Wharton Executive Education Customer Centricity Essentials: What It Is, What It Isn't, and Why It Matters (Wharton Executive Education Essentials) [Paperback]

Back in business school, I remember a marketing professor driving home the importance of customer segmentation by pointing out that the average American has one breast and one testicle. This pretty direct example showed that simple averages do not always produce meaningful information for business planning. Customers are not carbon copies, so why treat them all the same?

This concept of customer heterogeneity and the value of targeted segments is the topic of Professor Peter Fader's new book, Customer Centricity. Dr. Fader points out that customer centricity is so important now, because technological and geographic barriers are disappearing. Consumers are more connected than they have ever been, providing new options and empowerment. Competition is changing.

Customer centricity is a long-term strategy that puts relationships ahead of revenue in order to build customer equity for a business. Getting it right, can be a real differentiator, but so many companies with the best of intentions still get it wrong. This is reflective of the fact that there is no standard template for customer relationship management (CRM). Loyalty programs and CRM systems are just tools and not magic bullets. It takes a deep understanding of the business and behaviors to identify the right data, collect it, analyze it, draw the right conclusions, and take the appropriate actions. It takes an organization-wide commitment.

(Note: Customer centricity does not necessarily mean a focus on customer service.)

Dr. Fader paints some very successful businesses, such as Nordstrom and Apple, as very much NOT customer centric. It's true. They are brand and product centric, respectively. These businesses do not tailor their offering depending on the customer. Instead, they put forth a one-size-fits-all approach to managing customers. It has worked for them. While some businesses thrive today without a focus on customer centricity, today's consumers have quickly evolving expectations. Understanding the fundamentals of customer centricity and employing the proper data collection and analytical methods creates new strategic options.

Proper customer lifetime value (CLV) methodologies do not get the attention they deserve in today's business world, so this book is an important read. Customers represent assets with value to a business, much like stocks in a portfolio. You cannot optimize your portfolio to deliver maximum returns without understanding the fundamentals of proper valuation. This book provides a good overview of the implications of customer centricity and the importance of this type of thinking. Get a good grasp of it before your competitors do.

My only criticism is that this book reads like an extended introduction to a much bigger story that I want to dig into. It raises practical questions and points of debate around the valuation for trade-offs necessary to fully commit or transition to customer centricity. Just as I was ready to dig into the nitty gritty, I was at the end. I love data and stats, and I am a segmentation junkie, so I'd love to see a follow-up on this surprisingly often overlooked topic.

I have always felt that Customer Centricity as a strategy for improving profits is so obvious that it goes without saying. Apparently, it has gone without saying for too long. The solution? This book.

Peter Fader clarifies the strategy of Customer Centricity as a means to increase profits from your best customers, find more like them and avoid over-investing in the rest. Knowing who is worth pleasing and who is simply worth maintaining is not easy. Collecting the necessary depth of knowledge about customers is not a trivial task. But it is demonstrably valuable.

Had a bad experience with Customer Relationship Management? Then this book is for you. It describes what went wrong with CRM and how to fix it, and illuminates whether your firm should spend to grow customer equity or brand equity. Clear advice on calculating Customer Lifetime Value and plenty of examples make for a useful book, written in Peter's decidedly accessible voice. Read this book and learn how to treat your best customers well and reap the rewards.

An absolute necessity for companies differentiating themselves on service in this social media world.

If you accept the premise that all customers are not created equal and you'd like a rigorous, objective methodology for segmenting them based on their historical purchasing behaviours, then this book is for you. This excellent introductory book and the other readily-available works of Drs. Fader and Hardie, will illuminate the path for those marketing professionals who want improve the efficacy of their marketing expenditures and the operational efficiency of their sales and marketing teams. Gain an advantage on your competition today! Buy the book, read it, and reap the benefits of a change in philosophy!