In my paper, Customer centricity: an empirical analysis in the micro-sized firm, I wanted to understand why some micro-firms are successful, while others fail and fall away. This paper specifically looked at customer centricity and its impact on African small businesses.
A customer-centric firm is one which essentially orientates itself around its customers and their requirements. It is about satisfying the needs, wants and resources of an individual customer by making use of personalised service. It is an approach that does not focus on a market segment or the mass market.
...competition forces owner-managers to improve their services...
In order to understand the drivers of customer centricity, I needed to first understand the local market conditions affecting micro-sized firms. I came up with three concepts. The first was industry competition, particularly the intensity of competition within the practical environment. The next was demand uncertainty, which affects firms as their customers’ preferences change over time. Finally, I looked at technological turbulence, which is the rate at which technology changes, in particular, the advent of mobile phones – in this case, regular feature phones, not even smartphones.
Once I had identified what I believed to be the key market conditions that would impact African micro-sized firms, I then set out to determine the impact each of them would have on a firm’s need for customer centricity. What I found was that competition forces owner-managers to improve their services and thus adopt a more customer-centric approach. Technological turbulence is also an enabler for firms to become more customer-centric. Interestingly, when it came to demand uncertainty my results were inconclusive.
When it comes to customer centricity, firms need to adapt their way of working to accommodate a customer focus. This includes structural changes, how employees are trained and the company’s working environment. In other words, customer centricity costs money, and not all micro-sized firms have the necessary resources to make radical changes. As such, there has to be a financial reward for firms if they do turn to a more customer-centric business model. So, in my research, I tried to unpack whether customer centricity is enough to improve a company’s financial performance. To determine this I brought in a concept called marketing innovativeness. Marketing innovativeness intersects with customer centricity and financial performance. This is an important inclusion in the discussion as I believe it is too simplistic to say that customer centricity alone will impact business and financial performance.
Marketing innovativeness is not about research and development and radical innovation, but rather about how companies experiment with ideas and make incremental changes to their businesses. I found that for a business to improve financial performance, it needs to balance customer centricity with market innovativeness. And interestingly I saw that a greater focus on customer centricity actually drove marketing innovativeness. The two essentially go hand in hand.
My research determined that it is essential for micro-sized firms to continually engage with customers. These firms must work to personalise their services and partner with their customers on a consistent basis. By doing this, a micro-enterprise can learn and get an intimate feeling for what is happening in the market. As firms gain a greater understanding of the market, they can become more innovative in their approach to ensuring customer centricity.
There is a fine line between personalised service and privacy boundaries.
This brings us back to market innovativeness. Through engaging with their customers, firms are able to start experimenting with new ideas, such as marketing campaigns. Where small firms don’t have the resources for a formal marketing budget, they could now try more personalised marketing on social media. However, there is a caveat to this. There is a fine line between personalised service and privacy boundaries. It is vital that firms are careful not to cause offence through the way in which they interact with customers. Social media and the use of mobile phones make interacting with customers both affordable and efficient, but its misuse can infringe on a customer’s privacy. Firms need to find a balance between customer privacy and their own ease of use.
It is important for firms that work in Africa to remember that Africans thrive on social connectedness; this is critically important when it comes to customer centricity. This implies that although it is important to focus on customers in a business setting, customer centricity in Africa can also extend to personal relationships with customers outside of the office, from greeting someone on the street, asking after their families, and generally showing a personal interest in them beyond business.
Applying customer centricity practically
Through my research, I am trying to create awareness around customer centricity and how micro-enterprise businesses can use this customer focus as a tool to increase profits and sustainability.
Although the study was conducted in the Nigerian business environment, I believe my findings are transferable to micro-enterprises across the continent.
Here are some very practical implications of my findings:
1. Micro-enterprises need to change their business mindset from one of survival to one of growth.
2. A growth mindset requires entrepreneurs to formalise their business structures, from financing to client servicing, to marketing strategies.
3. There is a cost to adopting a client-centric business model, so start by personalising your service to your most profitable clients first.
4. Find out what the wants and needs of these top customers are, and include this in your service offering. This approach will trickle down to include all customers.
5. Word of mouth is the most powerful marketing tool, especially for micro-enterprises. A happy client will refer a company to others in their network.
6. Africans thrive on social connections, so always build relationships, in and out of the office. Greet customers on the street and show an interest in their personal lives. Formal meetings are not the only way to engage with clients.
7. Create what I call commercial friendships. Become friends with your customers while still maintaining professionalism and delivering an outstanding customer-centric service.
8. Listen to customers. They will give very clear insights into current market trends. Firms can then adapt their offering to keep up with the market’s needs.
9. Be innovative in your service offering. Experiment with new approaches. This is not about radical innovation but rather about making incremental changes that will have a massive impact on client relationships.
10. Educate staff to adopt customer-centric attitudes. This is an organisational agenda and customers must experience the same level of service across the organisation.