Notes

[MUSIC]
I want to spend a little bit more time
thinking about the distinction between
those really focal, those really valuable
customers,
and the eh, not so valuable ones.
How do we achieve the right balance there?
If you take my words a little bit too
literally, I keep focusing on the
valuable, valuable, valuable customers.
And I keep saying let's just zoom our
whole business around them.
If we were to do that, then we've become
very vulnerable.
We have all of our eggs in one basket.
And what happens if we're wrong about
them?
What happens if there's other customers
out there who are fairly valuable?
What happens if something changes to our
product or in
the marketplace that turns those really
valuable customers against us?
So how do we find the right balance?
And so here I, I want to raise an
important but subtle point.
The idea that, the more we zoom in on
those really focal
customers, the more we need the less
valuable
customers, in order to have a stable mix.
The metaphor that I like to use here comes
from finance.
Alright, we want to have some, some really
high flying stocks in our financial
portfolio.
High risk, high return.
We definitely want to have some of them.
Those are going to be where the real
growth comes from.
But the day-to-day stability comes from
the more predictable ones, the cash, the
bonds, and so on.
So in our customer mix, we want to have
that same kind of portfolio approach.
We want to have a large number of
these stable, predictable, but potentially
not very valuable
customers, that we're going to balance off
with
the high flyer customers, the really focal
ones.
This is where I come up with the notion of
The Paradox of Customer Centricity.
It goes like this.
The more we zoom in on those really
valuable customers, the more we need those
other customers around in order to have a
stable balance for the company as a whole.
You see, with only a few exceptions,
no company can be truly, purely
customer-centered.
If you are a private wealth manager
and your customer base consists of four
billionaires.
Yes, you can be totally customer centric.
You know everything about everyone of
them.
You can be a trusted
advisor to each one of them.
But if you have millions or tens or
hundreds
of millions of customers, it's a matter of
finding
the just right balance between being truly
customer centric
with the customer segments that we see as
really valuable.
But being products centric with the
remaining customers, who aren't as
valuable.
Being operationally efficient with them.
Now the difference between a true product
centric
firm is we're not going to let those so-so
customers drive the business.
We're going to continue to focus on the
customer-centric ones for growth.
We're going to continue to focus a
disproportionate amount of
our R&D activity on those really good
customers, coming up
with products for them, hoping and finding
ways to make
those same products palatable and
attractive for the product-centric
customers.
But it's a matter of finding that balance.
That's the paradox of customer centricity
and one of
the challenges for firms is to figure out
how to do that well.
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