Shareholder profits consistently outperform competition among customer-centric businesses. Businesses that prioritize client experience are 60% more profitable. But why? The answer is pretty straightforward. Namely, building customer-centric businesses is one of the most reliable ways to deliver solutions that are crafted to answer real customer needs, meet nuanced preferences and reduce user experience friction. Customer experience and satisfaction boost revenues and mean more lucrative dividend declarations.
Customer-centricity is essentially a modern approach to corporate strategy that dictates how a company competes in the marketplace by thrusting the customer’s overall benefit right to the front of the line of its priorities. Customer-centric business centers its client base as the primary cornerstone of all of its strategic decisions, dictating company values, how it measures success and effectiveness, and how it looks at innovations and improvement.
Is The Customer-Centric Model The Best Way?
That all depends on a company’s motives.
Historically speaking, customers have often been thought of as irrelevant, and business models have instead focused on product value and profits. Over the past century, business models have evolved from dependence on managerial professionals to obsession with shareholder values — both of which have yielded lackluster performances as companies are inevitably enticed into short-term profit rackets.
In hindsight, strategists now realize the lust to please investors and the obsession for revenue often hijack both and can be self-defeating in the long game. If a company wants to strengthen investor relationships with gains, it should be devoted to the customer first and foremost. This means shareholder profits get placed at the bottom of the totem pole in a company’s goals. When executives aren’t worried primarily about quarterly earnings reports and appeasing investors, they and their teams can spend the appropriate time and energy building the actual business.
Strong Customer Metrics Add Up to Long-Term Profits
Modern and new-age capitalists are motivated more than ever by how their services add to the total social value equation. Many businesses are not willing to generate profits if there are ethical violations involved, such as significantly contributing to climate change or taking advantage of consumer expectations. However, profit incentives still do exist and companies are still looking at the bottom line, and a customer-centric model offers alternative and effective routes to massive returns.
How do companies measure customer experience? Customer-centric businesses have their own special conglomerate of metrics to track success, specifically net promoter score, churn, net revenue retention, lifetime value, and cost of customer acquisition. When you care about your customers and prioritize them, these are the numbers that grow drastically.
Hyper customer-centric businesses such as Disney, Amazon, and Zappos, for example, have all found improving consumer and user quality results in the stickiest experience. They often go to great lengths to maintain and grow customer satisfaction. This approach leads to cascading effects that fortify a company’s client base and give a shot in the arm for expansion, such as:
- Diminished rates of churn
- The increased lifetime value of your clients
- Reduction in the cost of customer acquisition
These measurable outcomes of customer-centricity are the ingredients to the recipe of a self-compounding cycle that drives bullish revenue, turning lucrative dividends for shareholders to pocket or reinvest right back into your company.
Building Client Advocates
The value you get from a satisfied customer is just not the hedged potential of a future sale but all of the positive public and private reviews they can generate. For better or for worse, In today’s market, what people see when they Google search your business is what defines it. The days of hiding or ignoring frustrated customers are long gone and a new dawn of consumer accountability is in place.
By providing quality customer experiences a company will naturally generate the greatest social proof for its solutions and embolden customers to recommend it to peers and associates. This actionable social proof is achieved through customer-centricity by:
- Providing solutions to problems customers really have
- Understanding preferences and tendencies for enhanced product development
- Reducing a product’s user-experience friction
A business that has strong, positive social indicators is going to get significantly more referral business — your customers become evangelists for you and a powerful, low-cost driving source of advocacy. Studies suggest more than 80% of consumers make decisions based on word-of-mouth referrals. If you keep a customer for life, they create a compounding profit base for you, not only through their own extended lifetime value but through their recommendations.
The Promise of Customer-centric businesses
Is adopting a customer-centric business model going to make a business fail-proof? Absolutely not. Performance and results still boil down to the ability of teams to plan and deliver valuable products and services, and, of course, the willingness of customers to engage in exchange. Customer-centricity is, however, a sure-fire way to dramatically increase the likelihood that executives and teams hit the bullseye on a more consistent basis.
Instead of trying to enchant shareholders, focusing on the customer forces an organization to examine its operations and solutions. With the success seen by corporations that have fully involved themselves in UX research and customer satisfaction, it is well worth the investment in evaluating what motivations are fueling your operations.
