“Commerce is the art of exploiting the need or desire someone has for something.” (Edmond and Jules de Goncourt, July 1864)*
“Hold it wise…/to make a virtue of necessity.” The Canterbury Tales (1387-1400)*
How to grow business long-term in any business is and always was t h e key challenge for marketers. For Consumer Healthcare companies that holds true as well. It doesn´t matter how large or small, national or multi-national a company is. No matter how focused or patchy the portfolio may look like. The well-known options to grow a CHC business are: organic growth through line- and brand-extension, switching RX API´s to OTC, geographical roll-out or expanding the business by external growth through M+A/Licensing –activities. Right? Yes, of course – but not just.
Customer centricity – (beyond lip service) offering the best option for future growth.
Are not most of the CHC organisations really customer centric? What exactly is customer centricity in the first place? A fashion? A strategy? A process? A behaviour?
Well – let´s put first things first. The starting point for understanding more about customer centricity is the simple hence not easy question to be answered: who are your customers?
STOP! Re-Think again before answering the question.
- Who are your customers?
- You are having your list?
OK - would you get the same answer asking the key-people alongside your value-chain? Heads of R&D, Marketing, Sales, Operations, Finance are all aligned? The CEO and your shareholders/the entrepreneur agree unconditionally on the list and the implicit definitions? I would expect not too much of harmonization within any CHC organisation about who exactly the customers are. The plural is used on purpose by the way. “The customer” doesn´t exist. Diversity is an ever increasing reality and should be appraised. Which causes a big transformational headache for companies with a more classical business approach. Enjoying complexity is a hard lesson to be learned by Operations, Finance and Marketing. For decades executives have been paid and incentivized for streamlining portfolios to increase volume and decrease cost. What was wrong with that? Nothing - I would say - but this approach is not matching any more with the realities. Consumers, customers, buyers’ (call them as you like) have changed. Information technology is moving the power from companies (we produce - you buy) to the customers (I buy what I want). This process is ongoing and unstoppable.
You are aligned on the list of customers? Great! How do you value your customers then? Who is doing that? How are you organized? Sales is operating an elaborated valuable CRM system? That is a good step forward however is running a CRM system in sales really indicating customer centricity of a company? Here some acid testing.
Does your customer list and the output of the CRM-tool impacting your shareholder value? Most likely not – it should however have an impact in any serious valuation statement. I am asking myself for how long investors continue underrating future customer value for valuating CHC companies.
Seizing the enormous opportunities to innovate CHC - companies by coherent customer orientation is taking off. One company visibly working hard to become truly customer centric in the hunger for growth in the CHC sector is RB (formerly known as Reckitt-Benckiser) one if not the most dynamic company in the industry sector. The recently announced project to enhance the cooperation with Facebooks is testament to this increasing customer centricity.
In the following postings I will elaborate more on customer centricity.
I will sharing definitions, addressing opportunities, challenges and obstacles for CHC companies for appraising customer centricity as a potential value driver beyond expectations.
The following post will focus on definitions around customer centricity and elaborates on potential future scenarios CHC companies may wish considering. And I will come back to the starting question:
- Who are your customers - followed directly by the next not at all naïve question:
- What business are you really in (now and in 5 years)? Are you sure you will get the same answer alongside the value chain?
Best personal regards
Hans V. Regenauer
*The International Thesaurus of Quotations/compiled by Rhoda Thomas Tripp, Penguin books (1976)