Why Companies Fail in Their Efforts to Become More Customer-Centric and How to Overcome These Challenges

In a prior post I reflected on my 20 plus years of helping clients in their efforts to becoming more customer-centric. I also introduced our free online organization assessment tool which provides you with immediate feedback on where your organization is in its journey as well as suggestions on what steps you can take to help your company to continue its evolution. You can access the assessment here. As a follow-up I thought I’d share some of the common stumbling blocks I have seen over the years that have prevented companies from evolving into a more customer-centric entity. Here are the top 10 stumbling blocks that I have seen that have hindered companies in there efforts to become more customer-centric:

  1. Lack of Leadership Support: If the senior management is not committed to becoming more customer-centric, it is unlikely that the rest of the organization will follow through. Without leadership support, customer-centric initiatives tend to become ad-hoc and lack direction. That said, often the way to gain leadership support is to show impact. So developing customer-centric programs in a pilot format to demonstrate tangible results can be a great way to gain executive sponsorship.
  2. Inadequate Understanding of Customers: Companies often struggle to become customer-centric because they don’t have a deep understanding of their customers. Without a clear understanding of customers’ needs, preferences, and pain points, it’s difficult to tailor products, services, and experiences that meet their expectations. A lot of times companies will point to lack of data or that its too hard to access in order to generate insights. Non-sense. Work with what you have. Find work-arounds to integrate it and field some primary research to fill-in the gaps.
  3. Lack of Customer-Centric Culture: Companies that are not customer-centric tend to be internally focused, with a culture that prioritizes operations and processes over customers’ needs. Without a customer-centric culture, it’s challenging to create an environment where employees are motivated to put customers first. See number one. Its hard to change the culture without executive support and the alignment of performance metrics. If you do not have executive support then take the pilot approach and in parallel identify key performance metrics that need to change in order to gain alignment. Present those as part of your recommendations on how to scale and roll-out your pilot.
  4. Siloed Departments: Companies that have siloed departments tend to struggle to become customer-centric because they lack a unified view of the customer. Different departments may have their own priorities and objectives, which can lead to a disjointed customer experience. This is often the case when you do not have executive support and lack of customer-centric measures that would reinforce cross-department cooperation. If this is the case, look for advocates within the key departments and include them in your pilot development to help breakdown some of the silos.
  5. Ineffective Use of Customer Data: Many companies collect customer data but fail to use it effectively to improve the customer experience. Without effective data analytics and customer insights, it’s challenging to create personalized experiences that meet customers’ needs. If you are lacking in data science resources prioritize your investments. Where is the biggest business challenge? Acquiring customers, growing customers or retaining them? Once you have identified where the biggest challenge/opportunity lies, allocate the resources that you have to be laser focused on leveraging your customer data to improve performance. Use the results of these efforts to make the case for additional investments in resources so you can expand to other areas of the business.
  6. Inadequate Investment in the Right Technology: Technology can play a significant role in enabling a customer-centric strategy. However, many companies don’t invest adequately in the necessary technology to support a customer-centric approach. Technology is a key enabler to scaling customer-centric programs. If its a lack of resources for investment, take the pilot approach. Prove out the value to gain the budget to make the right investments. If its a matter of having the right tools, then you need to spend time truly documenting the requirements, vetting potential vendors and scoring them against your requirements while taking into consideration deployment and ongoing costs. You need to do your homework as its not easy to roll-back on these investments so its important you get it right out of the gate.
  7. Lack of Employee Engagement: Companies that don’t engage their employees in their customer-centric strategy tend to struggle to deliver on their promises. Without employees who are motivated and empowered to put customers first, customer-centric initiatives tend to fail. Your employees are brand ambassadors. Its important that they not only buy-in but feel apart of your customer-centric strategy. Before finalizing your strategy and launching programs, its critical to get employee feedback and input. This is particular true for those who will be helping to execute your programs and are customer facing. Without their participation upfront it will be harder to get their buy-in. Its also critical as part of this process you clearly identify and communicate the “whats in it for me” for these employees. Laying out how this will benefit them will go a long way in getting them to embrace proposed changes. Ultimately without their buy-in and support your efforts will fail. So don’t skip this step.
  8. Short-Term Focus: Companies that are too focused on short-term results tend to struggle to become customer-centric because they prioritize quick wins over long-term value. A customer-centric approach often requires a longer-term perspective that prioritizes building lasting relationships with customers. If you have used a pilot program approach you can leverage your results to project the overall impact on the broader customer base. This should help you manage short-term expectations. In addition, you should identify leading indicators of financial impact, monitor them and then use historical results to project the impact – i.e. improvement in Net Promoter Score by “X” can be projected into “Y” increase in retention resulting in increment profit of “Z”
  9. Failure to Measure Success: Companies that don’t measure the success of their customer-centric initiatives are unlikely to know whether they are making progress. Without effective metrics and KPIs, it’s challenging to track the impact of customer-centric initiatives and identify areas for improvement. Hopefully you have a core set of customer and customer value metrics you are already tracking. So when it comes to tracking the impact of your programs it comes down to an ability to attribute the impact of the program on these metrics. If you have gone the pilot route then you can use the pilot program to identify which of the KPIs you expect to impact and can use these to monitor broader impact once you scale out your programs. If you have not gone this route then you will want to create a control or holdout group from you customer-centric programs to assess impact. Now not everyone is comfortable holding out customers from their customer-centric programs and will instead rely on historical benchmarks to measure performance. Proceed with caution on this approach as macro factors may have changed overtime and could be impacting your results making a comparison against historical performance murky or
  10. Lack of Agility: Companies that are not agile and flexible tend to struggle to become customer-centric because they are not able to adapt quickly to changing customer needs and preferences. A customer-centric approach requires constant experimentation and iteration to stay ahead of customers’ evolving expectations. Hopefully your organization already has a test-learn-grow mentality. If not the best way to start to insert that into your culture is by example. Use pilot programs as a way to sho results to get executive managements attention. Its key with these pilots to “act locally and think globally”. That is to implement small changes but changes that can be implemented more broadly across the organization without major investments.

These are some of the common reasons why companies fail in their efforts to become more customer-centric. By addressing these challenges, companies can create a culture that prioritizes customers’ needs and delivers a superior customer experience.

What has been your experience? Where is your company on this journey? Not sure where you stand? Use our free online assessment tool to find out where your organization is in its journey. Regardless of where the organization is, we have the experience, tools and approach to help expedite your evolution. Contact us to set up time so we can discuss in more detail.