Imagine a world where businesses could identify opportunities and concerns associated with each of their customers before they happen—and then take action by delivering relevant, valued conversations and offers to them in real time? Chances are that company would have little issue with retention rates and loyalty, and they would be likely to make every interaction more profitable. That’s the promise of customer-centricity.

Customer centricity is not just making vague commitments to “put the customer first” or “provide outstanding service.” It’s about building the business around the needs, preferences, and actions of customers—at the individual level—on an ongoing basis.

Consider the following:

  • According to Dr. Peter Fader of The University of Pennsylvania’s Wharton School of Business, companies that are able to identify and maximize the value of their best customers have the potential to increase sales by 17%.
  • Research from Frederick Reichheld of Bain & Company shows increasing customer retention rates by 5% increases profits by 25% to 95%.
  • A Deloitte & Touche report calculated that customer-centric companies are 60% more profitable than their peers.

These findings tell a powerful story on the importance of customer centricity to companies.

Many companies collect and store vast amounts of customer data, but it’s fragmented—stored in discrete, application-specific silos that prevent a full understanding of each customer. By freeing this data—and merging it with additional data from external sources—to better understand and appeal to customers at the individual level, companies are able to deliver more personalized service. Customer-centricity is being enabled due to some key emerging technologies, including:

Mobility

According to Forrester Research, global smartphone penetration by population was 28% in 2013, and will grow to 50% by 2017. With 3.5 billion subscribers expected by 2019, smartphones and other mobile devices are rapidly becoming the primary means by which people manage their daily lives—communicating, navigating, capturing images, making purchases, and more. In the process, they are also generating a massive—and growing—amount of data of potential value to the businesses that serve them.

Social Media

“Word of mouth is the best advertising.” Today, “word of mouth” happens prominently on social media. According to research from A.T. Kearney, social networking is the number one online activity worldwide, consuming an average of 48% of people’s Internet time. Kearney’s research also reveals that social media has a significant impact on consumer buying decisions, particularly among the young. More than half of consumers under the age of 46 responded that they frequently or occasionally base their purchase decisions on what’s happening in their social network, and among those aged 16 to 25, the response was 67%.

Companies that seek to reach, understand, learn from, and influence these consumers need to master data collection and analysis from social media sources.

The Internet of Things

According to Cisco, the number of Internet-connected devices will grow from 13 billion to 50 billion between 2013 and 2020. As Internet-connected sensors get embedded into more physical objects, companies that can collect and analyze that data will find new ways to anticipate customer needs and deliver value to them at the right moment.

Big Data

Fueled in part by the Internet of Things, social media, and mobility, the amount and variety of data being generated globally is rising at an astronomical rate. It’s estimated the digital universe will grow from 3.2 zettabytes to 40 zettabytes between 2014 and 2020.

Add to this the rapidly-growing amount of customer data that companies are collecting and storing in data warehouses, including credit card transactions, product preferences, and purchase behaviors. Within these torrents of information are nuggets of data about each consumer, which can reveal their habits, preferences, dislikes and needs.

A number of technologies have been developed to enable organizations to better manage their big data assets. The open-source Apache Hadoop ecosystem is one of them, which includes: Apache Hadoop for distributed storage and processing of very large data sets; Apache HBase non-relational distributed database, which provides a fault-tolerant way of storing large quantities of sparse data; and Apache Spark, a cluster computing framework that supports repeated querying of data in cluster memories, which is particularly suited to machine learning.

Together, these technologies provide the means to extract valuable insights from big data.

Advanced Analytics

On top of big data alone sits advanced analytics, which is required to gain benefits from big data. According to Alexander Linden, research director at Gartner, “Advanced analytics solves problems using predictive analytics and prescriptive analytics. Predictive analytics predicts future outcomes and behavior, such as a customer’s shopping behavior or a machine’s failure. Prescriptive analytics goes further, suggesting actions to take based on the predictions.”

Taken together, these developments provide a rich, previously-untapped, and growing opportunity for companies in all industries to achieve greater customer centricity and open doors to new revenue and profit growth. Though it seems that everything we need to become customer centric is available, most companies are struggling to get there. Stay tuned to this space over the next few weeks as I detail some ways to unlock customer centricity, along with the challenges and opportunities facing customer centric organizations.