Three reasons why customer-centricity isn’t as easy as it sounds
By Caroline Ashley
When we started discussing a THEME edition on 'customer-centricity,' I wondered why we even need such a focus. Isn't putting the customer at the centre such a basic premise of any business? Surely this is what business people excel at and don't need outsiders to guide them.
But on reflection, I think there are at least three reasons why customer-centricity can be weak in inclusive businesses and is a critical issue to explore.
Innovators not entrepreneurs
Some leaders in inclusive business have emerged from a long career in business. Others, though, are 'innovators' – people who have come up with a great solution to an everyday challenge faced at the Base of the Pyramid (BoP). They need to commercialise it to get uptake and scale. But as well all know, selling a 'solution' does not work. Put another way, customers have to want it, not need it. These innovators need to integrate other skills of listening to consumers to co-design and improve their product and to understand how to message it. For example, which do you think will be more successful: the most fuel-efficient clean-burning stove or the improved stove that includes a USB port for phone charging? The best engineer may not think of the key added feature that consumers want.
'Developed there, deployed here' is another aspect of the entrepreneur-customer divide.
There are lots of great products and inclusive business models developed by people in high-income and upper middle-income countries, that have the largest or most urgent market in low-income countries. These businesses sorely need customer-centricity if they are to work. In the Innovations Against Poverty (phase 1) portfolio (a challenge fund supported by Sida), we saw this pattern that European innovators scored higher on innovation but struggled more with uptake. In Connect to Grow (a partnership innovation broker supported by DFID), we engaged with plenty of Asian businesses who were keen for an African enterprise partner, to combine their proven product with the market knowledge of the partner.
So if I am right, the inclusive business field has innovators who are not natural entrepreneurs, and entrepreneurs who do not have feet in their target market. Both these groups can gain from more information and insight on customer-centric approaches.
Assumptions that pricing, not customer, is king
I am surprised how often I still hear the assumption that a low-cost product is the key to success in inclusive businesses serving BoP consumers. Hordes of evidence show that decisions are based on product quality, unwillingness to take risk, perceptions of status and brand, and payment mechanisms. A no-frills version can be useful to make a product affordable, such as the Pureit water filter, but not at the expense of quality. My hypothesis is that excessive focus on price leads to insufficient focus on customers and their views.
Indeed, I would go so far as to say that price is one half of the six levers needed for success:
Awareness of product type,
Aspirations met by the product,
Availability of product,
Affordability of product,
Avoidance of risk for the consumer,
Acceptability of product to user lifestyles, and
Adoption of regular habits.
Price is part of the fourth item, affordability, alongside payment mechanism. Getting the payment system right, and all the others five levers, can only be done with full understanding of the customers' lifestyle, location, aspirations, behaviour and decision-making drivers. So success, then, depends on customer-centricity.
It's difficult, it's different
Plenty of inclusive business entrepreneurs do put the customer first and know perfectly well that it's not just the product and price that matter. But that doesn't make listening to the consumer easy. When the consumer is poor, and probably only partly in the formal market, perhaps illiterate, perhaps rural and dispersed, and certainly not the focus of most mainstream marketing information, customer dialogue is new and tricky. Different questions need to be asked, in different ways. Often the user is a woman, but the person controlling the wallet or mobile phone, engaging with a sales agent, or attending extension training is their husband, making the gender dynamics of understanding purchasing and adoption even harder. The BoP market is large, but heterogenous not homogenous, so understanding 'them' not 'it' takes time and resources.
For these reasons, the increased attention on tools for customer engagement is welcome. IDEO has been promoting human-centred design for some years in the inclusive business space and have launched IDEO U, an online school with courses in human-centred design.
Acumen's Lean Data Initiative has now helped hundreds of businesses to hear from their clients. It provides a smart blend of impact data and customer insight. There are plenty of blogs on the Practitioner Hub covering the evolution and use of lean data, a whole theme on Customer Intelligence produced in partnership with Acumen, or visit Acumen's Lean Data Field Guide for practitioners.
I hope the other articles in this THEME also give entrepreneurs good ideas on why customer-centricity is essential and how to do it even better.
This blog is part of the September 2018 THEME on customer-centricity.
The February 2017 series on Customer Intelligence, in partnership between the Practitioner Hub and Acumen, provides more detail on how customer data and insights is used to improve and drive inclusive business.
There are plenty more such examples of enterprises ignoring or using customer feeback, plus good tips, in this Insider by Tom Harrison and Parveen Huda, on 'Needs or Wants: Unravelling demand, affordability, and accessibility when selling to the Base of the Pyramid.'
My own '6A's of inclusive business' builds on the 4A's discussed by C.K. Prahalad: Awareness, Access, Affordability and Availability. Prahaland (2011) https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1540-5885.2011.00874.x