The dark underbelly of "customer-centred" practice
Customer-centricity, or being customer-centred, is the catchcry of what has been called The Age of the Customer by the likes of Forrester Research, KPMG, and proponents of Design Thinking. It involves being “customer-obsessed” and being attentive to customers’ needs and wants. The first step in this process is empathising with your customers, to understand how they feel and experience their pain points. This becomes the basis for putting the customer at the centre of all decisions related to product and service offerings, and the channels through which they are delivered. See Tzuo’s diagrammatic argument that new business models are fundamentally customer-centric above.
Know thy customer (respectfully)
However, customer-centred practices can have a dark underbelly. Firstly, what are the processes being used to know the customer? What data is being harvested about the customer and does the customer know how this data is being used? Does it involve dodgy data collection or sharing with third parties? Recent data sharing scandals from HealthEngine to Cambridge Analytica have been downplayed by the perpetrators as ways of personalising the customer / patient / voter experience.
I would suggest that it is impossible to truly empathise with customers, without respecting what they wish to be known about themselves. The mantra of “walking in the shoes of the customer” is more than understanding what they like, but developing a strategic sensitivity to and active avoidance of what they dislike. Piss them off at your peril.
Give customers want they want (transparently)
Secondly, if knowing customers and giving them what they want is all that constitutes being customer-centric, then banks should be considered examples of best practice. Banks have fully understood the appeal of easy credit to customers, so much so, that one in six consumers now have a large enough credit card debt that may never be repaid.
Indeed, credit cards fit this customer-centred model of providing what the customer wants (a convenient method of paying for goods and services), needs (accessible credit that can be repaid somewhat flexibly) and would utilise (when cash runs out). However, what is missing from the model are the potential long-term consequences (such as financial ruin) and the obligation of the business not to exploit the worst case scenarios. There should be a fourth phase to the model - responsibility - which makes explicit how the organisation profits from phases one to three, and delivers benefits to the customer in a way that does no future harm. Putting customers in a potentially worse financial position than they were originally, and using this as the crux of a business model, is categorically not customer-centred.
Help customers solve a problem (ethically)
Thirdly, being customer-centred does not equate to angelic behaviour. Just as the banks provide an offering that is desirable but irresponsible, so too do comparison sites in this and other sectors. Such sites superficially “help” consumers by playing on the tyranny of choice (to streamline the process of choosing), and the fear of making the wrong choice (by insinuating expertise).
Research shows that as the number of choices increases for consumers, the more likely they are to feel negative emotions, such as regret and paralysis. The phenomena of “information avoidance” and “information anxiety” have also been studied, whereby individuals are aware that information is freely available that can lead to better decision-making, but actively choose not to seek it out. Sites that assist in narrowing down the choice of insurers, mortgage lenders, electricity providers, etc, appeal to consumers by allowing them to select according to their preferred criteria, such as price, brand, and/or ratings. They resonate with the human tendency to select the middle option, when presented with a “good, better, best” spectrum of choices. Whether consumers set their own or are given a set of parameters, they opt for the “good enough” rather than “the best”. In this sense, comparison sites are solving the problem of information avoidance and anxiety by restricting the range of available choices, and hence the cognitive load required to decide between them.
However, what these comparison sites do is not necessarily in the best interests of the consumer. Often, the datasets from which the consumer is selecting are skewed or incomplete: that is, they are not choosing from the full range of all possible offers in the market. For example, sites such as Finder, iSelect and CompareTheMarket.com.au only compare deals from one third of the electricity retailers. Furthermore, those limited datasets are then organised to prioritise and push offers that pay a commission to the comparison site. The retailer that provides the most lucrative financial incentive to the comparator is given prominence, with estimates that up to $200m per year is paid in commissions to comparison sites in the health insurance sector. Comparators get paid up to 40% of the first year of health insurance premiums in commissions.
Summary
We can set the bar higher when it comes to being customer-centred. In addition to knowing thy customer (respectfully), giving customers what they want (transparently), and helping customers solve a problem (ethically), it should ultimately be about value propositions that are in the best interests of customer.
References
7 News Melbourne (May 2018) ‘Consumer group “Choice” claims it can save you up to $1500 on your power bills’, at:
https://www.facebook.com/7NewsMelbourne/videos/10156562224829301/
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https://www.choice.com.au/money/insurance/insurance-advice/articles/insurance-comparison-sites
Bupa (3 January 2018) ‘Bupa calls for comparator site transparency’, at:
https://media.bupa.com.au/bupa-calls-for-comparator-site-transparency/
Forrester Research (23 May 2017) ‘Top five imperatives to win in the age of the customer’, at:
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http://www.ejkm.com/issue/download.html?idArticle=147
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https://www.cmu.edu/dietrich/sds/docs/loewenstein/InfoAvoidance.pdf
KPMG (3 December 2017) ‘The age of the customer’, at:
https://home.kpmg.com/au/en/home/insights/2017/12/age-of-the-customer.html
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https://medium.com/hi-interactive-community/customer-centricity-by-design-thinking-ac689a64ce5b
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http://www.abc.net.au/news/2018-06-25/healthengine-sharing-patients-information-with-lawyers/9894114
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https://www.huffingtonpost.com/rich-nadworny/customer-obsession-is-the_b_8332666.html
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https://www.gizmodo.com.au/2018/05/slash-your-energy-bill-with-choices-transformer-tool/
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Tzuo,T. (9 June 2018) ‘The product economy is over. Here’s how to survive in the subscription economy’, at:
https://www.linkedin.com/pulse/product-economy-over-heres-how-survive-subscription-tien-tzuo/