What is Customer Centricity?
(Another piece of the puzzle)
Plus thoughts on creating experiences our guests don’t even know they want, at least not yet, The Human Part, CRM Software & Hardware, and Customer Lifetime Value (CLV).
I recently listened to an audiobook on a very long bike ride. The book is called Customer Centricity – Focus on the Right Customer for Strategic Advantage by Peter Fader.
Towards the end of the book, and after stopping the audio several times to think about what Peter was saying, I started getting that same feeling I always get when I finish a good book. That feeling of finding another piece of the puzzle.
One of the challenges for every business is having a clear picture of the puzzle their team is trying to put together. With a clear picture, it’s easier to see where the pieces go, just as important, it shows you what pieces still need to be found or created. The goal is to piece together a well crafted and unique business – one that enables us to become truly differentiated and, hopefully, make our business model uncopyable.
I think Peter Fader does a great job of explaining why his piece, Customer Centricity, fits certain business types, but not necessarily all. So, even if we have a decent picture of the business we are trying to build, we aren’t given a full box of all the pieces we need. In fact, the box often comes with pieces that don’t even fit. We have to discard the pieces that don’t fit and identify or even create the ones that are missing.
Customer Centricity for us is an important missing piece, but it is not an easy one to implement.
So, what is Customer Centricity and what is its goal?
As Peter Fader describes it,
“Customer Centricity is a strategy to fundamentally align a company’s products and services with the wants and needs of its most valuable customers. That strategy has a specific aim: more profits for the long term.”
Unfortunately, the ability to understand the needs of our most valuable customers is directly related to our ability to collect and decipher the relevant data, which is very difficult to do – especially for brick and mortar service businesses.
While it’s easier for many online digital businesses to develop software that tracks their customers’ purchases, they still don’t do a very good job of understanding their customers’ wants, desires, and must have needs.
Why is that?
The ability to really understand our customers’ or guests’ wants and needs is incredibly complicated and takes an intuitive team to design the algorithms needed to collect the right data, and then we need to be able to envision what our guests really want and need (and sometimes our guests don’t even know what they want until they see or experience it).
One of the biggest challenges with companies that are trying to be Customer Centric or Product Centric is that neither business model is enough to create what the customers don’t even know they want. In fact, a combination of both is what is needed along with an intuitive team that can look beyond what already exists to what could exist.
It takes time and effort to create something new that is noticeably better and highly desirable, even then it’s often being in the right place at the right time. Most importantly, it takes an intuitive human, or more accurately, a group of intuitive humans working together to recognize the new dramatic difference that is possible or is about to become possible.
The ability to see just beyond what currently exists was one of Steve Jobs and his team’s greatest abilities.
Apple is one of the truly iconic companies for several reasons – the most important one has been creating products and services their customers didn’t even know they wanted, at least not until Apple created them. The Apple design team often does it in a way that makes it so damn nice and intuitive that it seems ridiculously obvious, but it’s NOT! It takes a team to see just around the corner.
The Human Part
Another big challenge to becoming more Customer Centric, from an operational standpoint, is gathering accurate data on our guests, especially for brick and mortar service businesses.
To be more specific, it’s figuring out how to successfully integrate well crafted software algorithms (written by insightful humans) to collect the data needed so insightful humans are able to interpret the data and use it to understand what our customers currently like. Then to use the data to see a little further, just around the corner if you will,to what is possible next based on: current trends, technology capabilities both today and in the very near future, plus demographic changes, and more.
One of the most important insights is to figure out what our human guests don’t even know they will want or need.
Like I said previously, it’s much easier to be customer centric if the business is a digital online business, but dramatically harder when it is our frontline staff who are involved with the process and the ongoing and hopefully accurate collection of our guests’ data. However, it’s also the human touch that can raise the quality of our attraction and service experiences to a much higher level, and when done right, our human guests will repeatedly crave what we offer.
The desire to socialize with other human beings, and especially our friends and family, is literally one of our biggest human needs. Technology that will enable humans to easily plan, schedule, invite, and meetup with friends and family is available, but it’s not being done very effectively for out-of-home entertainment venues – at least not yet.
CRM Software & Hardware
I laughed when I got to the chapter in Peter Fader’s book where he discussed how a very high percentage of business owners and managers were extremely disappointed with their CRM software. He discussed how a CRM had to be able to provide information that was relevant and usable to enable business owners and managers to make effective decisions. The reason I laughed was because we ended up creating our own CRM software, because none of the systems we tried worked very well for our unique type of business. Most importantly, we wanted our CRM to be integrated into our POS software.
One example of maximizing the integration of CRM into a POS system would be the ability to identify guests walking up to a service counter with RFID cards in their hands or pockets. Photos of our guests could pop-up on our POS displays to identify the guests who are standing in front of our staff members along with the guests’ key data – such as previous purchases, likes and dislikes, etc.
Most importantly, the data has to be accurate. Our guests’ data can easily be degraded when they forget their cards and our staff members forget to ask if they are returning guests or if this is their first visit. If they are returning guests without their guest card or they lost or forgot it, and we create a new card as if they were a different person, we are basically starting over and causing our system to present us with inaccurate data for this person as well as inflating the number of different people who visit our center.
Our Center Manager Pro software will always be a work in progress, but it’s much better than trying to utilize multiple software applications that are not integrated. What we have done is integrate many of the needed software tools to operate our own out-of-home entertainment venues as well as for our clients’ venues. We also created and integrated our own In-House & Online Player, Party, and Group Reservation software, Online Food & Beverage Ordering, Email Bulk Mailer, Manager & Staff Reviews, and much more.
Customer Lifetime Value
I really liked Peter’s thoughts on Customer Lifetime Value (CLV) as far as the need to identify our most important customer segments. For example, the ability to drill down into our guest data to discover that 40% of our guests might be responsible for 80% of our revenue. These are the key types of insights we need to better understand when managing our businesses.
However, it’s also important to point out that the accuracy of CLV can be a highly flawed measure of future revenues in a world where new and often massive challenges are popping up at a much faster rate than ever before.
The increasing number of obstacles and other market shocks, like Covid-19, have caused successful businesses to crumble far more quickly. These rapid changes can easily reduce the accuracy of any Customer Lifetime Value (CLV) calculation from being semi-accurate to just plain wrong.
With all the above being said, one of the most important insights I read a while back was a reply to a question asked of Jeff Bezos.
I don’t remember the exact question, but Bezos’s response was something like the following:
“If you pick the right idea and it’s still going to be relevant 20+ years from today, you can afford to make huge investments to make that idea a reality – you can even afford to make a few mistakes along the way.”
Here’s a couple key questions for all of us:
Is our entertainment center model going to last for another 20+ years?
Have we picked the right attractions and services – will bowling, laser tag, VR, axe throwing, high speed go-karts, movie theaters, trampoline parks, arcades, food & beverage, etc. still be relevant for another 20+ years?
I think many of the above attractions and services will be relevant but certainly not all. The key is to continuously make significant investments in those attractions and services that are likely to be around for 20+ years. If we don’t make those investments, we could kill or significantly degrade one or more of our long-term revenue generators.
Even during trying times, we have to keep moving forward and we have to reinvest in our venues to keep them relevant for the long-term.
The in-home and mobile entertainment and gaming industry isn’t standing still. In fact, these companies are accelerating their investments to provide their users with better and more addictive entertainment and gaming experiences.
On top of our in-home and mobile entertainment competitors, we are dealing with one huge challenge, which is Covid-19 and all the unknowns that come with it.
As I have said many times to our clients and team members,
“It is what it is. And we just have to do whatever it takes to get to the other side.”
Hang in there, it’s not over yet, but I’m pretty sure we are starting to see the light at the end of the tunnel.
Thanks for reading!