We spent all of 2019 talking about being customer obsessed, and the conversation is not over. Earlier this year I had a chance to speak with Peter Fader, Frances and Pei-Yuan Chia professor of marketing at The Wharton School of the University of Pennsylvania, and his colleague Sarah Toms, executive director and co-founder of Wharton Interactive, co-authors of an in-depth analysis of customer centricity, The Customer Centricity Playbook.
The Wharton School should need no introduction. Wharton Interactive is about building innovative solutions and frameworks that will accelerate educator’s abilities to modernize curricula, and integrate novel experiences that serve to make learning more meaningful, and knowledge more applicable. In the following discussion, Sarah Toms explains some innovative applications for marketing students.
This is the first of two parts.
Toms: Wharton Interactive is a new initiative here at the Wharton School. One of the big differentiators is how much we bring theory to life, and put it into practice in the classroom, often around leveraging things like simulations, games, and other situational experiences. About a year ago, with some partners here, I started the customer-centricity simulation, one of our flagship products.
We work with thought leaders like Pete to understand the research, then bring it to life in real-world scenarios, such as customer-centric concepts. We can let the students, in a safe environment, play with the trade-offs and ideas around something like customer-centricity.
Fader: There are lot of people out there coming up with glitzy simulations, with materials that look nice, but taking rich models of how customers interact with brands, and make them digestible, that’s a real skill, and it’s what makes Sarah’s team so extraordinary.
Define it, difference in what brands do
F: To me, it’s just all a throwback to the world of direct marketing. When Lester Wunderman and all those terrific people got those practices established in the late 60s and early 70s, it was all about the recognition that not all customers are created equal. They are different from each other, not only in their needs and attitudes, but in their financial value. If we can really focus on that latter issue, and enhance that value, and find more customers like them, that can be a much more profitable and sustainable business model than just coming up with products, and praying that people will continue to buy them. It literally is putting the right customers at the center of everything we do.
T: Pete, where you’ve really evolved some of your thinking is what to do with the not quite so valuable customers, and how to focus on those other customers in ways that keep you profitable; keep the lights on.
F: A big part of it is being able to understand how all customers fit into the strategy, even if some are more central than others. It really is just taking the playbook of direct marketing, and making it applicable in domains our forefathers in that world would never have imagined operating in.
F: Our ability to tag and track individual customers, the technology that lets us pull all that data together, and the analytics that let us draw meaningful insights from it, and back to the technology that to be able to serve up different messages, or different types of products and experiences, based on your needs and value to the company. A mom and pop retailer, or even a B2B manufacturer with a small base of customers, they were doing the customer-centric thing already. They knew some customers were more valuable than others, and they used that to drive their product and service strategies, but it would never scale. With data, analytics, and technology, you can take that mom and pop feel and do it at full enterprise scale.
Experience (competing on)
F: It’s fair to say that customer experience is a key part of customer-centricity, but customer experience by itself isn’t the same thing as customer-centricity.
T: Pete and I recently wrote an article about CX, and the fact that most CX is not customer-centric – the core principle of customer-centricity being that you must recognize heterogeneity and you must start there and think about fine-tuning what you do to the heterogeneity which is naturally in play in your customer base. The problem with CX is that it’s still being done with this one-size-fits-all approach. One idea that Pete and I are challenging the CX community with, is think about measuring CX against other attributes, other behaviors, such as CLV, and think about how you’re aligning your CX strategy to these other dimensions.