Customer Centricity by Numbers

Customer Centricity by Numbers

Customer centricity is the master key for product management. Strictly tailoring products to customers’ needs is mandatory for long-term success. What is clear to every product manager in theory becomes surprisingly hard in practice – especially for established companies. Why?

Almost every company with some longer history in a market has roughly run through the following process:

The company is successful and growths. While growing, structures and processes are created and continuously improved in order to cope with the emergent success. Functional specializations and corresponding departments evolve. Now only some of these departments still have regular contact to customers, because they are good at what they are doing. But they are only good at what they are doing and these are now only specific tasks like sales (“I need to hit my sales target!”) or customer support (“I need to fix this customer problem right now!”). These and other functions, in charge of developing and deciding central customer relevant topics, show a growing distance to customers. Growth rates decrease, innovation slows down. Now it’s time for “customer centricity”! Initiatives are being kicked-off, someone (or even more) is put into charge to take care of the issue. Smart sentences like “There are no facts inside your building, so get the heck outside.” (Steve Blank/Bob Dorf, „The Startup Owner’s Manual“, K&S Ranch Press, 2012, S. XXiX) are being dropped. Finally and inevitably, a homeopathic dose of more people than before happens to see and talk to customers again. But the main effort is put into feedback-tools and corresponding metrics (e.g., Net Promoter Score) to get hold of the problem.

The solution seems so close now: Feedback-tools and metrics are great! They are scalable. Once implemented, they not only gather tons of external data, but they can also integrate internal know-how. They promise what higher management now expects: objectivity, facts, measurability and absolutely no gut feeling.

A few months later astonishment kicks in: Despite all efforts the company has not become more customer centric at all. Now the company additionally invests in several market researches by well-known agencies. But all initiatives seep away: The official metrics do not move at all. If they move, the direction is down. If they move up, someone found out where to better measure NPS to get some good scores. Nervousness sets in and the atmosphere becomes desperate. What’s up?

Feedback-tools and metrics are not the underlying problem. The problem is that scalable solutions, focusing on mainly quantitative data that is easy to get, is enforced to solve a problem that is of qualitative nature. Customer centricity means to discover the WHY behind customer behavior and to find a matching product that serves the needs better than the existing offerings. But feedback-tools and metrics are inherently unsuitable to understand the WHY, that even the customer himself can barely name at all. Feedback-tools and metrics systematically gather hardly interpretable customer statements and condense them to standardized reports and indirect, seemingly absolute numbers. As an example have a look at a simple metric such as exits from your webpage. What does a number of 35% tell us? After a change on the web form, if the exit rate goes up – is that a good or a bad thing? It could be both. You will only get the answer in qualitative form: Did the user walk away happily, having completed a task or did he walk away in anger never coming back, because he did not get the information he was looking for?

So feedback-tools and the corresponding metrics can complement qualitative insight at best but never replace deep methods of customer centricity like observations and interviews. Enforcing customer centricity via feedback-tools and metrics without having a deep command of techniques like observation and interviews cannot work.

Even worse, the implementation of feedback-tools and metrics can cause a creeping loss of existing customer centricity:

  • Feedback-tools are convenient since no direct interaction with the customer is required. They intrigue you heavily into being glued to the desk.
  • Processing and analyzing data is hard work and complex. Product managers who are required to use this data are increasingly dependent on specialists to cope with this task. Data gathering and data usage become increasingly disconnected. This ends in one more dependency in the company to get things understood and done.
  • Implementing feedback-tools is costly. So there is at least an implicit expectation to use these tools – in doubt also for improper problems.
  • Condensed data without the context of the WHY easily lead to wrong decisions since it is hard to distinguish the important from the unimportant. Spikes induce ad hoc actions. Conversely, actually crucial information remains undetected in the constant data stream. Averages and means are the enemy of real findings and great products.

Conclusion: Customer centricity is no question of the existence of automated feedback-tools and their metrics. Just the opposite: Feedback-tools can only used in a meaningful complementary way, if the company already has a strong culture of customer centricity. A heuristic: The more feedback-tools and metrics a company uses intensely, the less customer centric it is.

Photo by Kim Bach on flickr under CC License