Editor’s note: Pat Osorio is co-founder and CMO of insights and technology firm Birdie, Palo Alto, Calif.
Coined in the 1960s by Lester Wunderman, long considered the creator of modern-day direct marketing, the term “customer-centric” emerged during a period in which advertising began to move beyond mass media (e.g., TV, Radio) to more individual and personalized channels.
To have the knowledge and understanding of the consumers’ needs and wants is essential for any company and an integral part of the most basic business plan. It’s because of this notion that many companies strive to be customer-centric. But in the world of business, most companies focus on key performance indicators like revenue and Net Promoter Score (NPS) when it comes to evaluating the efficacy of being customer-centric.
Yes, metrics such as revenue and churn are important and even essential. They help to measure the health of the company and answer questions on, growth, efficiency and, from a certain perspective, even customer satisfaction. However, they fail to capture the “why” of each customer or reveal the consumer's intent when interacting with the company (i.e., what needs they are looking to satisfy?). In actuality, the metrics that companies should be looking at are not KPIs but rather consumer performance indicators (CPIs), which provide a more accurate assessment of what the customer has in mind.
If a company cannot collect and manage its consumer insights in a well-organized manner within a data-based environment, the real-world focus of that company on its customer has clearly been left aside. A great starting point for evolving a company’s approach to becoming truly consumer-centric is to define clear indicators to measure company performance with an emphasis on the expectations of your consumer – or in other words, define your CPIs.
How to define a CPI?
A CPI is similar to a KPI, but established from the perspective of your consumer. This approach allows you to measure in detail your performance concerning the needs of the customers themselves. It is a metric of value to the customer, one that reflects customer values and not necessarily company values. The NPS, for example, is not a CPI because it is not something the customer cares about, although it helps to indicate whether they are satisfied or not. It does not help you understand the "why" behind customer satisfaction and does not let you know exactly where to improve on this metric (i.e., it is not actionable). The same goes for revenue or market share.
The CPI is focused on the consumer, and fits well into the universe of marketing, sales and customer support, but can also be used in areas that are indirectly related to the consumer, such as finance and operations.
An example of a very common CPI is the "time to solve” (a customer problem). It is not the same as response time, as it is not just the contact or response that the customer seeks, but the time it takes to resolve the entire doubt or problem that they had.
When defining and managing CPIs, it is important to gather all relevant information and understand what the consumer wants or expects from a company or product, or the job to be done for them. For example, the expectations of those who buy a computer for work can be vastly different from that of those who buy the same computer to play video games. To understand what a consumer expects from a company and its products, a company must go beyond simple market research and focus groups.
A company must listen to its consumer, gather information from within their context of experience and understand, from a spontaneous source, what exactly frustrated them throughout their consumption journey – be it related to buying, using the product for the first time, interacting with support or even the performance of the product itself. Q&As, online reviews and discussion forums are a great source for this.
Using CPIs to improve your KPIs
An advantage gained from looking at your company’s CPIs is that it will bring qualitative answers to several questions that you would regularly ask yourself and your team regarding improving KPIs.
The relationship is straightforward: if a customer has a quick answer to a question, they are likely to recommend your service. If the shopping experience was pleasant, they will return to your store and buy again. If the product they purchased met a specific need, they will recommend it to someone with a similar need, and so on. In terms of managing your team to be customer-centric, it will be much easier to motivate and direct the team if they know exactly where they need to act. This clarity of objectives will prevent a lack of focus and unnecessary investment of energy and money in actions that will not generate the expected impact on the KPIs. By acting without focus or without knowing the source of a problem, more problems can be created. A company may even experience irreversible losses for not paying attention to the consumer in the first place.
Consumer first
If you really want your company to become customer-centric, you must start by defining the metrics that are important to your consumer and then establish a clear process for measuring and relating to the other metrics that are important to you.
It’s not easy to start. You must have a clear understanding of what is important to your customer and determine how you can measure it – whether it’s with surveys, review management or any other type of feedback collection. Once that’s clear, you can rest assured that you will have a customer-centric approach to everything you do.
When you do, you will reach your goals with higher efficiency and stronger long-term growth. And you will also have more satisfied customers.