MANAGING THE VALUE

OF CUSTOMER
RELATIONSHIPS
Module 5
Wrap-Up
 Wrap Up
• Make an informed decision about whether, how, and when to
invest in customer centricity.
• Make the case for customer centricity in your organization.
• Find a balance in your organization between customer-centric
and product-centric efforts.
• Decide what initial experiments your company should invest in to
achieve customer centricity.
• Choose metrics to gauge and guide ongoing customer-
centric efforts.
• Help me update this list.

2
Product-Centric versus Customer-Centric
Product-Centric Company Customer-Centric Company
Goal Best product for customer Best solution for customer

Main offering New products Personalized packages of products, service, support,

education, consulting

Strategy Value creation route Cutting-edge products, useful features, new applications Customizing for best total solution

Most important customer Most advanced customer Most profitable, loyal customer

Priority-setting basis Portfolio of products Portfolio of customers – customer profitability

Pricing Price to market Price for value, risk

Structure Organizational concept Product profit centers, product reviews, product teams Customer segments, customer reams, customer P&Ls

Most important process New product development Customer relationship management and solutions
Processes
development

Measures  Number of new products  Customer share of most valuable customer

 Percentage of revenue from products less than two  Customer satisfaction
Rewards
years old  Lifetime value of a customer
 Market share  Customer retention
Approach to personnel Power to people who develop products Power to people with in-depth knowledge of customer’s
 Highest reward is working on next most business
challenging product  Highest rewards to relationship managers who save
 Manage creative people through challenges the customer’s business
with a deadline
People Mental process Divergent thinking: How many possible uses of this Convergent thinking: What combination of products
product? is best for this customer?

Sales bias On the side of the seller in a transaction On the side of the buyer in a transaction

Culture New product culture: open to new ideas, experimentation Relationship management culture: searching for more
customer needs to satisfy

Note. Adapted from Designing the customer-centric organization: A guide to strategy, structure, and process (p. 10), by J. R. Galbraith, J. R., 2005,
San Francisco, Calif: Jossey-Bass. Copyright 2005 by Jay R. Galbraith.

3
 The chain is complete!
functional
symbolic
relational
expectations delight sacrifice development

CUSTOMER CUSTOMER FIRM

VALUE
SATISFACTION LOYALTY CLV EQUITY VALUE

retention
SWITCHING
COSTS

internal

indirect
direct acquisition external
acquisition

4
 Acquisition, Retention,
Development: where would
you put your money?

5
 References
 Galbraith, J. R. (2005). Designing the customer-centric organization: A guide to strategy, structure,
and process. (Designing the customer-centric organization.) San Francisco, Calif: Jossey-Bass.