Customer-centric: Definition, Benefits & Best Practices

Customer-centric: Definition, Benefits & Best Practices
Gain a clear understanding of the customer-centric approach along with its benefits. Discover how to become a customer-centric business with Square today.
by Square Jan 02, 2022 — 6 min read
Customer-centric: Definition, Benefits & Best Practices

When you’re in business, one of the first things you learn is that the customer is always right. We may have moved away from taking that saying literally, but the principle behind it remains the same. No business becomes successful without a strong focus on its customers. After all, if nobody is buying your products and services, you simply can’t survive.

There’s also a theory that a happy customer will tell a friend, while an unhappy customer will tell the world. That might be an exaggeration, but again, the concept is true. An unsatisfied customer can cause untold damage to your reputation, so it makes sense to be more customer-centric.

So, what does it mean to be customer-centric? Far from being a buzzword, the idea of being customer-centric applies to all aspects of your business. From pricing your products to providing after-sales support, you need to focus on the customer at every point of their journey.

What is customer-centric?

Being customer-centric is all about creating a positive customer experience at every stage of the customer journey. From the moment they discover your business until well after they’ve made a purchase, the customer journey should be a key focus for any business.

Product-centric vs customer-centric

Since customer-centric thinking is all about creating a great experience for your customers, you also need to consider how product-centric you are. Great customer service won’t get you too far if you don’t have the products and services that customers are looking for. You could be the friendliest furniture salesperson in the world, but if you sell chairs that break in a week, you’re most likely not going to get repeat business and your reputation will soon decline.

So, the two need to intertwine. Ensure that you are product-centric enough to create something that offers genuine value to customers. Then, make sure you are customer-centric enough to make a customer’s buying experience as easy and rewarding as possible.

Benefits of a client-centric approach

The old saying about the customer always being right is still prevalent today, and that’s because focusing on your customers provides many benefits.

1. Increased sales

Word gets around about your great service, and your online ratings and reviews will reflect it. That can lead to more sales and income. Additionally, being customer-centric makes it easier for customers to make purchases, so your conversion rates may increase with a stronger customer focus.

2. Building brand loyalty

Happy customers are usually return customers. Repeat business should always be a goal because it’s a sale that ultimately costs you nothing in marketing. When you make customers happy, they become your biggest cheerleaders, often sharing content on social media and marketing your brand for you without even being asked.

3. Reducing operating costs

Engaging with customers to find better ways of doing things often leads to improved business practices. Also, with great brand loyalty, your marketing costs decrease because you’ve got repeat customers.

How to become a customer-centric business

1. Anticipate what your customers want

Many customers don’t know what they want until it’s shown to them. This can apply to products, services, or even just the way you interact with customers. If you can use expert knowledge to anticipate something that will work well, go for it. It’s important to always be innovative in business because you can change the way customers see your business by doing things a little better, differently, or offering something they didn’t know they needed.

Remember the video-sharing platform Vine? It was born on the back of YouTube’s success, except Vine was different. The videos were only 6 seconds long, leading many people to wonder why anybody would be interested in such short videos. While the platform isn’t around anymore, without Vine’s creators recognising that people may want quick, sharp pieces of content, Tik Tok may never have been born. Tik Tok has gone on to become a cultural phenomenon because someone anticipated that short videos may be wildly popular.

2. Collect customer feedback

While being innovative is important, it’s also crucial that you listen to what your customers are saying. It’s one thing to say you offer great customer service, but it’s another to listen to feedback and implement positive changes based on it. To deliver what your customers want, you need to find out what they are thinking using surveys and other feedback tools.

Products like Square Feedback make it easy to collect private customer feedback so that you can act on concerns straight away.

3. Make it easy for customers to contact you

Customers can get frustrated when they can’t easily contact a business. Basically, it forms a barrier between the customer and your business that ultimately causes the customer to look elsewhere. It’s one thing to generate a lot of leads, but you also need tools in place to convert those leads. Easy communication is one of those tools.

Ensure that you provide several contact options including email, phone, online contact forms and social media channels. Most importantly, ensure you are responsive and respond to enquiries quickly. The other alternative favoured by many businesses is a chatbot on your website.

4. Understand customer pain points and resolve them

When you look at your customer journey, can you identify pain points? If so, it’s imperative you fix them quickly. For example, if you run a clothing store that gets plenty of customers through the door, but doesn’t translate into sales, what’s holding the customer back? Perhaps they pick up items of clothing they love and even carry them around the store. Ultimately, they want to try them on, and you don’t have fitting rooms. If this costs you sales, installing fitting rooms is an easy solution.

5. Hire for customer orientation

The staff you hire play a major role in the customer experience. Great people skills and friendly personalities are important when planning your sales and customer service team. The other factor is providing your team with the tools they need to provide great service. Clunky computer systems and poor processes will never make the customer’s journey more enjoyable.

Use tools like Square Team Management to handle all staff related issues such as rostering, staff permissions and reporting. When your team is managed well, they’ll be able to serve your customers well.

6. Provide after-sales support

The most customer-centric companies in the world all have great after-sales support, and it’s not too difficult to set up. Firstly, it goes back to being contactable. Make it easy for customers to contact you directly with concerns, this can avoid a dispute going public. Secondly, be committed to solving the customer’s issue quickly and without fuss. This shows the customer you value them, and they’re more likely to return despite a less-than-perfect transaction.

If you use a customer relationship management (CRM) tool, it’s easy to email your customers a week after purchase, to check that they’re happy with their purchase and even ask for valuable feedback. This goes a long way towards building brand loyalty and increasing repeat business.

7. Create reasons for customers to become loyal

On the subject of loyalty, to be customer-centric, you need to generate trust and loyalty in your brand. Great products and customer service can help you achieve this, but you can always do more. We mentioned before that business software like CRMs makes it easy to connect with your customers. So, why not offer them a special deal or discount every 6 months or a special birthday gift? After each purchase, you could send them a quick email offering 10% off their next purchase. These little touches go a long way.

To go one better, consider using products like Square Loyalty, which help you set up and facilitate a rewards program that encourages customers to keep coming back for more.

How to measure the success of customer-centricity

Businesses use a range of metrics to measure their customer-centricity, and these are just a few.

1. Churn rate/retention rate

Churn rate refers to the percentage of customers you lose over a period of time. Or, for a more positive spin, the retention rate looks at the customers you’ve retained. Either way, the metric is the same. The importance of churn rate can’t be understated, because it shows you the potential for increasing revenue if you can find ways to increase customer loyalty.

The formula for calculating churn rate is: (Lost customers / Total starting customers) x 100.

For example, if you had 300 regular customers at the start of the quarter, and you lost 40, your churn rate is 13.3%. Usually, a churn rate of 5-7% is considered acceptable over a year.

2. Customer satisfaction/Net promoter score

Measuring customer satisfaction can be done using a range of surveys, and each tells a different story. One of the popular ones is Net Promoter Score®(NPS). This metric is used to determine customer loyalty, and is calculated by asking customers one simple question: ‘How likely are you to recommend this product/service to a friend?’, customers respond with a value between 1-10.

Responses are then grouped accordingly:

0-6 – Detractors

7-8 – Neutral

9-10 – Promoters

The formula from there is quite simple: % of promoters – % of detractors = NPS score.

For example, 60% of people answered with 9-10, making them promoters, 20% answered neutrally and 20% answered with 0-6, making them detractors. The neutral responses are essentially ignored, so your NPS score is 40.

3. Customer lifetime value (CLV)

Customer Lifetime Value (CLV) measures the amount that a customer will spend over the lifetime of their association with your business. The tool is used for marketing and analytical purposes. There are several ways to calculate it, and some businesses also consider various metrics such as acquisition and marketing costs.

The simplest calculation formula is: Average order total x average number of purchases per year x average retention time in years.

This calculation is based on factual historical data, so if the average customer spends $100, and they do this 4 times a year, they have an annual value of $400. Multiplied by an average retention time of 3 years, and their Customer Lifetime Value is $1200.

Ultimately, improving your customer-centricity gives you an advantage in a competitive market. By creating positive experiences for customers, you build loyalty, increase sales and reduce your operating costs.

The Bottom Line is brought to you by a global team of collaborators who believe that anyone should be able to participate and thrive in the economy.


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