A Case for Consumer-Centric Growth

Prelude: The phone rings a couple of times. The founder CEO of a leading fashion accessories brand comes on the line. We had undertaken a small qualitative research project two years ago. The study objective was to understand usage and purchase habits in the category. The research design was five focus groups in two metro cities. In the report we identified four consumer profiles. After the research, the client wanted some additional guidance on sizing up the opportunity. What is the income of the household in a SEC A home? What will the disposable income be? What will they spend on fashion accessories, and the specific product category? We sent them material on Socio-Economic Classification (SEC) and the McKinsey framework. Each time they come to a decision point, they reach out. We have had intermittent conversations which I am uncomfortable about. Is their consumer in the center of their business and how well do they know her? If she is at the center, why do they bring this up with us every six months? Does this have to do their design production cycles?

Consumers and Uncertainty: Consumers have become more demanding, more discerning, and less predictable in their purchasing behaviour. They have more choice and less loyalty. They are smarter shoppers, with the “always-on” consumer becoming more sophisticated and more technology-driven. Consumers have come to expect frequent discounts and promotions, buying less and less at full-price. The world is increasingly interconnected, and by 2020 McKinsey Global Institute (MGI) expects 940 million online shoppers to spend almost $1 trillion on cross-border e-commerce transactions. Industrialisation and urbanisation in emerging economies, aging populations in established markets, and new technologies further complicate the current environment. A consumer-driven mindset adjusts in real time to changes in consumer needs.[1]

P&G – ‘Living It’ ‘Doing It’: The consumer is the pivot around which the organization dynamo revolves. Consumer products companies have practiced consumer centricity to give them a competitive advantage, innovate and grow. Two consumer products giants, Proctor & Gamble and Unilever are early adopters of consumer-centric practices. A consumer-centric organization is an outcome of adoption of consumer-centric mindset, attitude, and behaviors in employees. The organization culture and processes reflect and support consumer centricity. To make an organization more consumer centric, is to change its current ways of working. It involves setting in motion a series of initiatives to skill and mandate behaviors. P&G has a program called ‘Living It’ and ‘Doing It’ twin pillars of customer-centricity for the company. In ‘Living It’, P&G managers live in consumers’ homes for three weeks, observing them in their life context. This is where they experience consumer life challenges, concerns, aspirations within their setting. It gives them observations and ideas to make improvements in current products and new product design opportunities. In ‘Doing it’ P&G managers stand, serve and sell to shoppers in stores for one week. The experience of observing and interacting with consumers is immersive and a perspective creating.

Journey to Consumer Centricity: Gargantuan Limited[2] was a large consumer goods company and the foremost buyer of market research. In the late 90’s, the company borrowed from design thinking principles and started testing product prototypes with small consumer samples. The consumer feedback went back to refining the product mix, sometimes real time. Each improved iteration went back into consumer testing. Consumer testing in the early stages of the product innovation cycle meant that the product mix was ‘near perfect’ when it went into quantitative testing. This approach gave optimized product innovations many of which were incremental in nature. Disruptive innovation and growth calls for an overhaul of the marketing research function. The Gargantuan Limited ‘insights engine’ began whirring in early 2000 and the first mentions of the term ‘customer centricity’ was heard in the organization. The organization ecosystem, made up of three pillars of people, process, and culture had begun changing. A consumer-centric organization is built one day at a time by setting off change in each of these dimensions. Gargantuan Limited was embracing customer centricity across functions, not just the marketing function. The consumer became ‘visible’ with invitations to ‘Consumer Connect’. An annual 3-day event was arranged when the entire organization was out, visiting consumer homes and stores. It involved employees from Technical, R&D, packaging, sales, and HR functions who went with an agenda to observe and interact with consumers in their homes, and with the trade and shoppers in stores.

Skilling for the Consumer License: The Gargantuan Limited skincare business was the early adopter of customer centricity. The business head who had recently moved in from a stint the UK parent, carried with him best practices. The business mandated 100 hours of consumer contact per person per year. Teams were configured around a product category and had members from marketing, R&D, packaging, supply chain, and consumer insights working together. Only ‘licensed’ team members had the authority to mention a consumer observation or insight to any meeting. Authority to discuss came from first hand consumer experience. A physical “license” or a tag with the team members name and completed hours became a symbol of consumer-centricity. These practices were adopted across businesses within the organization. Skilling is a part of the change initiative to build a customer-centric organization. On-the-job training via observing consumer interaction by experts, guided-observation, hands-on-training with mentors was the thorough and rigorous manner in which employees were trained. They were exposed to the art and craft of observation, dialogue and listening via workshops. They learned the do’s and don’ts of the right way to meet and engage with consumers.

Customer-Centricity and HR: The HR function at Gargantuan Limited was closely involved and customer-centricity included the employee or the internal customer. Engaging with consumers needs an open, curious outlook, sensitivity to cultural differences, a nuanced understanding of consumer life and context. They need to inculcate a global mindset. Goal-setting, review, reward and recognition, growth mechanisms need to align with the overall organization mandate and recruit, train and reinforce right talent. It meant becoming a more diverse organization across dimensions of gender, socio-economic strata, academic backgrounds, and location. As 90% of brands are targeted to women consumers, there is a case to hire more women across work levels in the organization. Attracting the finest talent means upping the employer brand and employee value proposition. It means identifying triggers and barriers to joining the company. Customer-centricity means continually asking questions and dialoguing with employees to understand the challenges and highs of working in the organization. Continuous feedback and continuous improvement helps close the feedback loop and move the organization in an upward growth spiral.

Consumer Centric Insights Engine[3]: Operational skill gave organizations their competitive advantage. This is no longer the case. The new source of competitive advantage is customer centricity. Deeply understanding the customers’ needs, identifying unfulfilled or poorly serviced needs provides ideas and insights for innovation. The Marketing Research department a decade ago was a reactive service unit reporting to the marketing function, fielding their marketing research requests. From being data gatherers and purveyors, to becoming interpreters of data and insights, with an ability to link. They have now moved closer to the board room in the capacity of an advisory.

A study involving more than 10,000 practitioners examined strategies, structures and capabilities that distinguish high performing, customer-centric companies. Having an independent customer insights and analytics function that participates fully in business strategy and planning is key.

Companies gather massive pieces of structured and unstructured data on the consumer. Product sales figures across on-ground and online channels, media spend and effectiveness data, social media feeds, call center records, customer interaction by customer service. The insights group within a company needs to aggregate, synthesize, interpret and disseminate the data in a marketing-information system accessible to all marketers within the company. The Unilever Consumer & Market Insights (CMI) function’s widely communicated mission is “to inspire and provoke to enable transformational action”.

Conclusion: The changing business environment, the VUCA (Volatile, Uncertain, Complex and Ambiguous) world, growing competition, rapidly changing disruptive technology, globalization is putting more challenges before the businesses than ever before. Being customer centric is an imperative as it helps the company better predict and align to change. While in emerging markets, growth opportunities exist, the CEOs/CXOs and other business leaders are constantly working on finding out more innovative ways to strengthen competitive edge as well as sustain it, in the face of ever-increasing stakeholder expectations. Customer-centricity is an imperative to survive this VUCA world. Companies need to go beyond customer profiling to continuous engagement to understand experience and interaction with products and services, systematically designing and re-aligning the organization and organization networks, to embrace innovative use of new technologies and programs along with ways of collaborative working across functions. We are already in the post-customer centricity age with B2C brand marketers. The next time the CEO of the accessories company calls I need her to start thinking about building their insights engine.

 

Deepa Soman

article appeared in the issue

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[1] The State of Fashion Report – 2017 [BOF & McKinsey]

[2] Fictitious name to secure client identity.

[3] How Unilever Got to Know Its Customers, HBR South Asia – September 2016

Posted by Deepa Soman

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