Last updated: What is customer centricity: The importance of CX in the age of data

What is customer centricity: The importance of CX in the age of data


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In a world where marketing buzzwords quickly turn cold, “customer centricity” has gone from hot to hotter.

First coined in the 1960s, the concept is now viewed as critical for post-pandemic business success. In fact, a survey conducted by Forrester Consulting on behalf of KPMG found that 72% of the respondents said customer centricity had become a higher priority since COVID-19.

What’s driving this trend? It turns out the digital economy, which grew fast during the pandemic, added a new twist to an old adage. Yes, customers are always right… and now they’re in complete control of their relationships with brands. This twist adds significant complexity for businesses looking to differentiate based on the experiences they offer.

Let’s look at the challenges surrounding customer centricity, how enterprises tried to achieve it in the past, and why technology like new customer data platforms (CDPs) are ideally suited to help accelerate this shift.

Defining the north star: What is customer centricity?

It’s easy to say an organization should make customers their north star. Yet the reality is many are still product and service-focused.

The definition of customer centricity is the act of putting your customers at the heart of everything an organization does. This requires deep understandings of customer expectations and perceptions, as well as aligning across all facets of the business, including – but not limited to – operations, product, marketing, service, and sales in order to be truly customer-centric.

An enterprise has a lot to consider if it wants to achieve this. There’s an explosion of data and touchpoints to manage. The consumer privacy landscape grows tougher by the day. And companies need a solution for surfacing accurate and trusted data in real time so they can move at the speed of their customers.

Dan Tranter, VP of North American sales for SAP Customer Data Solutions, summed up the challenge by asking: “As a business owner or executive, how can you understand what the customer is doing at any given point? And how can you understand what the next best action would be to drive a better relationship?”

The two-pronged customer centric strategy

To tackle the challenge, an enterprise needs to execute a strategy that addresses both its culture and technological approach.

In terms of technology, a foundation based on data-driven insights are necessary to deliver market-differentiating experiences across customer touch points. This foundation can’t be limited to serving one line of business; instead, it should make rich context readily available for any engagement. This includes in-store, e-commerce, sales, and service interactions.

From a culture perspective, enterprise leaders need to think holistically.

To be truly customer centric, a business should factor customer data into its supply chain, inventory, and product development decisions. Instead of separating the front-office from the back-office, there’s opportunity to view the whole picture and set the path for success.

A CDP is key to executing this strategy effectively.

CDP: The path to customer centricity

Customer data challenges have existed for decades, and enterprises have used many solutions to try and address them.

CRM solutions were never designed to be the source of truth that ingests multiple data sources in real time, and then pushes that data out to engagement systems.

Data management platforms specifically address ad-tech use cases. Data warehouses and data lakes store massive amounts of customer data, but retrieving it and making it actionable can take a long time and require help from the IT department.

“None of these [solutions] meet the challenges,” said Ratul Shah, head of product marketing for SAP Customer Data Solutions. “If you’re a business, you don’t have months to understand who I am as a consumer and serve me. It just doesn’t work.”

A CDP is a prebuilt software system that resolves and centralizes customer data to build comprehensive profiles. These profiles enable an organization to uncover deep insights into audiences, segments, and intentions.

A CPD also enables real-time data activation to engagement systems across the enterprise. Following are four ways CDPs can help you fuel the hyper-personalized experiences that are the signature of customer centricity:

  1. Comprehensive understanding
    CDPs can ingest and resolve all relevant customer data to create comprehensive profiles. The profiles are updated in real time. They make up a holistic view of first-party, second-party, third-party, offline, event, and activity data streams along with transactional, behavioral, and experience data.
  2. Deep insights
    With machine learning models and intelligent analytics, today’s CDPs can help marketers build dynamic segments and audiences. In addition, CDPs can establish connections to back-office systems such as master data management, ERP, and supply chain systems. This means the insights they provide can inform decisions beyond customer engagement.
  3. Data privacy governance
    With GDPR and several regional data protection regulations that have followed in its wake, respecting consumer privacy is more crucial than ever. CDPs can connect enterprise consent and preference management with other data purposes to create a strong data privacy and governance foundation. They can ensure that only data with the required consent and processing purpose gets merged into profiles, and enforce consent, preference, and purpose when it moves data to a target system. This helps address regulatory requirements and bolsters customer trust.
  4. Customer data-driven engagements
    Through a CDP, an enterprise can bring together structured and unstructured customer data in real time to define specific audiences. It can then activate relevant data to any engagement system: marketing, sales, service, in-store, or e-commerce. The result is a consistent omni-channel experience instead of a fragmented, irrelevant journey.

The future of the customer-centric enterprise

At a time of rising customer acquisition costs, enterprises are looking to strengthen retention and loyalty.

According to Sergey Krayniy, head of product for SAP Customer Data Solutions, this situation highlights the need for a customer-centric business model.

“Retention has different CX metrics than acquisition. Every interaction from pre-sale to post-sale becomes equally important. Real-time decision-making becomes crucial, as does the ability to prevent service escalations,” he said.

Today’s CDPs should meet this challenge, Krayniy said. They create the basis for consistently personalized experiences throughout the customer relationship.

“The CDP offers an executive summary of your entire relationship with a customer based on context. It lets you make a timely decision – a contextual decision – and deliver personalization not just in one funnel but at any engagement,” he said.

With this technological advantage, an enterprise can win against agile digital disruptors, grow revenue, and take a giant step toward earning a reputation as a customer-centric organization.

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