Definition

customer-centric

Contributor(s): Francesca Sales

Customer-centric is an approach to doing business that focuses on providing a positive customer experience both at the point of sale and after the sale in order to drive profit and gain competitive advantage. The philosophies and operations of customer-centric businesses revolve around their most valuable customers and making sure they're happy.

Dr. Peter Fader, in his book Customer Centricity: Focus on the Right Customers for Strategic Advantage, explains that because not all customers turn out to be profitable, businesses that seek to be customer-centric and gain strategic advantage should identify the best customers and focus on building their products and services around the needs of those specific individuals. This is achieved by gathering customer data from multiple channels and analyzing it to better understand and categorize customers.

One way to figure out if a customer is high-quality, according to Fader, is to calculate their customer lifetime value (CLV), which predicts the net profit a business will acquire from its entire future relationship with a customer. High-quality customers are those who stay loyal to the company and don't leave unless given a very strong incentive to do so. These customers have a high CLV and collectively have a low attrition rate. Customer-centric organizations strive to acquire, retain and develop this type of customer by enhancing their experience.

This was last updated in March 2015

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Is your business customer-centric?
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I would have to say "yes", because without their input and their needs being met, we have no one to sell our product to. In our case, our product is actually sold as a product, rather than a service that makes its money on advertising.
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The real answer to this question lies in how customers would answer it. The best businesses I’ve worked with make the most of the few opportunities they have to listen to their customers instead of overwhelming them with surveys and creepy levels of personalization.
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