If you read one book over the holiday, I suggest Peter Fader’s recent book titled Customer Centricity. Published by the Wharton Digital Press, it is a perfect read for the holiday. It’s short (60-90 minutes), clear, and the best summary I’ve read of why companies should re-think their approach to customers.
One of the main premises is that product-driven companies may not be able to survive megatrends like globalization, deregulation, and instant communications. Customer-driven companies, however, align themselves, their products, metrics, and actions with the most profitable customers to drive superior profitability.
Other nuggets from Mr. Fader:
- Not all customers are created equal or as I sometimes remark, “discrimination isn’t all bad.” Beyond this statement, however, is the acknowledgement that even your best customers have value.
- You can’t analyze “the customer” but must instead think of each customer and use that information to segment.
- Traditional methods to calculate Customer Lifetime Value fail when the relationship is not contractual (i.e. when the customer can purchase at will as in retail environments).
- The value of Customer Relationship Management (CRM) software diminished as the prominence of the tool superseded that of the customer relationship. Unfortunately, CRM became “customer data management” and the idea of growing and improving a relationship was lost in the excitement of the latest buzz.
The pivot point is to match your company’s capabilities with the needs of your most profitable customers. First you have to understand that not all customers are equal and then you have to use customer inequality to serve them effectively and drive profitability.