Hello, in this session we are gonna talk about the DNA of Customer-Centricity. Let me start by telling you a little story. It is the story of Sandy Lerner and Leonard Bosack who started Cisco. In 1981, they were working at Stanford University, managing the university's network and computer systems. As the network grew, as the computer systems grew, they realized that one set of computers were not talking with another set of computers. So they developed a product to get the computers to talk to each other. They took this product to a customer and they said, we'll come back after a week and you let us know whether or not the product worked for you. When they went back after a week, the first customer rejected their product and he said that the operating system that he was using was different from the one that their translator handled, and so, their product didn't work for him. Well, think about it, Sandy Lerner and Leonard Bosack, now, are at the crossroads. They could have very easily told the customer, why don't you change your operating system and then our translator will actually work for you. Rather, they said, we'll come back in a week and we will bring you a translator that can handle your operating system also. That essentially, is the heart and soul of customer centricity and still today at Cisco Everyone is focused on the customer, and customer centricity is part of their DNA. This leads us to two contrasting worldviews. One starts on the inside of a company, and works its way outside. And that's called the product-centric worldview. The other starts outside with the customer, and works its way backward into the company, and that's called the customer-centric point-of-view. In this course, we are going to be focusing on the customer-centric point-of-view, and not merely because we are a course on marketing. But because it has been demonstrated through research and in the real world that companies that are customer-centric tend to do much better, in the long run, than companies that are product-centric. Sometimes, product centricity is also referred to as technology-driven companies, means these companies start with a technology and then they push their solutions out to the market place. Customer centricity is also referred to as market-focused companies, means that these companies start with the market, they're focused on the market, and then work backwards, developing and designing and delivering effective solutions to the marketplace. So more formally speaking, what is customer centricity? First of all, it's a strategy. It's a strategy to fundamentally align a company's products and services with the wants and needs of its most valuable customers. And that phrase is important, most valuable customers. We'll come back to it. The strategy has one very specific aim, and that is to make more profits in the long run, not in the short run, but over a period of time. Now, in the previous session, we talked about customer value, means the value that a customer derives from doing business with a company. But there is a second aspect to value and that's the value of a customer to the company. Both aspects of value are very important because, customers do business with the company if they get value from the company. And companies like to do business with customers that are valuable to them, that give them business. So customer centricity is really aligning a business' products and services around the needs of it's most valuable customers, those that the company can benefit from doing business with in the long run. Why? Because there is not a single company on this planet that has infinite resources. Every single company has finite resources and therefore they have to make a choice which customer to do business with. This actually leads to a very interesting new metric. And the value of a customer, or the value of customers, is not captured by a forward looking metric called customer equity. And those of you who are a little bit more financially oriented, who have taken courses in finance, it's the total of the discounted lifetime values summed over all the firm's current and potential customers. And you know that money in the future is less valuable than money today. And that's where the discounting comes in. The lifetime value refers to the sum of all transactions over a period of time, not the life of the company or not the life of the customer, but the life over which all the transactions take place with a company. So customer equity is an important metric that talks about the value of a customer or a marketplace to a company. Among the single biggest mind shift, the singular biggest shift that comes around, due to customer centricity, is in the mindset. Which says, the customers are assets. They're not merely sources of revenues. Therefore, companies need to invest in their customers. They need to nurture them, and they need to grow them. Another perspective is that you put the customer at the heart of your business, and then you build a business around the customer. Your strategy, your structure, your processes, the rewards, the people, they're all aligned in such a way that they're all focused on the customer. Working in unison to serve the customer. There are five levers for putting the customer at the center of your business. The first is internal coordination, where a company doesn't work in silos, but works together so that they can respond swiftly to the needs of the customer. The second is cooperation, a culture that aligns all employees around customer solutions. The third is clout, that means those employees that actually champion the calls of the customer are given more power. The fourth is capability, developing employees' skills at tackling changing customer needs through training and other kinds of orientation. And the last is connection, blending a company's offerings with those of its partners and it's collaborators, so that they can provide a more unique and richer set of solutions to its customers. In summary, customer centricity is a business philosophy that influences how a company organizes itself and how it operates. Secondly, it stems from a deep-seated belief that customers and markets drive a business, not the technology that a company possesses. Lastly, customer-centric companies use formal structures and processes, like customer champions, monetary rewards and training to build businesses around their customers.
