This week, as a member of the teaching staff of one the most important academic institutions in Spain, I started an in-house course on customer orientation for one of the country's leading companies. On the positive side, the senior management decision at this great company to become "customer-oriented" and cast aside not only the obsession with product positioning but also the short-term view of earnings. On the negative side, the meager existence of a customer-oriented culture in general or, worse still, the companies that believe they are customer-oriented when in fact they are product-oriented organizations through and through.

This is not unusual. It's something I come across every day. Most companies don't have the customer in their strategic radar. At most, customer orientation crops up in grandiose statements in their mission, vision and strategic plans, but in actual fact they couldn't care less about customers.

Diagnosis

How can you tell whether a company is customer-oriented or not? It's quite simple, really. There are two infallible acid tests. First of all, take a close look at the organization chart. If the executive committee includes figures like customer manager, customer intelligence manager, marketing manager, or customer segment managers, then they're not focused on customers. Guess who is marketing director at Inditex?  Amancio Ortega, chairman, CEO and founder! Next, check out the board of directors' KPIs or key performance indicators. Do they measure customer satisfaction, LTV (lifetime value), churn rate (lost customers), complaints and claims, etc.? If not, if they only measure financial and product indicators, they are not customer-oriented.

Another very common mistake is to think that you are customer-oriented simply because you look for customers to match your products, because you aren't. That's called product positioning.

The Concept

Being customer-oriented is a business philosophy that turns a company's organization chart on its head, putting the customer at the top, as the "boss", and the executive team on the line below. In other words, the people who are in direct contact with customers have to become the best paid, best motivated and best supported executive team in the organization. Sales reps, call center operators, after-sales service personnel, waiters, sales assistants, customer service personnel, and so on, become the most important people in the organization, and everyone else on the organization chart and in the various departments has to work for and on behalf of them.

In a customer-oriented organization, the tiers are much narrower and the management ones are replaced by team and/or project coordinators. The CEO/general manager is merely the facilitator, whose duty is to ensure that the grassroots have everything they need to satisfy the customer.

The Goal

Just so everyone knows, the main goal of customer orientation is to maximize earnings by achieving a perfect triangle between volume, profitability and loyalty. Clearly, this goal can only be met through complete customer satisfaction, and that is achieved by developing and creating the products and services they want.

The Process

Customer-orientation involves five phases:

1. Information. Having as much "quality" qualitative (what they like) and quantitative (what they buy) information as possible about customers is key.
2. Value proposition. You have to design what you are going to offer each customer and define the services they are going to require throughout their entire lifecycle with you (capture, development, loyalty building and loss). Many companies that are unable to create a 1to1 plan—that is, a plan to tailored to the customer—resort to segmentation as a more manageable method (grouping "similar" customers), but this is simply a fix for a technical gap and not, as many people believe, an end in itself.
3. The relationship model. You also have to define who relates to the customer and how, exercising particular caution with multichannel strategies. Dealing with customers as multichannel, in a coordinated way, is another issue that remains to be addressed by the vast majority of organizations. Organizations that are structured around business units per channel (call center, stores/offices, eCommerce, etc.) are clearly NOT customer-oriented as customers are HARDLY EVER single-channel.
4. Measurements and incentives. If revenues and profit margins are the only things that are measured, and bonuses are linked to them, the company is NOT customer-oriented. Customer loyalty, customer information quality and customer satisfaction are the parameters that have to be measured and incentivized, not earnings. Customer orientation rewards the excellence of the process, whereas earnings are a consequence.
5. The organization. None of the above will make any difference whatsoever if at the management committee or marketing committee the CEO only wants to know about revenues and only rewards the best salesperson. The executive team has to be concerned first and foremost with customer satisfaction, with the operating team's relationship with customers, and with the opinion and suggestions of the "boss": ie. the customer.

Whenever I give these courses I am always asked about which companies are genuinely customer-oriented, and my answer is always the same: look at their earnings. There is usually a direct connection between customer orientation and a growth in revenues, profitability and market share. Companies like Inditex, Coca-Cola,  Apple, etc… They are clearly customer-oriented.