We were very fortunate to get Peter Fader, Wharton Professor of Marketing and author of the book Customer Centricity: Focus on the Right Customers for Strategic Advantage (Wharton Executive Essentials) give a lecture in Iceland this week. His talk was music to my ears as most of what we are trying to do with Dattaca Labs is built on that foundation.
We agree totally with the premise that 33% (other 2/3rd of the companies should focus on Product Excellence and Operational Excellence) of the universe of companies should focus on Customer Centric Excellence, which means they need to focus on the right customer. So, how do you focus on the right customer? What are the metric? How do you know who is the right customer and who is not? Well, the answer lies in the customer’s personal data.
In a world where our customers are leaving finger prints of their behavior (read personal data) in various services and products on the internet it is tempting to go on a treasure hunt to find that secret exclusive angle, that key insight to get the answer to unlocking the potential of the right customer. We think that is a fools errand. No one likes a stalker, especially your “Right Customer”. We are encouraging companies to stop with the wild goose chase of going after customer data from 3rd party sources, social media companies, search companies and data aggregators. We believe the right answer and the right data lies with your customer. Companies need to reach out and build a relationship with their customer to understand them better. Create an engagement model that is built on trust. Customer centricity and excellence is about building deep relationship with your customer so you can create an enduring, sustainable and maximum value for both parties in the relationship.
How do you calculate the Customer Lifetime Value? the equation is simple
We deliberately emphasize the Value Exchange instead of using terms like Revenue or Profit or Sales, we believe customers derive value from a Customer Centric company. This value exchange needs to be mutual. The way to increase the CLV on the right side of the equation is either you increase the Average Value Exchange and increase the probablity of repeat value exchange or reduce the cost of customer acquisition. We think that all three are possible when you build a deep meaningful relationship with your customer.
How do you build meaningful relationship on a foundation of trust? We think it all starts with Customer Centric companies efforts to #GiveFirst. In a world filled with competing products and commodities, Customer Centric companies need to embrace a culture of Giving Value to their potential customers first. This is what every startup does at the beginning, they start by giving away their product for free so their potential customers can try before they can buy. There are several business models that have emerged from the startup world, we believe established companies can learn from these innovative business models.