CRM and AI as the key to customer centricity
What is the company’s greatest asset? Turnover, growth, brand awareness? The philosophy of customer centricity puts the customer at the center. The principle: inspire customers and thereby achieve all other corporate goals.
However, the practical implementation of the customer-centric mindset is a complex task. A powerful CRM system acts as a tool for implementation because data-based decision-making processes are among the core components of the approach. CRM and AI tools are an ideal duo for the systematic collection, analysis and use of customer data, allowing companies to gain precise insights into customer needs and behavior. These insights form the basis for an authentic customer-oriented strategy and enable products, services and interactions to be tailored to the individual requirements of customers.
Table of Contents
What is customer centricity?
The first publications on a customer-centric approach date back to the 1950s. However, the technologization of the modern world has given the topic a whole new dynamic. Spurred on by digitalization and its new possibilities, the corporate philosophy of customer centricity became the dominant paradigm from the 2000s onwards. And it is likely to remain so in the future.
A study conducted by the Bundesverband Industrie Kommunikation e.V. in 2022 revealed that 86% of respondents see customer centricity as an important factor for the future success of their company. 83% even confirmed that the topic is firmly anchored in their internal strategy.
Customer experiences make the difference
In a market environment characterized by high product homogeneity and intense competitive dynamics, companies are striving for market leadership and greater differentiation from competitors. Increasing the focus on customer retention and acquisition is a promising option. However, this requires a far-reaching transformation of corporate structures and processes.
The effectiveness of customer centricity in companies can be attributed to various factors. Has one of your customers ever opted for a competitor’s product even though your own is significantly better? If so, it could be that your competitor was able to deliver a better experience at various touchpoints. Product features or price are rarely the only reasons for a purchase. Above all, a customer is looking for the best possible fulfillment of their needs and they will choose the provider that offers them the best service. It’s about trust and the feeling of being valued.
This is where the advantages of customer centricity become apparent: customers who are enthusiastic about an offer and a service come back, remain loyal – and ideally recommend your company to others. This is how customer centricity can develop into a competitive advantage.
“A company is only successful when the customer comes back, not the product!”
(Wendelin Wideking)
What is the difference between customer orientation and customer centricity?
At this point, some people will say: We’ve always been customer-oriented. That’s probably true. But there are crucial differences between “customer-oriented” and “customer-centric”.
Customer orientation describes a strategy in which companies aim to be as customer-friendly as possible. In practice, this means, for example, offering a good service and improving product features, for example following customer feedback. However, customer orientation is usually reactive. Only when there is criticism do adjustments follow. Moreover, customer orientation is usually only one aspect of decision-making in business matters.
Customer centricity, on the other hand, places the customer at the center without compromise. This means that the entire corporate culture is geared towards this. Accordingly, customer centricity must be anchored in all departments, not just in sales and marketing. It is crucial that customer centricity takes place proactively. Your company does not wait for feedback, but puts itself in the customer’s shoes, determines their wishes and optimizes its offering with foresight.
What exactly does the implementation of customer centricity look like?
Various measures are required to ensure that a company’s behavior and actions are no longer just product-centric, but above all customer-centric. In order to provide the customer with the best possible care, you should know him as well as possible.
You gain valuable insights for optimizing your products and services through statements and ratings from customers, e.g. on social media and rating portals, through surveys and direct conversations as well as through evaluations of tickets and feedback from your customer service. With dashboard and report functions in CRM, you can use your key figures to identify trends and derive appropriate actions. This makes your CRM system the key to successful customer centricity. It enables you to create customer profiles and recognize certain patterns that help you to get closer to the customer and serve them better.
With the right software, hundreds of pieces of information about potential customers can be collected and analyzed every day. The central storage of all customer information is just as important as the correct input of data. If your data from various sources is stored centrally in a CRM system, these data records can be searched and structured with the help of artificial intelligence and profitable insights can be derived from them. Read more about this further down on this page.
Important CRM functions for customer centricity
- Personalization: adaptation of offers, communication and content
- Customer segmentation: Division of the customer base into relevant target groups
- Marketing automation: increasing customer loyalty by automatically displaying suitable offers at the right time
- Multichannel communication: integration of different communication channels for seamless customer interaction
- Customer feedback management: collecting and analyzing customer feedback
- Integration with other systems: Seamless integration with other systems to improve data quality (such as ERP, InfoZoom, Nemo AI etc)
Challenges in the integration of CRM, AI and customer centricity
It reads simple on paper: introduce CRM, implement AI tools, evaluate data, think customer-centrically and inspire customers. However, the individual steps require good preparation, suitable managers, a team of motivated employees, a concrete timetable, training and sufficient financial resources so that the concept can be put into practice step by step. Everyone must pursue the same goal and remove obstacles on the way to becoming a customer-centric company.
The following best practices highlight three common problems and their solutions.
Improve data quality through company-wide guidelines
As already mentioned, understanding customer needs is crucial for a customer-centric approach – especially in the B2B environment. However, companies often make the mistake of making gut decisions about what might be important to buyers, even though analytical, data-based strategies are much more reliable.
A necessary prerequisite for the data-driven approach is standardized data maintenance in CRM. Only then can a high-quality treasure trove of data be created that is available to all departments in the company. A company-wide guideline should therefore be drawn up for all employees to specify the requirements to be observed when maintaining data.
Customer centricity as a lived corporate culture
A customer-oriented corporate culture is crucial for the long-term success of your company. In fact, all departments need to think from a customer perspective, not just sales and marketing, but also development, production and support. In order to create and maintain a customer-centric culture, it is crucial that management levels exemplify customer centricity and support it through appropriate measures such as training and workshops.
This is why customer centricity is so important:
- Customer satisfaction and loyalty: When all employees, regardless of their department, focus on the customer, this leads to a better customer experience and increases customer satisfaction and loyalty.
- Efficiency and productivity: As all employees focus their efforts on meeting customer requirements, this leads to greater efficiency and productivity throughout the company (e.g. through improved communication, faster problem solving, more targeted use of resources, etc.).
- Employee motivation: Employees who work in a customer-oriented environment and whose contributions to customer satisfaction are valued are generally more motivated and committed.
- Innovative strength: A customer-oriented culture with motivated employees promotes a company’s ability to innovate because employees are committed to looking for ways to improve products and services and adapt them to customer requirements.
Provide infrastructure for customer centricity
Providing a suitable infrastructure for customer centricity is crucial in order to effectively meet the needs of customers and build long-term relationships. In addition to the CRM system, the following technologies are useful:
- Business intelligence technologies for data analysis:
BI helps to analyze data, especially unstructured data from social media. These analyses provide a deeper insight into customer behaviour and promote a personalized approach, which increases customer satisfaction. - Marketing automation tools to support personalization:
They help to provide personalized content and offers in real time, which leads to higher customer loyalty and satisfaction because customers feel understood and valued. - Omnichannel platforms for seamless communication:
Use ensures that customers have a consistent and seamless experience across different channels. This is important to ensure a consistently positive customer experience.
What role does artificial intelligence play in customer centricity?
Artificial intelligence (AI) enables companies to analyze large amounts of customer data in order to identify patterns and trends in customer behaviour. By using AI-supported tools, specific customer profiles can be created based on first-party data. Once you merge demographic information, transactions and interactions from your CRM and other sources via interfaces, AI can help structure your data. This makes it possible to identify which products or services are of interest to certain customers so that personalized offers can be made to them.
How AI can “predict” customer behavior
1. data analysis and pattern recognition
AI-supported systems analyze historical data on customer interactions, purchases and preferences. Through machine learning, these systems can identify patterns that indicate future behavior.
2. RFM analyses
(Recency, Frequency, Monetary (RFM for short) analyses use AI to determine the value of a customer and predict how likely they are to buy in the future. These analyses focus on factors such as the frequency and value of previous purchases to calculate purchase probabilities.
3. prediction of customer churn
An important use case for AI is the prediction of customer churn. AI models analyze past customer behavior in order to calculate the probability of churn. Customers with a high risk of churn can then be targeted with special offers or incentives to retain them.
4. sentiment analysis
AI can also analyze unstructured data such as customer reviews and feedback to assess customer engagement and satisfaction. These sentiment analyses help companies to identify problems at an early stage and adapt their strategies accordingly in order to improve customer loyalty.
Conclusion: Customer centricity – don’t just catch the eye, stay in the memory of your customers!
Customer centricity therefore means putting the customer at the center of your business activities and aligning your activities accordingly. Don’t just create the product your customers want, create the feeling that they are making the best choice with you.
