There’s a lot of discussion in business these days about moving to a “customer-centric” approach. Customer centricity isn’t a new concept. Companies like Amazon have rooted their strategy in customer-centricity for over a decade. What is new is the recognition that to be competitive and meet the customers’ demands and expectations, customer-centricity must be at the heart of your business.
What Does Being Customer-Centric Really Mean?
Customer-driven companies are proven to be more effective at selling and retaining customers. Their teams are more sympathetic to their customers’ problems and are better able to build solutions that actually solve their problems. With a focus on the customer, companies can create things that people care about. There’s also something magical about customer-centricity that positively affects all areas of a business, from customer experience to employee experience. And, customer-experience-obsessed companies consistently outperform their peers in regards to revenue and market cap growth.
But how does a company adopt a customer-centric approach? It’s not just a matter of stating, “We’re customer-centric.” Instead, this approach relies on understanding your customers—and to understand, you need insights.
Business has become more data-driven over the past couple of decades, initiating a fundamental change in strategy and performance management. Some of the primary metrics that executives have started to rely on as measures of business health—the cost of customer acquisition, lifetime value of customers, online social reputation, and brand equity—have become the lifeblood for how companies think about building sustainable businesses. However, only looking at business performance through the lens of quantitative data falls short in predicting and ensuring that the new measures of business health are accurate and that your business is investing in the areas that will truly benefit your customers.
Businesses have tested different strategies for improving business health over the years, and the most effective approach is instituting an insight function in the company and investing in qualitative data.
Companies that are insights-driven have seen that qualitative data is more predictive of outcomes for customer-centric decisions. This is for a few reasons:
Quantitative analytics data is backward-looking: By its nature, quantitative data can’t tell you much about the future.
Qualitative research is largely simulated: It’s an experiment framework where you can ask people about products and concepts that don’t exist and collect data that helps you acquire insight about hypothetical products.
Qualitative data is inherently forward-looking: This separates it from every other type of data a company has access to, so fundamentally, it’s a different set of data that provides critical information that can’t be acquired through quantitative methods.
Becoming an Insights-Driven Organization
An insights-driven strategy relies on the voice of the customer and illuminates opportunities and necessary guidance directly from the people you’re selling your products to. The power of this information cannot be overstated.
For instance, the qualitative insights gathered through customer research can reduce the risk of product development. If your product and development teams don’t have access to customer-voice insights, we find that development teams can work for months, building products and features that no one wants or is willing to pay for.
At a large company, uninformed development can cost millions of dollars in development costs, over just a matter of days, if the team is rowing in the wrong direction. Research and insights protect businesses by validating the work and increasing the probability that what you’re building is something buyers and users will value and pay for.
I believe that companies that incorporate qualitative data into their research practice and invest in an insights-driven approach will realize the benefits of a customer-centric strategy, strengthen their business, and establish a more competitive position.
If you want to learn more about the power of insights, check out this discussion with a Lexis Nexis researcher on our new Science of Influential Research webinar.
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