Required Reading: To Be Truly Customer-Centric, Companies Must Think Round

Companies typically develop products in a linear fashion, focusing first on manufacturing and not thinking about the customer until it's time to market and sell the product. By that point, however, it's often too late, says Martha Pease, coauthor of Think Round and founder of consulting company Demandwerks.

To be a customer-centric company that delivers outstanding experiences, you must emphasize customer needs and expectations from the moment a product is first conceived. Associate Editor Maria Minsker caught up with Pease, who explained what it means to "think round," and why it's so important.

CRM: In the book, you say that while many companies think they're customer-centric, that's often not the case. What's the cause of this discrepancy?

Martha Pease: The way business usually works, a company starts with a new product that's somehow better or different. They design it, engineer it, build a distribution network, and determine the logistics. But it's not until the late stages that companies start asking: "What's the value of this in the marketplace? What's the strategy behind selling it? How do we market it?" Most of the connections between what a company makes and what people want are left to the end of the chain. That means that even if you have great data about customers, that information isn't being deployed until the end of the process. Even though your CRM group or your tactical execution group might be customer-centric, the focus on the customer doesn't necessarily reside in the rest of the company. Unless the entire company builds a unified accountability around delivering to the customer, you're not truly being consumer-centric.

CRM: It seems that companies are becoming aware of this and are starting to make changes. Are they making the right ones?

Pease: They've been responding by looking for a silver bullet—something magical that will suddenly make them more relevant and engaging. The temptation over the past five to eight years has been for companies to pour money into tactics like social media, programmatic ad buying … all these bright shiny objects that promise to solve their issues, but they're not really working in the long run. We know from many decades of working with companies in many different markets that the key to relevance is not about new tactics but rather a new strategic orientation that puts the customer first and creates a behavior inside the company. That requires companies to think round.

CRM: So what does it mean to "think round"?

Pease: To be successful, companies have to be consumer accountable. That means putting the organization at the center of a circle, both figuratively and literally, and surrounding the organization with knowledge of its customers and an understanding of the emotional connections it has with its customers. The outer edge of the circle is made up of customers, and those 360 degrees are completely and holistically integrated with how the company goes to market.

CRM: You mentioned emotional connections. Why is that a key aspect of your approach?

Pease: The functional aspects of what companies bring to market are really short-term reasons for why people buy from that company. But the reasons for why people stay with companies and really develop relationships with them are emotional ones that transcend the function. The emotional experience is what keeps customers coming back. It sounds kind of mushy and touchy-feely, but there's research that has proven that there are very definite, quantifiable rewards for providing a complete consumer experience that delivers on these emotional connections. When you look at publicly traded companies that lead in customer experience, their stock performance typically leads by about 8.6 percent. That’s significant.

CRM: Can you give our readers a company that exemplifies the think-round approach?

Pease: My favorite product story is probably Lexus, Toyota's luxury car brand. Toyota was late to the luxury market, but instead of taking the fast route and just building a more expensive version of a Toyota, it decided that it first needed to understand the behaviors and expectations of its potential customers. So it sent its marketing and engineering people out from Japan into places like Southern California, the French Riviera, and the luxury stores of Paris and immersed them in the lifestyles of their target audience. They watched how women put shopping bags into their trunks, and how they came out of salons with recently applied nail polish, to understand what the steering wheel issues and door opening issues were for people who lived that kind of lifestyle. They spent time on yachts looking at the finish. They stayed in high-end hotels and looked at leather goods from Hermés. They used all of that information to understand the emotional connections that their customers would bring to the experience of luxury, and they used that to build their cars.

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