I thought it is always useful to look at alternative points of view regarding customer focus. Below is the first part of a good article by Professor Martin Koschat from IMD in Switzerland. He makes a good case that not every company needs to rely on being customer-focused to be successful. Although correct, you need to either be so operationally excellent that you can achieve a price advantage on a sustainable basis or you have an innovation pipeline Steve Jobs would be envious of. For everyone else, being customer centred and using a Service Design approach to understanding, designing and executing a great service experience is a great choice if you wish to keep more customers who spend more with you every year.
There is no shortage of extremely successful companies with business models that critically depend upon a high degree of customer proximity and the ability to generate detailed insights into customers’ needs, wants and behaviours – those buying habits and attitudes pivotal in shaping and directing the whole organization. In other words, companies that are customer-centric. Yet, there are also many successful companies that don’t go out of their way for customer proximity. By looking at companies that operate on both ends of the spectrum, it becomes clear that customer-centricity is not a virtue.
It is well known that BMW delivers superb engineering. Perhaps less well known is the fact that BMW tightly controls the supply chain downstream by owning most wholesale operations and many of its retail outlets. By doing this, BMW enforces, and ensures, a uniformly high level of service befitting a top luxury brand. At the same time, this proximity to the consumer provides direct and timely insights into consumers’ shifting perceptions and tastes.
Nordstrom, a US department store chain, consistently ranks at the top in terms of customer satisfaction surveys. Shopping is made to be a rewarding experience. Nordstrom’s personnel is carefully selected and trained to help customers along the path of finding what they want or need and, in the process, identify and present new products they never knew they needed. Invariably, customers often leave a Nordstrom store with more than what they had planned on buying. The level of Nordstrom’s customer engagement is in line with the retailer’s sales strategy.