Customer focus as a strategy
The crash of a big dream
Tony Hsieh was a dreamer. He believed he could build a customer-oriented yet profitable business.
His book Delivering Happiness inspired countless entrepreneurs.
He founded Zappos—once a paragon of customer centricity and holacracy. Hsieh treated customers like friends and employees like family.
Amazon aquired Zappos in 2009, but it continued to operate independently with Hsieh staying at the helm.
Unfortunately, holacracy and exceptional customer service could only do so much. Zappos hasn’t become an international business. Few companies managed to replicate its experience.
What works for a passion project doesn’t cut it in a global giant. Customer service is hard to build, but painfully hard to scale.
Tony Hsieh tragically died in 2020. His brainchild, Zappos, has outlived its founders, but this is not the Zappos as it was in 2009. Now, it’s just another company, one of many.
This story is yet another reason not to buy into Silicon Valley fairy tales about dreams and passion.
However, you can make your business more customer-oriented with five simple ideas.
Managerial schizophrenia
Schizophrenia is a severe mental disorder often linked to split personality. But by “managerial schizophrenia,” I don’t mean the illness. I’m talking about when managers say one thing and do the opposite.
Have you ever seen a business not claiming to be ‘customer-focused?’ I doubt that.
Have you seen many truly customer-focused businesses? Me neither.
The biggest problem is that, even if executives sincerely want to build a customer-centered business, they rely on self-centered principles.
It’s like gifting your loved one a ticket to a concert of your favorite band.
Most companies make two common mistakes:
1. They segment their customers based on the wrong criteria, and
2. They design their org structures around flawed linchpins
If a company structures its sales department by region and its marketing department by product, it cannot become customer-oriented.
You can’t build a business in a way that makes it easier for you to run and still expect customers to love it. Designing an org structure for themselves while preaching about clients is a sign of managerial schizophrenia.
But you can choose another path.
Check out my book, Red and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism
Marketing biology
Three women come to a dealership to buy cars. They are all the same age, married with the same number of kids, and have the same education and income levels.
From the classical marketing theory, they all belong to the same customer segments.
But:
· The first woman needs a new car because she’s found a new job far from home.
· The second woman is buying a car because she needs to drive her daughter to activities and visit her parents on Saturdays.
· The third one has just received a big bonus at work and wants to treat herself.
In the 20th century, businesses segmented customers the way biologists classify species—by external traits. In 21st century, the best marketers segment customers by their needs or benefits.
Stop segmenting your customers by ‘exteral traits.’ Start segmenting them by the benefits they seek.
These three women have different needs and belong to different segments.
The customer doesn’t exist to make you rich. You exist to make the customer happy. And this, in turn, makes you successful.
Being customer-oriented means literally oriented toward the customer
Correct customer segmentation is not enough.
Most companies structure their sales departments by region and marketing departments by product.
In a very simplified form, it may look like this:
But your company may become much more customer-focused if your org structure looks like this:
If you divide your sales department by customer segment, sales teams will gain deeper understanding of customer needs and serve them better.
Dividing those who develop your products—namely, your marketing department—by customer segment could make your business even more customer-focused:
And if you can build a structure where your production department also consists of groups focused on specific segments, it makes your business unstoppable:
Take the following five steps to enhance your customer centricity.
Conclusion
1. Segment your customers by their needs
2. Optimize your product lineup to match these needs
3. Build your org structure around customer segments
4. Use KPIs that show how satisfied each segment is.
5. Design as many reports as possible around customer segments.
Don’t just promise to be customer-centered. Be customer-centered.
Svyatoslav Biryulin
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