Monday, May 7, 2007

Customer Focussed versus Customer Centric

Today I got a query from Mr. Ravi (from Hyderabad) about how customer centric concept forwarded by Fair Isaac is different from general Customer Focussed Marketing approach. I was writing a mail to him but thought it would be better if I make a blog entry for everybody to learn.

The two concepts seems very similar from outside but they are very distant in principle. Customer focussed approach stresses on knowing the profitable and risky customer segments. Then the steps are taken to market accordingly. Generally the importance is given here to the product, price, place (distribution channel) and promotion that appeals to customer. This four Ps approach has been very successful when implemented by few of the companies. But this approach has some very serious drawback. I will discuss that in a while.

The customer centricity is directed towards knowing customers better. Knowing their general behavior and their business value in terms of past purchasing behavior and future potential. It takes the marketeers to make them see from the customers eye. The 4Ps are thus converted to 4Cs here. The product is replaced by Customer wants and needs, upfront price is replaced by Cost to customer, place is replaced by Convenience of purchase and promotion by Communication between the company and the customers. This clearly has certain edge over the customer focussed strategy.

The former approach is understanding a demand and pushing the product. The later concept is understanding the demand, knowing the reason behind the immediate demand and predicting chances of the demand movement. Thus shaping the product accordingly. There are some chances of influencing demand shift according to the company's product profile by effective promotion and advertisement.

I would like to mention Human Values here. Evaluate the two statements and try to find which is spiritual and which one is material thought.

1. Everybody exists, therefore I exist.
2. I exists, therefore everybody exists.

First one seems spiritual at the first glance. But in actual, second one is the spiritual thought. Consider Gautam Buddha. We all must accept he is spiritual. But he left his mother in poverty and everyone he knew to enrich himself with the truth. Once he got enriched, he came back and enlighten the world with his knowledge.

The principle of Customer Centricity roots from the Human Values. It is a value based approach. It is knowing the present and future market, and preparing company's product portfolio according to it. This is enriching self. The enriched self (here company), thus emit and brightens the world. While customer focussed organization tries to focus more on customers current needs and thus play it right, and weakens self. Thus fail in the long run.

While now all of you must have been convinced about the customer centricity being superior to any earlier marketing approaches. Now I will discuss something about this approach and its implementation.

Customer Centric approach can be summarized as:
1. Define Market
2. Quantify Market needs
3. Segment the market appropriately
4. Profile the segments to make understandable (by business managers and others, non-technical)
5. Determine value proposition of these segments
6. Predict the possible changes in future
7. Communicate the value proposition to all concerned
8. Deliver the value proposition
9. Monitor the value being actually delivered
10. Evolve with time.

The heart of the customer centricity is customer segmentation and profiling, and evolution with time is the key to keep the strategy functional at any specified time.

1 comment:

Anonymous said...

Good insight into the differences b/w the two approaches.Its true that Cutomer Focused approach is knowing customer from company's perspective while Customer Centricity is knowing the customer from his/her perspective. And this is a big difference. You will think differently when you are thinking for the customer keeping the company in mind compared to when you are thinking for the company keeping the customer in mind.

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