Customer centricity is a business philosophy that puts a company's customer at the heart of operations. Rather than adopting a "build it and they will buy it" mentality, a customer-centric organization seeks to understand its customers' needs and then designs and delivers products and services to meet those needs.
As part of this process, companies may group their customers into various segments so that customers receive products and services that are best aligned with their needs.
One result of adopting a customer-centric operating focus is creating value for the customer through product and service offerings. However, the customer must also generate value back to the company, and this value is commonly measured through customer profitability.
According to consulting firm Booz Allen Hamilton, a customer-centric company focuses on" delivering the greatest value to the best customers for the least cost" (The Customer-Centric Organization, le/141263.pdf).

a. Explain how activity-based customer profitability analysis can assist in implementing customer centricity.
b. Assume that as part of Bergquist Electronics' customer profitability analysis, marketing manager Brittany Mathis identified customers who shopped primarily during sales events. Those customers, who purchased a large volume of merchandise, had been considered desirable customers. After the analysis, however, the company ceased to mail sales notices to them. Why would Bergquist decide to ignore those customers?
c. After implementing its customer-centric approach, Bergquist's sales revenue increased.
As a result, would you conclude that the move to customer centricity was a profitable one for Bergquist? How should the company determine the profitability of the change?

  • CreatedFebruary 21, 2014
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