After the upheaval of 2020, are you cultivating employee loyalty? Baking security in from the start? CIOs leading digital transformation in 2021 face new risks and opportunities.
Why customer-centricity means being ready to say "no"
Is your organization working to become more customer-centric? Prepare to hear and accept harsh truths - then learn from them and come back stronger
Salespeople who want to know what customer-centricity really means could do worse than to look at early Hebrew literature; about 700 B.C. to be exact, and the proverbs of King Solomon. Along with advice on the nature of wisdom and the state of the soul comes this helpful nugget: “Faithful are the wounds of a friend; but the kisses of an enemy are deceitful.” In short, best friends tell harsh truths.
Experience tells me it’s true. I’ve had friends warn me off a course of behavior, make me think twice about a career move, or reveal things in others that I couldn’t see before. I’m sure you recognize this. The people who tell you what you need to know (but don’t necessarily want to hear) are the friendships that endure.
Talking with your customers should be no different. I’ve read hundreds of management books and sat through hours of sales enablement training, and the same phrases come up time and again to describe customer-centricity: "trusted advisor", "strategic partner," "business consultant." They have become buzzwords, meaningless labels, because very rarely are they accurate. If you were genuinely any of these things, you’d be willing to turn around to your customer and say: "Sorry, on this occasion we’re not the right company to help you." Have you ever done that?
[ Get answers to key digital transformation questions and lessons from top CIOs: Download our digital transformation cheat sheet. ]
What does customer-centric really mean?
Right now at Red Hat, we're wrestling with this question: "What does it mean to be truly customer-centric?" Like all the other things that are important to us, we want to be accountable for what we set out to do. We have discussed measuring our customer centricity using NPS, or the number of new logos, or upsell revenue. They all provide decent health indicators; but I’d argue none of them gets to the heart of what we’re trying to achieve.
In addition to the multiple times when we could truly match the customer’s expectations and actual needs, if we’re brave, we’ll also make one of our KPIs the number of times we said no to a customer; or more tellingly, how much revenue we passed up because we couldn’t offer, at that time, what they really needed and decided to not pace them towards another average solution.
Once you adopt this approach, you begin to have very different conversations with customers. Sales-led vendors will bias their technology and try to adapt their customer’s challenge to match the solution. Customer-led vendors will not consider the technology until they fully understand what the customer wants to achieve. The “risk” is that their technology won’t be suitable for the task. But it’s a much lower risk than the long-term brand damage of selling something the customer shouldn’t buy. This is where the best brands stand out from the crowd; they divorce customer-centricity from sales. They are willing to forgo short term wins in the belief that sustainable profits go hand-in-hand with genuine honesty and trust.
I have been at Red Hat for nearly 9 years. I am passionate about open source; but I always stop short of debating its values versus proprietary technology. For starters, customers should have a choice about what’s best for their business; and proprietary software has plenty of benefits. But I often wonder if there is a contradiction between the proprietary business model and customer centricity? When software, protocols and codes are not accessible, adaptable and transferable; when the natural inclination of the vendor is to control and protect their technology, I wonder how open and honest the conversation with a customer can really be?
Ask for the hard truths from people
A global pandemic such as we are experiencing is the perfect time to test your customer credentials. The sales-led company will frame the challenge in financial terms: Budgets are more protected, projects have been put on hold, sales are harder to come by. In contrast, the customer-centric company will reflect and ask: “How are you and your team members doing? How has our technology been able to help you survive this crisis? Are you making the best of it?” These are questions that leave you vulnerable, and hence you won’t find them advanced by so-called sales experts. But until you’re willing to hear the truth, you can’t possibly know whether you’re delivering value for the money.
That’s willing to hear the truth; and accept it. It’s easy when the feedback is positive. But customer centricity means also being open to the negative – those "wounds" that King Solomon tells us can only come from a friend.
A truly customer-centric business takes those wounds, learns from them, and comes back stronger. In turn the customer, seeing the value of transparency, is encouraged to become more honest with their vendor. And only then - at this intersection of customer-centricity and supplier- centricity – can you claim to have a genuine partnership.
[ Will your organization thrive in 2021? Learn the four priorities top CIOs are focusing on now. Download the HBR Analytic Services report: IT Leadership in the Next Normal. ]