These days it seems like everyone is talking about their customer obsession. From Forrester Research, which has based a business plan and research agenda on “The Age of the Customer” to Jim Blasingame’s book of the same name. Consultants, authors, and marketing pros are embracing customer centricity with bear hug-like gusto.
Yet, the idea is old as marketing itself. If there’s two things I learned in business school, it’s Philip Kotler’s “Marketing 4 P’s” and the “find a need and fill it” mantra. In fact, the notion of customer centricity goes much further—as far back as 1901 when John Nordstrom opened his first shoe store. If you’ve ever read “The Nordstrom Way”, then you also know that at Nordstrom’s the customer has always been king. To Nordstrom, the “need” was “service”. Whatever the customer wanted; the employees at Nordy’s made sure they got it.
So why the newfound obsession? It has to do with what’s trending. A lot has changed and it can be demonstrated through the lens of Kotler’s 4 Ps.
Product — The world has come a long way since Henry Ford’s “You can have any color of car as long as its black” mantra. Customers are demanding and getting more customized products. And in an IoT world, the hardware product (like Fitbit and Apple Watches) are just vehicles for the valuable data that’s attached to it. Beyond style, the big benefit is the content that is provided, which is purchased over time. Not surprisingly, people are rethinking how and what they buy. In the automobile industry, for instance, car buying is being supplemented by mobility, security, and infotainment services.
Price — When purchasing new services customers only want to pay for what they use. It’s creating new market opportunities. For instance, Philips has reshaped how they sell radiology imaging, making the devices available on a pay-per-scan basis. This lowers the cost of entry for medical facilities, making scanning services available to more patients. One day, maybe Nordstrom could sell their shoes by the number of steps versus the cost of the leather!
Promotion — Mass ads via TV and billboards are making way for personalized ebanners that can be streamed anywhere, updated quickly and targeted with laser-like precision.
Place — If the closures of Sears, Dayton’s and other stores isn’t a harbinger of a sea change then the growth in ecommerce should be. Brick and Mortar is being replaced Click and Order, which provides more selection, better prices, and 24/7 availability.
The common thread that binds the P’s of the new millennium is digital transformation. McKinsey & Company reports that digital services are expected to account for about three-quarters of global growth over the coming decade. Additionally, digital services have made competitive advantages of the production age nearly irrelevant. Digital products and services are more abundant, cheaper, easier, and faster to deliver.
Companies looking for new levers to grow their business have returned to the customer—to see how they can satisfy their every whim, with the expectation that this will keep them coming back and drinking from the well for longer periods of time. To be successful, companies must reorient their thinking from product margins to customer lifetime value. And the writing is on the wall—and the books and the blogs: the customer age is here to stay.