The difference between customer-focused and customer-centric

What’s the difference between being customer-focused and customer-centric? Read ahead to discover why customer-centricity is the superior option for your business.

Customers are the heart of every business.  With that in mind, businesses need to nurture relationships and provide a customer experiences that delights and satisfies. This begs the question, is it better to be customer-focused, or customer-centric?

For many, the terms customer-focused and customer-centric are almost interchangeable, but there are considerable differences in reality. In this post we’ll look at the differences between customer-focused and customer-centricity and reveal why the latter should lie at the center of your strategy.

Customer-Focused vs. Customer Centricity

Customer focus refers to operating a business with a strong orientation towards achieving the current customer needs. The concept is not new, and most companies believe they must always focus on customer needs to enjoy higher profits, however, this is only half of the full picture.

On the other hand, customer-centricity refers to looking at the customer's lifetime value and directing the marketing efforts towards providing a positive experience. This approach puts the customer at the center of everything you do, and aims to drive repeat business, create customer loyalty and enhance business growth.

While being customer-focused is important, it doesn’t cover enough ground to create the impactful experiences that today’s consumer expects. A business that is customer-centric works to understand their customers at a deep level so that they can better serve them and retain their business.

Dealing with Customers' Needs, not Wants

A customer-focused organization listens to what the customers currently want and offers them that. Customer-centric companies take things a step further by trying to understand the customers' needs and behaviors to serve them in different phases of their customer lifecycle. Deploying customer-centric approaches that focus on evolving needs builds strong relationships between customers and the company.

Thinking like a Customer

A customer focus approach applies the outside-in technique, by simply figuring out what products and services will best drive purchases. This angle of approach will only get you so far. Alternatively, customer-centricity implies an inside-out method, where one first works to understand who their customers are before trying to sell to them. A customer-centric business is one that makes marketing decisions from a customer’s point of view.

Proactive, not Reactive

At their core customer-focused businesses are reactive. This means that customer-focused businesses only seek to match their products and services to please their customers. Being reactive only serves as a limited benefit, as you’re always playing catch-up. Customer-centric businesses, on the other hand, tend to be proactive, as they preemptively strive to understand their customer behaviors and adapt their strategies accordingly. A  customer-centric business  will focus on the core customer groups, understand their needs, and seek to solve their problems.

Providing Solutions, Not Just Products

Customer-focused marketing identifies the products or services that match the customers' wants, while the customer-centric alternative aims to deliver a complete solution. Customer-centric businesses can ensure an optimized long-term customer experience by thinking like customers and understanding their needs.

Focus on the Long-term Value

Customer-focused businesses aim to satisfy all their customers at once. They empower staff to go the extra mile in offering great service to all clients to make them happy. While this is a worthwhile endeavor, it limits profit growth as it forces businesses to paint with a large brush.

Since the customer-centric businesses focus on lifetime value, they will spend more time focusing on the key customers that deliver more bottom-line value. A customer-centric business will focus a majority of their marketing efforts towards meeting the needs of these customers as they’ll spend more and are expected to be more loyal to the brand. And that’s not to say other customers are less value, rather they don’t play as much of a central role in strategic planning.

What is the Impact of Customer-Centricity?

Understanding and satisfying your customer base is crucial to the long-term efficiency and productivity of your business. With the increased competition in the retail and ecommerce landscape, the shift from customer focus to customer-centricity is imperative.

Up-to-date with Customer Needs

With the customer-centric approach, a business can worry less about delivering outdated or irrelevant content, marketing, or products. When a company understands the customers' needs, it can modify and meet them accurately, and with little effort. A business that remains rigid, and doesn’t adapt to their customers’ shifting needs and behaviors, is bound to struggle. By remaining adaptive, you can continue to make an impact and drive business growth.

Enhanced Customer Retention and Loyalty

Acquiring new customers can be harder than retaining the existing ones—you’ve probably heard this before. But did you know that loyal customers are bound to spend more than new ones, roughly 67% percent more. When a business is customer-centric, they can better meet their customers’ needs, and in turn, retain their business for the long-term.

Acquiring New Customers through the Word of Mouth Marketing

Strangely enough, your customers are the best marketing source for your business. On average, word-of-mouth marketing drives $6 trillion in annual spending worldwide, making up 13% of all retail sales. These are big numbers, and customer-centricity can help your business take a cut of the pie. Raving customers will bring in their family and friends to your business. These newcomers will purchase your products with low effort from your marketing teams, leading to an exponential growth in new valuable customers that require little to no ad-spend.

Enhanced ROI

It only takes a few unhappy customers to bring a well-established business down. However, with an effective customer-centric approach, you will always be at par or exceeding your customers' needs, which attracts them to make repeated purchases.

The result of these efforts, is a massive boost in sales and revenue. Research by  Deloitte and Touche revealed that 60% of companies that adopted customer-centricity had more profits than those that did not. In addition, 64% of organizations with customer-centric CEOs have a competitive advantage against their competitors.

Applying Customer Centricity to your Business

To develop a customer-centric service, you need to start thinking strategically. Determine how you will focus on the lifetime value of your customers by being proactive and not reactive. Keep your focus on the customers' needs and behaviors versus their short-term wants.

That being said, a successful customer-centric business requires high-quality tools to ease the transformation process; Lexer’s customer data platform (CDP) is that high-quality tool. Built with busy retailers in mind, Lexer helps you understand and serve your customers without the need of an IT or data science team. Lexer acts as a unified hub for all of your customer data and delivers advanced segmentation tools that you can use to not only learn who your customers are, but also better serve their unique needs. It is a proven quality data platform that helps brands and retailers transform into customer-centric businesses.

At Lexer, we believe that the way to drive incremental sales is through improved customer experiences. Allow us to take your business to the next level.

Use the calendar below to book a demo of Lexer and discover how our CDXP can help you take a customer-centric approach to business.