Every company is constantly responding to change and working to develop appropriate strategies, as if responding to the call of the motto: “Disrupt or be disrupted.” Leaders come up with strategies that provide innovative solutions that beat the competition (until new competition emerges) or lead to creative breakthroughs that have the power to transform humanity and even save lives. I dream of coming up with strategies. And if you can get there, the reward is gold nuggets, the income and profits that help you survive in the hard times and thrive in the good times, year after year.
But amid all the difficult economic times and unpredictable political climate, the essence of why businesses matter to the world in the first place can be forgotten. It's important for customers. Without customers, no company can survive for long. To say that being customer-centric is important is an understatement. It's the core of why business exists. Getting the strategy right therefore means putting the customer at the center of any business strategy.
We define customer centricity as: That is, aligning all of a company's activities for the success and benefit of its target customers. Customer centricity therefore requires companies to continuously interact with their customers, identify and act on strategic insights from those conversations to navigate change and transform the way they do business. At the end of the day, customer centricity is about collaborating and collaborating to deliver co-developed solutions that produce mutually beneficial outcomes for both suppliers and customers. In other words, your strategy must look to your customers, not just your competitors and the market, to guide your strategy.
The biggest barrier to getting customer-centricity right is confusing it with consumer-centricity. The latter includes things like customer satisfaction surveys, tracking Net Promoter Scores, mapping customer journeys, keeping customers engaged through responsive websites, and using chatbots and AI solutions. Reputable consumer-centric brands like Apple, Google, and Amazon are doing just this. They provide more value than customers expect.
But what does customer centricity look like when you're in the business-to-business space? If you're a company like Maersk, which competes in the shipping industry, and your customers aren't individual consumers, you're a company like Kotahi. What if you were an organization? How do you align your strategy, value proposition, supply chain processes, and resources while achieving impressive, profitable growth with your customers year after year?
This is our focus in the B2B space. This is because customer centricity is different in the B2B space, and despite being a larger market, it is less understood. Behind the fascinating B2C market lies the global B2B market, which is worth $14.9 trillion (almost four times the size of B2C) and accounts for nearly 80% of the world's daily transactions. Overall, if you also look at B2B and develop customer centricity there, you will have a 10x larger profit pool.
Even retail customer-focused technology giants Apple, Google, and Amazon make billions of dollars from business partnerships with tech companies through software and services deals. For example, starting in 2022, Amazon will partner with Italian-based automaker Stellantis to install millions of Stellantis vehicles worldwide by 2024, including brands such as Jeep, Chrysler, Fiat, Ram, and Peugeot. Consider providing software. The partnership will co-develop a software platform that leverages AI and cloud solutions to deliver personalized and intuitive in-car experiences including entertainment, Alexa-enabled voice assistants, navigation, vehicle maintenance, e-commerce marketplaces, payment services and more. It's something you create, and it's part of it. Stellantis has ambitions to invest more than $33.7 billion in software and electrification by 2025. This is helping both companies move towards business breakthroughs. Other examples of Amazon's government partnerships include a $600 million contract with the CIA in 2013, followed by a new “AWS Secret Region” for U.S. intelligence community and U.S. government customers in 2017; There is a $10 billion cloud computing deal with. The US National Security Agency announced this after a highly public legal dispute with rival Microsoft in 2021-2022. All of these events demonstrate the importance of B2B partnerships for these large technology companies.
In B2B, customer centricity is about more than things like customer satisfaction surveys. At a basic level, it typically involves negotiating and renegotiating contracts, designing customized value propositions, developing cutting-edge digital sales efforts, creating sales growth forecasts with the latest data-driven analytics, and two or more. It starts with mitigating the unlimited risks associated with the contract. More organizations will be doing business with each other.
At a more advanced level, customer centricity for business customers means having a business strategy that incorporates the voice of the customer. Our research shows that B2B companies that aim to become customer-centric ensure that the voice of their business customers is heard in the boardroom when developing business strategy. This saves them from the classic risk of strategy discussions becoming the equivalent of a ceremonial rain dance. It doesn't affect the weather afterwards, but it does make those who participate in it feel like they're in control.
Corporate customers provide direct insight not only into industry developments and innovations, but also into the formation of trends in commercial innovation through their own strategies that influence the market. impact information). future business decisions with supplier companies; As with any business strategy, overlooking business customer insights and information is a big risk, especially for large customers that represent a significant portion of a company's revenue. A case in point is Microsoft and its ill-fated acquisition of Nokia. At the time of the decision to enter the device market, many of Microsoft's customers were not convinced that this was the right strategic move. However, management pursued acquisitions and exited the device business with Nokia after seven years. Microsoft executives would have known this would happen had they listened to strategic input from key accounts. A lot has changed since then, and the company has become more customer-centric under the leadership of Satya Nadella.
When Maersk first began strategic dialogue with business customer Kotahi, it realized that there was not enough alignment among its management team. There was also a lack of shared strategic planning, including mutual advancement strategies across the maritime, port and land logistics supply chain networks. In some cases, a lack of communication was preventing customers from accepting new value propositions from Maersk. As a result, there were few joint activities to expand relations. Kotahi was an important customer for Maersk, so a customer-centric approach was needed.
Getting the voice of the customer into the boardroom was the key to further success. The conference in Copenhagen showed that there is great value in just sitting there if companies can talk and unlock it together.
Excerpted with permission The Triple Fit Strategy: How to Build Lasting Customer Relationships and Drive Growth By Christoph Senn and Mehak Gandhi (Harvard Business Review Press, November 19, 2024).
