Six Building Blocks of a Customer-Centric Organization

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Framework Primer
Six Building Blocks of a
Customer-Centric Organization
Presentation created by
BUILDING
BLOCKS
CUSTOMER LIFECYCLE
AND JOURNEY VIEWS
SOLUTION MINDSET
ADVICE BUNDLING
FRONTLINE CUSTOMER
INTERFACE
FIT-FOR-PURPOSE
BUSINESS PROCESSES
CROSS-FUNCTIONAL
EFFORT
1
2
3
4
6
5

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Contents
Templates
Cross-functional Effort
Fit-for-Purpose Business Processes
Overview
Customer Lifecycle and Journey Views
Solution Mindset
Advice Bundling
Frontline Customer InterfaceThe content on this page has been partially hidden.
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Presentation Overview
A shift to a Customer-centric Organization also represents a shift from cost management
to growth.
There are 6 building blocks that are necessary for creating a true
Customer-centric Organization
More and more organizations are shifting a traditional Product-focused model to
becoming a Customer-centric Organization. To do this without incurring
debilitating costs from added process and organizational complexity, the
organization must be build a true Customer-centric Organization by completely
transforming its operating model and business model.
A true Customer-centric Organization possesses capabilities across the following
6 building blocks:
Additional topics discussed in this presentation include McKinsey Decision
Journey, Value Stream. Mapping, Customer Value Proposition, Solution
Development, Digital Transformation, and more.
2 Solution Mindset 5 Fit-for-Purpose Business Processes
3 Advice Bundling 6 Cross-functional Effort
1 Customer Lifecycle and Journey Views 4 Frontline Customer Interface
The content on this page has been partially hidden.

First, let’s define what we mean by a Customer-centric Organization
Customer-centric Organization Overview
What’s the difference between a Customer-centric Organization and an organization with customer focus?
A Customer-centric Organization has re-designed
its entire operating model around the customer,
thereby increasing customer satisfaction and its
own profitability. This requires dramatic internal
organization changes.
The operating model must be aligned behind a
carefully defined and quantified customer
segmentation strategy. Specific business streams
(e.g., product development, demand generation,
production and scheduling, supply chain, customer
service, etc.) must be tailored to maximize
customer value at the least operational cost.
Organizations studied in North America and Europe that have adopted a Customer-centric
Organization model generate profit margins 5-10% above non-Customer-centric competitors.
Source: Smart Customization: Profitable Growth through Tailored Business Streams, Booz Allen Hamilton, 2003
To re-align our operating model,
we need to make changes to the
following 6 elements:
1 Customer Orientation
2 Solutions Mindset
3 Advice Orientation
4 Customer Interface
5 Business Processes
6 Organizational Linkages and
Metrics

Shifting from a Product-focused to Customer-centric requires 6
elements—Customer Orientation, Solutions Mindset, Advice Orientation…
Shift from Product-focused to Customer-centric Organization (1/2)
Product-focused Organization Customer-centric Organization
Discrete transaction at a point in time
Event-oriented marketing
Narrow focus
Customer life-cycle orientation
Work with customer to solve both
immediate and long-term issues
Build customer understanding at each
interaction
Narrow definition of the customer
value proposition
Off-the-shelf products
Top-down design
Broad definition of the customer value
proposition
Bundles that combine products,
services, and knowledge
Bottom-up, designed on the front lines
Perceived as outsider selling in
Push product
Transactional relationship
Individual to individual
Working as a insider
Solutions focus
Advisory relationship
Team-based selling
Customer
Orientation
Solutions
Mindset
Advice
Orientation

… as well as Customer Interface, Business Processes, and Organizational
Linkages and Metrics
Shift from Product-focused to Customer-centric Organization (2/2)
Product-focused Organization Customer-centric Organization
Centrally driven
Limited decision-making power in the
field
Incentives based on product economics
and individual performance
Innovation and authority at the front line
with the customer
Incentives based on customer
economics and team performance
“One size fits all” processes
Customization adds complexity
(e.g., one-off workarounds)
Tailored Business Streams
Balance between customization and
complexity
Complexity isolated within the system
Rigid organizational boundaries
Organizational silos control resources
Limited trust across organizational
boundaries
Cross-organizational teaming
Joint credit
High degree of organizational trust
Customer
Interface
Businesses
Processes
Organizational
Linkages and Metrics

To build a Customer-centric Organization, we need to develop
capabilities across 6 core building blocks
6 Building Blocks of a Customer-centric Organization
To become a true Customer-centric Organization, we must demonstrate capabilities across the following
6 “building blocks.”
The key is to strike a balance between customer delight and company profit.
Source: The Customer-centric Organization, Booz&Co, 2004
BUILDING
BLOCKS
CUSTOMER LIFECYCLE
AND JOURNEY VIEWS
SOLUTION MINDSET
ADVICE BUNDLING
FRONTLINE CUSTOMER
INTERFACE
FIT-FOR-PURPOSE
BUSINESS PROCESSES
CROSS-FUNCTIONAL
EFFORT
1
2
3
4
6
5

Contents
Templates
Overview
Solution Mindset
Advice Bundling

A Customer-centric Organization takes a holistic view of the customer—
evaluating both the Customer Lifecycle and Customer Journey
Traditional product-focused organizations are organized and equipped to treat customers as a set
of discrete, unrelated transactions over time. The customers are viewed as a series of “events.”
A Customer-centric Organization takes a more holistic and continuous view of the customer. In this
case, we take into consideration the Customer Lifecycle and Customer Journey.
Largely driven by Social Media and Mobile technologies, the number of customer
touchpoints in the Customer Journey has increased dramatically.
A Customer Lifecycle refers to the customer’s
passage through his or her life—e.g. as she moves
from being a student to working professional to
marriage to home ownership to parenthood, and so
forth. Each stage of her life, her needs change.
Thus, the value proposition and relevance of our
offering must change accordingly to adjust to the shift
in value drivers.
This concept is called Lifecycle Marketing. Emerging
Digital Transformation technologies, e.g. social
listening, big data, analytics, can be leveraged to
determine the current customer lifecycle phase and
appropriate tailored offering for the customer.
CUSTOMER JOURNEYCUSTOMER LIFECYCLE
The Consumer Decision Journey is a new-age
business framework that captures the customer’s
path to purchase. The Customer Decision Journey
proposes that the customer goes through four phases
in a cyclical process. Each phase represents a
potential marketing battleground where companies
compete for the customer’s purchase and loyalty.
This is a fundamental shift from the traditional view of
sales, which is conceptualized linearly, typically as a
funnel (with no feedback cycle component).
This path can take from several days to several
months, mostly driven by the product category and
market maturity.

The McKinsey Decision Journey is a framework to understand the
Customer Journey and evaluate the key touchpoints
Customer Lifecycle and Journey Views – McKinsey Decision Journey
Initial
Consideration
Set
Moment of
Purchase
Active Evaluation
Post-purchase Experience
Ongoing exposure
1
3
2
4
1. Initial Consideration Set
When the customer first conceives the
notion of buying a product, she will
develop an initial set of brands to
consider buying.
2. Active Evaluation
In the evaluation phase, the customer is
seeking information and shopping
around to make an informed purchase
decision.
3. Moment of Purchase
This is the point in the time when the
customer goes to the retailer and makes
the purchase.
4. Post-purchase Experience
After the purchase, the customer builds
expectations based on her experience
that will impact her next purchase
journey. This creates the circular nature
of the journey.
For more on this framework, as well as Accenture’s Customer Journey framework, look at
this FlevyPro framework: https://flevy.com/browse/flevypro/customer-experience-2252.
Source: Consumer Decision Journey, McKinsey & Co., 2009

Contents
Templates
Overview
Solution Mindset
Advice Bundling
Frontline Customer Interface

We must also shift our mindset from selling products to solving
customer problems
Solution Mindset
Becoming a Customer-centric Organization represents a fundamental shift in mindset—from one
of selling products (product-focused) to one of solving customer problems (customer-centric). In
essence, within our customer value proposition, Solutions replace Products.
Truly Customer-centric Organizations often collaborate with competitors to deliver a more
comprehensive customer solution.
What’s the difference between a Product and a Solution?
By product, we refer to distinct “off-the-shelf”
products.
To create a solution, we first need to develop a
suite of modular, product bundles. These product
bundles are then layered with an advisory
relationship between the company and customer
PRODUCT A PRODUCT B
PRODUCT C
+ ADVISORY
PRODUCT
B
PRODUCT
A
PRODUCT
C

Here are examples across 5 industries of how a Solution Mindset would
shift the Customer Value Propositions
Solution Mindset – Value Proposition Shift Examples
Solutions evolve the Customer Value Proposition to one that is more tailored and hands-on.
Truck
manufacturing
INDUSTRY
Traditional Value
Proposition
“We sell and service
trucks”
Value-added
Services
Financing
Service
Trucks
Traditional
Product
Customer-centric
value proposition
“We can help you reduce
your life-cycle
transportation costs”
Aerospace
components
“We sell high-
performance fasteners”
Application/Design
support
Aerospace
fasteners
“We can reduce your
operational costs”
Utilities
“We provide electricity
reliability”
Energy asset
maintenance
Electricity “We can help you reduce
your total energy costs”
Chemicals
“We sell a wide range
of lubricants”
Usage and
application design
Lubricant analysis
Lubricants “We can increase your
machine performance and
up-time”
Pharmaceuticals
“We sell
pharmaceuticals”
Product support
Outcomes-driven
information database
Drugs “We can help you better
manage your patient base”
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Contents
Templates
Overview
Solution Mindset
Advice Bundling

To offer good advice, we need to continuously engage in dialogue
with the customers to develop key insights
Advice Bundling
Historically, Advice Bundling has been reserved as a premium service for high-value clients.
To offer relevant advice, we first need to develop customer intuition and insights.
This is done by continuously engaging in dialogue with the customers, starting long before a product or
service is purchased and continuing after the sale. This is done by leveraging all possible customer
touchpoints in the Customer Decision Journey.
The difficulty in continuous customer engagement is to do so cost-effectively. To enable dialogue, many
Customer-centric Organizations offer mobile apps for the customer that are integrated with other mobile
applications (e.g. social media). This also allows the organization to collect other relevant info about the
customer (e.g. GPS data).
Emerging Digital Transformation technologies are making it easier and easier for organizations to collect
more and more data about the customer. Big Data and Analytics are also making it easier to make sense of
the plethora of data to develop meaningful, actionable, and accurate insights.

In this example of Advice Bundling, Citibank uses its Citipro Financial
Planning Tool to drive product penetration
Advice Bundling – Citigroup Example
Companies can leverage pre-sales support to move up the customer purchase chain.
Set up at convenience of client
Free, with no obligation to purchase any products/services
Client provides his or her financial information
System generates customized plan and proposed Citibank products to fulfill it
(approximately 60 minutes)
OutputsFace-to-Face meeting with Financial Client Analyst
Overview of Citibank’s marketing efforts for Citipro
Targets all customers
Uses statement inserts, service center calls, some outbound efforts, and advertising on Web site
1 Client Financial Plan
Debt-to-Income Ratio
Current Net Worth
Cash Flow
Retirement Plan Analysis
2 Proposed Financial Solutions
Cash management
Completion DateTarget Date
Direct deposit
Citigold Account
Overdraft protection
Citibank Automatic Savings Program
Budget management Income Protection
Begin process for Insurance
Protection Qualification
Debt
Debt Elimination Program
Investment management
Mutual Funds
Citicorp Brokerage
Citibank/IRA Account
________________
________________
________________
________________
Account statements
Tax statements
Debt statements – Mortgage/Education
Proofs of Assets – Car/Home
Insurance
________________
________________
________________
________________
________________
________________
________________
________________
________________
________________
________________ ________________
________________ ________________

Contents
Templates
Overview
Solution Mindset
Advice Bundling

We must also shift customer-oriented decisions downstream to the
frontline staff, who deal directly with our customers
For the Customer-centric Organization, retail distribution channels should have the skills and
authority to tailor solutions for the customer, as they are the on the frontline of customer interaction.
After all, the frontline staff—i.e. where the customer is—is where customer insights and intelligence reside.
Finding the right balance between personal service and administrative scale is at the
core of a successful customer-centric strategy.
On the contrary, in the Product-focused Organization, customer-oriented processes and decisions (e.g.
customer management, pricing, marketing, innovation) are relegated from the top down. This often results in
the sales team being the “order takers.”
Not every decision and customer interaction should occur at the physical point of contact, because this model
would be too costly. Instead, we should develop an integrated, multi-channel experience for the customer.
As online retailing begins dominate physical retailing in more and in more industries, the multi-channel
experience becomes more important. Different types of servicing can also be delegate to different channels.
For instance, routine servicing can be handle via a self-service online portal, whereas more complex servicing
can be handled in person at a physical location.

Contents
Templates
Overview
Solution Mindset
Advice Bundling

To avoid increasing organizational complexity, we should re-design
business processes for the Customer-centric Organization
The primary reason organizations fail to transition from a product to a customer focus is the cost
of the resulting organizational complexity.
One powerful Lean tool we can use is Value Stream Mapping (VSM).
Typically, organizations implement solutions by creating one-off workarounds in their business processes.
These workarounds are layered on top of the legacy product-focused processes, which creates inefficiencies
and thus increases costs. Over time, this creates crippling operational costs.
The proper way to redesign business processes for the new Customer-centric operating model. The new
processes should be based on Lean Management methodologies. Lean Management, also known as Lean
Enterprise and Lean Manufacturing, is a management philosophy based on the Toyota Production System
(TPS). The objective of Lean Thinking is to eliminate everything that does not add value (i.e. “waste”) from
the customer's eyes. Lean is also based on the premise of continuous, iterative business process
improvement.

One business process re-design framework to use is Value Stream
Mapping (VSM)
Fit-for-Purpose Business Processes – Value Stream Mapping (VSM)
For more information on VSM, take a look at the Flevy business toolkit:
https://flevy.com/business-toolkit/value-stream-mapping.
Sponsor
selection
Team
selection
Process
selection
Data
Collection
and
Current
State Map
Current
State
Evaluation
Future
State Map
Action
Plan
Benefits
Measure-
ment
1 2 3 4 5 6 7 8
The purpose of VSM is to provide optimum value to the customer through a complete value creation
process with minimum waste in:
1. Design (concept to customer)
2. Build (order-to-delivery)
3. Sustain (in-use through lifecycle to service)
VSM is a team exercise and should involve representatives from all of the areas within the process being
mapped. This creation of a Value Stream Map should be facilitated and led by an expert with experience in
creating value stream maps.
Creation of the VSM involves 8 key steps:

Contents
Templates
Overview
Solution Mindset
Advice Bundling

Lastly, we need to develop a culture of collaboration—this means build
linkages across the organization
A Customer-centric Organization requires a new culture of collaboration across the organization.
Key financial and operational metrics will change as a result.
The traditional Product-focused Organization has a sales culture, where can be characterized as territorial—
with little sharing across organizational silos. This type of culture does not support the solution-based
customer value proposition of the Customer-centric Organization.
Tailoring solutions to customer’s unique and dynamic needs require a level of collaboration across functions
with the organization. This collaboration will be across product and service lines, across regions, and
corporate functions. To support this type of working model, we need to build linkages across our
organization.
Employees at every level in a division need also to understand customer needs to make the end-to-end
customer experience streamlined and cohesive. Creating cross-functional teams require a full-scale Change
Management program—one that must motivate employees at a basic human level to invest in a customer-
centric future.

Contents
Templates
Overview
Solution Mindset
Advice Bundling

BUILDING
BLOCKS
CUSTOMER LIFECYCLE
AND JOURNEY VIEWS
SOLUTION MINDSET
ADVICE BUNDLING
FRONTLINE CUSTOMER
INTERFACE
FIT-FOR-PURPOSE
BUSINESS PROCESSES
CROSS-FUNCTIONAL
EFFORT
1
2
3
4
6
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FRONTLINE CUSTOMER
INTERFACE
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FIT-FOR-PURPOSE
BUSINESS PROCESSES
5
CROSS-FUNCTIONAL
EFFORT
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MINDSET
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1 CUSTOMER LIFECYCLE AND JOURNEY VIEWS
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5 FIT-FOR-PURPOSE BUSINESS PROCESSES
6 CROSS-FUNCTIONAL EFFORT
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CUSTOMER
LIFECYCLE
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JOURNEY
VIEWS
FRONTLINE
CUSTOMER
INTERFACE
CROSS-
FUNCTIONAL
EFFORT
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MINDSET
FIT-FOR-
PURPOSE
BUSINESS
PROCESSES
ADVICE
BUNDLING
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CUSTOMER
LIFECYCLE AND
JOURNEY VIEWS
SOLUTION
MINDSET
ADVICE
BUNDLING
FRONTLINE
CUSTOMER
INTERFACE
FIT-FOR-PURPOSE
BUSINESS
PROCESSES
CROSS-
FUNCTIONAL
EFFORT

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Flevy (www.flevy.com) is the marketplace
for premium documents. These
documents can range from Business
Frameworks to Financial Models to
PowerPoint Templates.
Flevy was founded under the principle that
companies waste a lot of time and money
recreating the same foundational business
documents. Our vision is for Flevy to
become a comprehensive knowledge base
of business documents. All organizations,
from startups to large enterprises, can use
Flevy— whether it's to jumpstart projects, to
find reference or comparison materials, or
just to learn.
Contact Us
Please contact us with any questions you may have
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