Schultz: Another thing that has popped up in the last several months is there is this huge emphasis now on, "We want to become customer focused." And so, every organization says, "Our goal is to become customer focused."
Berens: Like they were ignoring their customers for the preceding recorded history…
Schultz: Yeah, the last hundred years we have been ignoring them, so now we are going to become customer focused. Now, the problem is, when they talk about customer focused, what they mean in many cases is, "Well, we are going to be nice to customers now. We will start answering the telephone. We will start responding to their requests." Most will not have to stand in line as long as they used to.
But, the problem is, that is customer focused from a marketing view. When you talk about it in traditional terms it means: How do I cross-sell you, up-sell you… that sort of thing. What they really are trying to get to, (and they have great difficulty in doing), is becoming customer-centric. Customer-centric says you put the customer in the middle, or at the center of the organization, and then you try to figure out what they need, and what they want, and what they require, and you try to fill those needs. Customer focused essentially says, "Let's try to find ways to focus on the customer more than we have in the past, so we can cross-sell, up-sell, and that sort of thing."
Berens: Or, another way of putting this is, what you are calling customer focused is a way of more efficiently getting the customer to purchase something, and then go away; but, not to have them linger; not to have them engage in a dialogue with the company; not to make it something that is an ongoing relationship; but, just to more effectively process them.
Schultz: Exactly. Now, you have to understand that marketing organizations are designed to talk. They have never been designed to listen. So, when you start talking about dialogue, and interactivity, and you start talking about things like social networks, and that sort of thing, the marketing organizations have no way to deal with that, because they have always been outbound, and linear, and all designed to push communication out, and never really ever looked at, or listened to, customers historically. So, that creates a big problem.
So, one of the issues is there is all this customer focus, which is interpreted as: "How do we improve our customer service? How do we improve our customer wait times? How do we improve the things that we do?" …all in the hope that we can sell them something. There is very little emphasis in customer focus, in terms of trying to satisfy customers, to understand their needs, or create a long-term relationship with them. Customer relationship management essentially is customer focused. The more I know about you, the better opportunity I believe that I have to cross-sell, or up-sell, or add on, or migrate you, or something like that. So, customers in most marketing situations are still considered pawns that the marketing organization is trying to move around.
Berens: How does customer-centricity differ from customer-focused?
Schultz: Well, customer-centricity says that you really are looking at a demand chain, rather than a supply chain. A supply chain is one where we try to figure what is the most efficient way to serve you. A demand chain is: How do we figure out what we want, and then how do we make it? And, those are radically different concepts.
Look at two very separate examples: Wal-Mart essentially is a supply chain-- it is a logistical system designed to get products through the system, get them into the stores at the lowest possible price, and then hope people come in and pick up them up.
Berens: Right. It is all about the economies of scale.
Schultz: Exactly. And, if you look at an organization like Dell, Dell says, "Tell us what kind of computer you want. We will make it for you, and we will design it to your specifications." That is a demand chain. So, those are two radically different kinds, and radically different business models. The problem is, customer focused is all designed around a supply chain. How can I sell you more of the stuff I have got? A demand chain is all focused around, "Tell me what you want, and let me see if I can figure out if I can provide that; or, if I cannot provide it, maybe I can find another way to fill your needs."
They are two diametrically opposed processes, and what they are doing is they are essentially crashing/clashing in the marketplace today. The supply chain people are beginning to understand that they cannot get much more efficient than they are now; and, cannot squeeze suppliers much more than they have now. And so, the real question is: What do I do? Well, I have got to go sell some more, which forces me into this add on, up-sell, cross-sell, all those kinds of things. So, those are the big issues.
Next: Alignment rather than integration
