthy two-

way communication between the management and front line employees on the one

hand(vertical communication) and among the frontline and back-stage employees on

the other(horizontal communication) is the strong foundation which supports the

super structure named customer-centric orientation. This encourages open ness,

team work and ownership at all levels of the organization.

2.2. Empowerment of employees: People who work for customer-centric

organizations are not afraid of taking decisions on their own, to ensure customers are

fully satisfied every time they avail themselves of the service. Self-directed work

teams and multi skilled work force also ensure quick service recovery, should any

service experiences turn unpleasant for the customers.

2.3. Training and development: Customer-centric organizations invest a lot on

training their employees, not necessarily on productivity-improvement techniques but

on development of soft skills, inter-personal skills, changing customer needs,

business communications and team work. It is the attitude and actions of employees

at all levels that manifest the customer-centric ethos of the organization. Not mere

lip-service by top management.

2.4. Provide open-access to customers to voice their views: Customers are constantly

encouraged to share the good or not so good experiences with the senior management, in

companies that are customer-centric. Formal channels like help line, feed back links on

companys portal, suggestion boxes at the servicescape which can be easily accessed by

customers are provided by such organizations. They also have a formal organizational

mechanism to review the suggestions and complaints received from customers and take

immediate action which customers are kept informed of.


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Figure1- Customer-Centric organization

As aptly summarized by Bill Gates in his path breaking book, Business at the Speed of

Thought, Information flow is the primary differentiator for business in the digital

age7

2.5. Marketing is every bodys business: Customer-centric organizations believe that the

entire organization, from top to bottom is responsible for delivering value to customers.

7 Bill Gates and Collins Hemingway,Business @Speed of Thought: Using a Digital Nervous System(NewYork: Warner Books,1999)

Strong Internal Marketing

Empowered employees

Training & Development

Open-Access to customers

Customer-centric organization


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They practice the Japanese concept of Okyaku-sama which means honored customer

or the Customer is God8

3. Challenges for bringing about customer-centric orientation

An organization which wants to change its orientation to being totally customer-centric

has to be prepared to overcome lot of challenges in terms of resistance of employees to

the cultural changes such an orientation demands, training to be imparted to employees at

various levels, processes to be followed, systems to be adopted and the structure around

which various activities have to be organized.

Culture of a customer centric organization encompasses the following

.

Values and beliefs of top management

Degree of participation of employees in various organizational processes

Interdepartmental interactions

Organizational systems and procedures

Conviction and commitment of the top management is a must for an effective change-

management. They have to demonstrate their commitment by practicing the values they

want every one else in the organization to imbibe and walk the talk. According to

Lafley and Ram Charan The leaders most important job is to create a culture in whichpeople feel free to express ideas-in short to take the fear out9 Encouraging uninhibited

vertical and horizontal communication will go a long way in motivating the employees to

participate actively in the various organizational processes such as training, performance

reviews, appraisals, counseling, mentoring and working in teams.

It is also important for various functions/departments to have a collaborative approach so

that the entire organization is responsible for providing value to customers and not just

the marketing department or front-line employees.

8 Harvey.B.Abrams and Theresa Hnath Chisolm, Quality: The Controlling Principle of PracticeManagementin,Audiology: Practice Management,ed .Holly Hosford-Dunn, Ross .J.Roeser and MichaelValente (Newyork:Thieme,2008,2nd edition)p.359 Lafley and Ram Charan, The Game Changer,p.236


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A culture which encourages trust, mutual respect and free and frank exchange of views is

what makes an organization customer-centric.

Systems and procedures followed by the organization should support this culture. It calls

for transparency, open ness, and rewarding employees who take on the spot decisions

for resolving customer-related issues. Flexibility, agility and speed are the key

characteristics of customer-centric behavior in the context of services, which need to be

fostered and encouraged.

In addition such organizations have to institutionalize

Responses to dynamic environment

Dual emphasesoncustomer and competition

Long term view of business

Market environments keep changing ,more so in the case of services, due to emergence

of new technologies, changing life styles of customers, increased customer expectations

and entry of new players who may have the skills and expertise to deliver better value to

customers. An organization has to stay connected with the market to pro actively upgrade

their skills, technology and processes to counter the competition and maximize value for

customers. Both competitors and customers therefore become the focus of attention for

organizations who do not want to be left behind. At the same time they have to shed the

transactional mind set and concentrate more on building long term relationships with

customers which are mutually beneficial.

For the above to become a reality and not just a dream the top management has to play a

very positive and active role as the employees look up to them as role models for

cultivating such proactive, customer-centric behaviors.

4. Organizations have to be innovative-centric to be customer centric


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According to Jeff Immelt, CEO of GE Innovation without a customer is nonsense. Its

not even innovation10 Lafley and Ram Charan, assert that the company that fails to

innovate is on the road to obsolescence11.They do not mince any words when they say

No matter what your job is as a middle manager you must practice and master the art of

observing customers and detecting insights for innovation12

Being innovative- centric therefore becomes a basic requirement of progressive

customer-centric organizations which have to be on the constant look out for

innovations for adding value to customers .Innovations are not confined to new products

or services but could be in terms of functions, logistics, business models and processes. 13

Innovations need not always be break through innovations14 .Incremental innovations15 ,in

fact would ensure a steady pipeline of innovations in the organization, ammunition forremaining ahead of competition.

While innovation-centric culture helps organizations to sustain their customer-centric

orientation, being customer-centric on the other hand supports innovation-centric culture.

According to Jeff Immelt innovation can not happen without getting close to customers.16.

Unlessbusinesses are organized in such a manner that facilitates them to get to know

their customers and serve them better, it will not be possible for them to maintain a

steady flow of innovations.

10 Lafley and Ram Charan, The Game Changer,p.2111 Ibid,p.2312 Ibid,p.2713 Ibid,p.2514 Break through innovations are the radical, new to the world innovations which are rare but extremelyvaluable to the organization15 Incremental innovations pertain to continuous improvements that add value to processes, products andservices16 Lafley and Ram Charan, The Game Changer,p.287


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Figure 2-Customer Centric and Innovation Centric orientation

From the above it is very clear that customer-centricity and innovation-centricity

complement each other so well that those organizations which embrace one of these as

their strategy for growth and profits will not be able to ignore the other.

5. Success stories of customer-centric organizations

We now look at the success stories of two of the world-class organizations which are

customer-centric.

5.1. FedEx

FedEx is a world class logistics solution provider. They have pioneered many

revolutionary concepts in logistics domain and are renowned for their customer-centric

innovative approaches. During their early days they had gone to the extent of chartering a

flight for delivering a wedding gown to a customer at a remote location in USA.17

The success and phenomenal growth of FedEx is solely due to their customer-centric

orientation right from the time they started their operations.

17 Basch Michael .D, Customer Culture,(New Jersey: Prentice Hall PTR,2003),pp 10-11

Customer-centric

orientation

Innovative-centric

orientation

Customer

Delight


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Let us look at how FedEx had helped another world class organization Philips to solve a

major logistics problem and save millions of dollars in the process.18

Philips is one of the leading manufacturers of semiconductors in USA with clients spread

all over the globe.

Philips management realized that their supply chain was not equipped to handle the

demands of their customers for faster service and shortened cycle time. As a short term

solution they began maintaining buffer stocks in remote depots. This however added to

the inventory. Because of longer transportation cycles, at any point of time $2-4 million

worth of inventory was in transit and therefore inaccessible. In spite of all these measures

with substantial cost implications, customers were still not very satisfied because of late

shipments and longer response time. Philips desperately needed a better solution. They

were on the look out for someone with worldwide reach, speed, reliability, integrated

information access, and willingness to invest in the infrastructure and staff support

After spending a year searching for the right solutions provider Philips zeroed in on

FedEx. Their customer-centric approach manifested by their proven expertise in

shipment visibility, world class fool-proof tracking system and above all willing ness to

invest on infrastructure for providing a solution to customers problem ,well supported

by excellent human resources did wonders for Philips.

Customer response time of Philips had comedown to less than five days which was more

than two weeks before FedEx stepped in. Savings in terms of reduced inventory was

quite substantial.

Now we can support sales growth and customer demands for safety stock without

adding inventory, and our end-customers have much more confidence in our ability to

meet delivery commitments consistently. says Jim Harbinson Logistics Director of

Philips, North America.

18 http://images.fedex.com/us/supplychain/casestudies/philips.pdf


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5.2. IBM-DOF Management: Partners in Success19

IBM ,the world class IT solutions provider and DOF management, Norway provider of

vessel and crew management services to oil and gas sector world over , with a fleet of

70 specialist offshore/sub sea vessels, came together with amazing results .The projects DOF are associated with are very prestigious and fairly large posing

financial, environmental, and health and safety challenges of a complex nature.

DOF plans all the projects with care, precision and attention to detail and in the process

large volume of correspondence is generated. Documentation of this large volume of

material became a serious problem. It was not unusual for the users to spend 30minutes

every day just to find the right documents.

Traceability of documents was another issue as there was no fool-proof way to find out

the origin of documents and who carried out subsequent editing and revisions and when.

Further the limited options on sea and under sea vessels had to communicate with on

shore servers and problems of lower band width of satellites used for communication

added to the complexity of the problem.

DOF approached IBM, who had the expertise in content management and successfully

launched Document Manager, to help them solve this problem. IBM recommended

Ergo Group, a business partner of IBM with a successful track record of offering content

management solutions.

A two-phase implementation of content management module first at DOFs main data

center providing access to branches located all over the world and later extending access

to the fleet was agreed upon.

The potential cost savings for DOF, based on a detailed cost-benefit analysis was

estimated at 630000 Euros per annum. (Saving of 115 hours per person per annum)

According to Leif S. Jacobsen, CIO of DOF Management, The feedback from our users

about the IBM Document Manager solution is very positive, and we have much greater

security, better version control and improved traceability. Once the second phase of the

project goes into production, the benefits will be even more significant helping DOF

improve its service to customers and increase internal efficiencies.

19 http://www-01.ibm.com/software/success/cssdb.nsf/cs/STRD-7SNJTW


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The above case study demonstrates the customer-centric orientation of IBM who apart

from offering the right product(Document Manager) , studied and understood the end

customers needs, suggested the right partner, provided expert service to the business

partner and their customer to design and implement the project successfully and in the

process met the derived expectations of end customer .

Both FedEx and IBM are most admired global companies who have always kept the

customer on the center stage and aligned all their efforts for the ultimate delight of the

customer.

There are some Indian companies also who have been very innovative in managing their

business operations with the ultimate objective of providing delight to various

stakeholders. Let us have a look at some of them.

5.3. Success story of Amul: Innovations in supply chain management

Gujarat Cooperative Milk Marketing Federation(GCMMF), marketers of Amul brand of

dairy products collects close to 6.5 million liters of milk from over 2.2 million farmers,

most of whom are illiterate, processes the milk, converts it to branded packaged products

and delivers over Rs 6 crores worth of goods to over 500000 retail outlets in India every

day20. They achieve this mind boggling feat by following an innovative supply chain

model known as Time Based Military Technique (TMT).21 GCMMF have also

successfully implemented the Geographical Information System (GIS) at the milk

collection points as well as the product distribution points.22 All these initiatives have

resulted in reduced wastages, faster cycle time and availability of fresh products to

consumers. GCMMF have also provided all the necessary facilities for testing and

grading of milk at the collection points to ensure that payments to farmers are made on

the spot. Their technological infrastructure enables them to make 10 million error free

payments every day totaling to 170 million rupees.23

20http://www.rediff.com/money/2005/sep/23spec.htm

21 http://www.amul.com/kurien-annual05.htm

22http://www.rediff.com/money/2005/sep/23spec.htm

23Arindam K. Bhattacharya and David C. Michael,How Local Companies KeepMultinationals at Bay, Harvard Business Review, March 2008
http://www.rediff.com/money/2005/sep/23spec.htmhttp://www.rediff.com/money/2005/sep/23spec.htmhttp://www.rediff.com/money/2005/sep/23spec.htmhttp://www.rediff.com/money/2005/sep/23spec.htm


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Mumbai Dabbawallahs who provide meals collection and delivery service with a

precision of 0.15 PPM, CavinKare who have revolutionalized the rural distribution

system, Basix who have changed the rules of the game by taking micro financing to the

doorsteps of rural customers in A.P and Karnataka (cumulative lending of over 1000

crores) are the other examples of customer-centric companies that have achieved service

excellence through their innovative approach.

6. How Indian services marketers can use customer-centricity as a strategic

weapon

Services sector contributes over 60% of Indias GDP. Though this figure is considerably

less than some of the developed countries (where services contribute as high as 75% of

GDP), it is one among the best for developing countries.

Knowledge Management, ITES, Hospitality, Healthcare, Insurance, Entertainment,

Retail, Insurance, Banking, Financial Services and Communication are some of the fast

growing services in India.

India, like many other economies, has been affected by the global economic melt

down. .Fortunately the effect of melt-down on Indias economy is not that severe as it is

in USA and other developed countries. We are still hopeful of growing at 6.8% and

markets are showing positive signs of recovery.

While IT/ITES sectors have been adversely affected due to global economic-slow down

and appreciation of rupee vis--vis dollar, all the major players have their own risk-

management strategies in place and have not put all the eggs in the same basket.

Exports, no doubt have slowed down considerably. But given the fact that exports

account for only 17% of its GDP India inc. can still bounce back to a healthy, growing

economy, considering the huge domestic potential for goods and services propelled by a

population of close to 1.2 billion.

Services marketers, who reaped the benefits of economic boom which lasted for more

than 6 years (2002-08), have to now pull up their socks. While they could get away with

lack of professionalism, customer-focus and accountability under the shelter of an

emerging economy whose learning curve has still not reached a plateau, any further


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complacency and lethargy on their part will not be tolerated by customers, who want the

maximum value for their money during times of recession and have zero tolerance for

any service lapses.

Indian services sector comprises of two distinct categories of service providers

a) Global multinationals that set up their shop in India, either on their own or through

strategic partnerships with local firms

b) Local companies who jumped into the fray looking at the tremendous opportunities

offered by this sector

Unfortunately both the above groups have so far not lived up to their expectations with

regard to quality of service provided for totally different reasons. The global MNCs

made the mistake of trying to replicate the best practices that worked back home, which

unfortunately have not been very effective in India due to the local social, cultural, and

emotional factors which are entirely different ,which they had failed to read. The local

players, on the other hand have failed to shed their product-centric orientation, the

comfort of which they had been used to for generations and grossly lacked a long-term

approach and customer-centric orientation.

Further though most of the sectors have opened up and have quite a few private players,

key sectors like Railways and Surface transportation (highways) still continue to be

monopolies owned by government where more of a lip-service is provided than real

service.

Following are some of the strategies which all the service providers have to adopt,

irrespective of their pedigree to survive the economic slow down, which is the

immediate priority and ensure longevity.

6.1.Stay connected with customers-Understanding the customer is the basic requirement

of any marketer .In a country like India with diverse cultures , religions, linguistic group

and geographical regions it is easier said than done. It calls for real immersive research

like Living it24 .and Working It25practiced by world class organizations like P&G.

24 Living it is a practice pioneered by P&G where in their marketing personnel live in customers homesfor few weeks to observe from close quarters usage patterns of various products and develop a morecomplete understanding of their needs and preferences(For further details please refer Lafley and RamCharan, The Game Changer,pp48-49)25 Working it ,a practice initiated by P&G provides employees with the opportunity to work behind thecounter of a small shop to gain better insights into the shopping habits of consumers.( (For further detailsplease refer Lafley and Ram Charan, The Game Changer,pp48-49)


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No published reports or book can be a substitute for the first hand knowledge gained

through immersive research .Organizations that tend to overlook the importance of

immersive research were made to eat a humble pie by Indian consumers. Companies like

Kelloggs, Sony-Erickson and Virgin mobile have learnt it the hard way.

Further it is too nave to assume that customer expectations remain unchanged for a very

long period. Thanks to globalization, advent of internet and increase in foreign travel,

customers are more exposed to the latest goods and services on offer and none wants to

settle for the second best or third best. Having an effective customer-feedback system

therefore is an absolute must.

MNCs should realize that Indian markets are not what the USA or European markets

used to be ten years ago26and have to come out with strategies that take into account the

local factors.

Local players, who do not any more enjoy the state protection, have to change their basic

orientation and out look and organize themselves around the customers by identifying

their needs and adding value to them, on which their survival and growth are highly

dependent.

6.2. Uphold values that demonstrate customer-centricity- Values reflect the philosophy

of the top management which form the binding thread of an organization. Values emerge

from the personal struggles, experiences and learnings of the founders and therefore

should remain sacrosanct. They help an organization generate the trust and confidence in

the minds of customers. Colonel Sanders, founder of KFC which was later taken over by

the food giant Hublein ,stood by the core values of the organization ,even when he was

no more its owner by vehemently opposing the new managements proposed move to

save a few dollars by using water for the preparation of gravy instead of milk27.Some

of the recent unilateral decisions of multi national banks operating in India like raising

the minimum quarterly balance customers should hold to avoid levy of penalty, charging

customers for duplicate statement of accounts, making anywhere banking out of reach

for not so elite customers, resorting to unethical methods for recovery of dues have

seriously dented their image and credibility.

26 Rama Bijapurkar, We are like that only :Understanding the logic of consumer India,(New Delhi: PenguinPortfolio,2007)27 Basch Michael.D, Customer Culture,pp54-55


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6.3. Adopt customer-defined service standards- A majority of service providers fix their

own norms and standards. While it is certainly better than having no standards, it is

appalling that customers who are the purpose of their business are not taken into

confidence while finalizing the standards. Those standards which are company defined in

all probability enhance the operational efficiency of the service provider. But are they a

true reflection of customers expectations? How many customers want to be greeted by

an answering machine when they call up their bank or insurance company? As observed

by Zeithmal et al 28Many firms create standards and policies to suit their own needs that

are so counter to the wishes of customers that the companies endanger their customer

relationships. Are they working for themselves or customers? Unless firms come out of

this service myopia they will not be able to provide delightful service experience to

their customers, which is very much essential to forge strong bonds with customers.

6.4. Empower front-line employees-It is the employees in general and front-line

employees in particular who deliver the service to customers. A well designed service,

unless delivered properly is not going to enthrall the customers. Front line employees are

the marketing and operations people rolled into one. None can promote the service more

effectively than the employees who perform boundary- spanning roles29. If they are

proactive and take decisions on the spot resulting in quick recovery, customers will not

fail to notice them. The amount of favorable WOM publicity a satisfied customer

generates is invaluable for the service organization. Any goof-ups by the employees,

lack of enthusiasm, lukewarm response to customers requests also will not go unnoticed

and lead to negative WOM which spreads rapidly like a wild fire. Zeithmal et al highlight

the importance of customer-contact service employees as under:30

They are the service

They are the organization in the customers eyes

They are the brand

They are the marketers

28 Zeithmal et.al, Services Marketing: Integrating Customer Focus across the firm,p.29829 Hoffman Douglas.K and Bateson John E.G.Essentials of Services Marketing: Concepts ,Strategies andCases(Orlando, Florida: Harcourt College Publishers,2002,second edition),pp 248-25630 Zeithmal et.al, Services Marketing: Integrating Customer Focus across the firm,p.364


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It is a well established fact that customer satisfaction can not be achieved with out

employee satisfaction. Heads of service firms therefore have to manage their human

resources with the same care and attention as they manage their personal finances.

Recruitment, training and performance appraisal are all specialized activities to be

handled by professionals. What the top management should ensure is encourage

employees to take on the spot decisions and reward such behavior which will make

the employees more confident and responsible, apart from cultivating a sense of

ownership among them.

Progressive organizations like Tesco enfranchise31 their employees whose

performance levels soar to new heights year after year, ,by sharing their profits

with them . They have a scheme named Shares in Success under which more than

200000 employees ranging from check out workers to Stores managers are all set to

be allotted companys shares worth a whopping sum of 98 million pounds in

bonuses during the current financial year.32

Such practices will go a long way in motivating the employees to higher levels of

performance and sustaining the customer-centric orientation through out the

organization.

6.5. Build up long-term relationships with customers and other stake holders

Instead of seeking more and more new customers which is a transactional approach,

organizations benefit more by building up stronger bonds with existing customers by

retaining them. This is the essence of relationship marketing.

It is common knowledge that it costs much more for an organization (as much as five

times in some cases) to develop a new customer to offset the volume loss because of an

existing customer defection to a competitor. Some of the benefits of building up long

term relationships with customers are:33

31 Empowerment coupled with a performance based compensation(See Hoffman and Bateson,Essentials ofservices Marketing,p259)32 http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article6361075.ece33 Hoffman and Bateson,Essentials of services Marketing,pp 391-393


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1. Repeat purchases throughout customers life time

2. Customers willingness to pay a premium for reduced perceived risk (a well

established relationship allays the fear of un-known and reduces customers risk)

3. Reduced operating costs as customers are familiar with the firms policies, procedures

and processes

4. Referrals Satisfied customers often refer businesses to their friends and family

members and their positive WOM publicity helps generate new business for service

providers.

It is therefore very important for marketers of services to maintain long lasting relations

with their customers, who apart from contributing to their profits also provide assured

business during times of recession, when seeking new customers becomes more and more

difficult.

Following are some suggested strategies for customer retention34

1. Never lose sight of the purpose of your business-Processing customers like raw

materials on an assembly line and being rude to them is incredibly short sighted.

Maintaining the proper perspective calls for a customer-centric orientation and a

positive service attitude.

2. Stay in touch with customers-Socializing with customers in between service

encounters by sending greeting cards, gift vouchers etc is an effective tool forbuilding long term relationships.

3. Build relationships through mutual trust and confidence-This requires high degree

of professional integrity, honesty and reliability on the part of the service

provider.

4. Involve customer in the service delivery process-Customer as a co-producer

provides an opportunity to the service provider to fine tune the service delivery to

maximize customer satisfaction and minimize the cognitive dissonance.

5. Provide required training Customers who receive detailed instructions from the

service provider about the usage of equipment/technology (ATM, Internet

banking etc) required for delivering the service are usually more satisfied than

those who have to fend for themselves and are more likely to defect.

34 Ibid,pp394-397


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6. Do not ever avoid customers-The last thing a customer expects from a service

provider is being cold shouldered when he (customer) is faced with a problem and

desperately needs some help/advice from the service provider. Such a short

sighted behavior on the part of the service firm will prompt the customers to seek

new avenues.

7. Walk that extra mile-It is not the stated needs alone that need to be met. A service

provider who takes the pains to meet the unstated or implied needs by his

proactive approach will always be remembered by a customer as opposed to

someone who merely complies with the technical aspects of service delivery.

All the above tactics reiterate the importance of customer-centric approach for building

long lasting relationships.

7.Areas for further research

While significant research has already been done on the customer-centric approach and

innovation management of global organizations, research on Indian companies in the

following areas will enrich the available knowledge base.

1. Relationship between leadership style of CEOs/Promoters and the degree of customer-

centricism of organizations

2. Role of suppliers and channel members in propagating the customer-centric philosophy

of organizations3. Relationship between customer-centricism and the ownership pattern of the

organizations i.e. state owned, private, cooperatives etc.

Conclusion

It is imperative for marketers of services to become customer-centric for staying ahead

of competition and occupying a prominent position in the market. Companies with a

long term perspective who always stay connected with customers and never

compromise on their strong fundamental values enjoy a better chance of survival and

consequent success .World class organizations like FedEx, Singapore Airlines, IBM,

Tesco, GCMMF and many others have demonstrated time and again the virtues of being

customer-centric. A culture that facilitates innovations at regular intervals helps

organizations stay committed to their customer-centric philosophy. People at the top

have a well defined role to play in ushering in customer-centric culture and making


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innovations a way of life by providing the required inspiration and leadership to their

teams. Without this organizations can not hope to have a cutting-edge over the

competitors and sustain their initial gains. Adopting customer defined standards, careful

nurturing of human resources and building up strong bonds of a permanent nature with

customers fortify the organizations against all vagaries of market for whom winning at

the market place is a predictable outcome and not a serendipitous act. To conclude, there

can be no better strategy for organizations to fight the current economic slow down than

adopting customer-centricism and innovation as the twin engines to sustain their growth

and profitability during good times and bad times and stay ahead of others struggling to

remain afloat.

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business vision becoming customer centric

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