Why Go Customer-Centric?

Customer-focused organizations gain competitive advantage over the long term by remaining agile and giving customers what they need. In return, customers remain loyal, actively use products and services, and provide referrals.

A customer-centric approach provides value for customers by responding to their wants and needs through tailored experiences and products. Product use empowers customers and gives them control over their financial lives.

The approach offers value for organizations through value propositions that are based on customer needs, cost to serve, and customer lifetime value. In an ecosystem of employees, suppliers, consumers, competitors, and community members, all stakeholders gain sustained value, not just shareholders.

Between 2011 and 2014, financial inclusion efforts around the globe prompted 721 million account openings. Of this number, 54 million were mobile accounts, and two thirds of those were used less than once every three months. Most of the remainder were only used as “mailbox accounts,” as customers immediately withdrew all cash upon receipt of wages or social benefits. Lack of use translated into a lack of revenue for organizations that offered these accounts.

Strong research backs the link between customer satisfaction and business performance.

In his book, Reorganize for Resilience, for example, Ranjay Gulati of the Harvard Business School demonstrated that organizations that focus on customer solutions instead of pushing product delivered shareholder returns of 150 percent – outperforming Standard & Poor’s 500 (S&P) returns of 14 percent over the same period. Such organizations experienced sales growth of 143 percent compared to S&P growth of 53 percent.

Research by Gupta and Zeithmal in 2006 shows that a 1 percent increase in customer satisfaction results in a 2.37 percent increase in return on investment, while a 1 percent decrease in customer satisfaction brings a 5.08 percent decrease in return on investment.

Organizations with a customer-oriented strategy consistently outperform the S&P stock index. MetLife, AAMA, and Amazon are great examples of companies that excel at building their business around customers. They use internal and external customer data to design and deliver better services – ones that empower their customers. They continuously improve focus and measure value based on actual customers, not just products.

In developing countries, Equity Bank, Pioneer Life, Zoona, and Janalakshmi are among the many financial organizations that differentiate themselves through a customer-centered approach. In an industry that overemphasizes products and sales, they focus on people to achieve solid, profitable results. The focus includes external customers as well as the employees and agents they consider to be their “internal customers.” 

Keys to a customer-focused approach:

• A granular understanding of customers. Learn how in our Customer Segmentation Toolkit.
• Financial solutions designed specifically for customer needs. Read a practical example.
• Organization set up to deliver through the customer-centric business model.