You Are Not The Customer: How Customer Centricity Improves Marketing Performance

A Marketing Week Career and Salary Survey found that 53% of marketers have no training in marketing. More than half. To most discerning hospitality businesses, that should be a pretty worrying problem, but there’s also a more nuanced consequence that I think needs highlighting:

Marketing is the most important business function for understanding customers, yet most marketers are making decisions about customers based on entirely on instinct. They’re not making those decisions based on true insights that they’ve been trained to harvest.

That’s not necessarily a dig at individual marketers, but collectively, I think it’s helped to infect businesses with an unhelpful attitude towards the customers they exist to serve. I’ve seen it first hand and it often leads to decisions being made without the customer genuinely in mind. Personal preferences, operational efficiencies, new opening times, new restaurant concepts, even major refurbishment projects… decisions being made without knowing if your customers want them. If and when we do talk about ‘what our customers want’, the answers are usually based on our own convenient assumptions about the market.

And it’s doing serious damage.

The epiphany most marketers never have

Repeat after me… "You are not the customer."

Go on, say it out loud… “You are not the customer!”.

Notice how obvious it sounds and then notice how rarely it actually informs the way decisions get made. Because if businesses genuinely believed it, they'd behave very differently. They'd be far more cautious about making pronouncements or blind decisions. They'd invest far more in research. They'd be far more willing to be surprised by what they found, and to pivot when it contradicts their pre-conceptions.

Now, it’s maybe understandable why certain business functions don’t inherently think about what customers want, but the job of a marketer is to be the voice of the customer whenever a decision is made. You’re the one in your organisation who needs to fly that customer flag and obsess – yes, obsess – about what they think, not what’s in the convenient interests of the business.

The critical thing to understand is that you don't need to be like your customers - that's not why you're employed. You just need to know that you're not like them. And whenever questions arise about what customers think or feel or want, the only honest answer is: "I don't know. I'm not the customer. But I do know how to find out."

That's not an admission of failure, it's the beginning of the proper marketing process.

Harvard Professor Rohit Deshpande has been researching this for over 30 years. He coined the term "customer centricity" and defined it as "the set of beliefs that put the customer's interests first in order to develop a long-term profitable enterprise." Notice he says set of beliefs, not processes or departments. It's a culture within which the entire organisation revolves around what customers actually think, rather than what the business has decided or inferred.

His research with John Farley produced the MORTN scale - a ten-question diagnostic tool that measures how genuinely customer centric a business actually is, not how customer centric it thinks it is. That distinction matters enormously because, as the research shows, most businesses share a wildly inflated sense of their own customer focus.

The data on this is pretty sobering

Bain & Company found that 80% of businesses believe they deliver a superior customer experience. Their customers agreed in only 8% of cases. Capgemini ran a comparable study: 75% of businesses called themselves customer-centric, but customers put it at 30%. Average out the available research on this perception gap and you land at roughly 40% of customers agreeing with the company’s own assessment of themselves. And that’s because… they’re not the customer!

Psychologists call this kind of systemic self-overestimation the Dunning-Kruger effect. It’s the tendency to overestimate our own competence, particularly in areas where our knowledge is limited and we lack the external feedback to correct ourselves. The classic example is that 80% of drivers rate themselves as “above average”. Obviously that’s mathematically impossible but entirely consistent with how people process their own performance when they're not being properly tested against the reality.

In marketing, that external test comes in the form of customer research. And, frankly, most businesses don't do nearly enough of it. If you’re not spending circa 5% of your annual marketing budget on market research and customer insights, then you’re simply not getting to understand your customers nearly enough.

The consequences of this gap show up in a piece of research by Steve Levy at Ipsos Canada that I find myself coming back to constantly. Levy asked real consumers how much time they spent each day consuming various media - TV, streaming, radio, podcasts, and so on. Then he asked marketers the same questions about their own habits. He delightfully referred to the marketers as ‘us’ and the consumers as ‘them’, which I think is very apt. Then - and this is where it gets revealing - he asked us marketers to estimate our customers’ behaviour across those same channels.

The marketers' own media habits were somewhat different to the general population. That's expected and it's not the problem. The problem was their estimate of consumer behaviour. Marketers consistently and significantly overestimated customers’ behaviour across every single channel. They weren't just slightly off, they were off by an order of magnitude. In the same direction. Every time.

The implication for anyone building a marketing strategy on the basis of what they imagine their customer behaviour to be should feel very uncomfortable. You’re almost certainly making that assumption based on your own habits and, as the research shows, that projection is reliably and substantially wrong.

What good actually looks like

Deshpande has conducted research more recently into ‘high-performing’ firms, drawing on interviews with senior managers across the UK, USA, Japan, France, Germany and the BRIC nations. Expecting to find major variance, what he actually found was commonality. Something that cut across every assumption about cultural and geographic differences:

The top-performing businesses in every country share the same success profile.

In other words, the most successful Chinese firms look identical to the most successful British firms, not in their products or their markets or their structures, but in their orientation towards their customers.

Three things defined them.

• They are customer-centric rather than product-centric. What separates them from the competition is how deeply they understand their customers.
• They invest more than their competitors in customer insight and market research.
• They integrate branding and customer understanding at the heart of the organisation, not in a separate customer services function off to one side.

Other research from Deloitte found that customer-centric companies are 60% more profitable than those that aren't and John Narver at the University of Washington found that more market-orientated businesses enjoy higher profitability alongside better sales growth, customer retention and new product success.

Frustratingly, none of this is new. ‘Market orientation’ (or customer centricity) dates back to the early 1950s, which poses the question why on earth aren’t more businesses doing it? Well, aside from a lack of training, maybe the answer is in that pesky Dunning Kruger effect - they think they already are!

Measuring the gap honestly

Based on Deshpande and Farley’s work, I’ve built a practical tool to address this problem which I share in my Marketing Academy. Instead of just talking about customer centricity in the abstract, it allows you to start measuring it concretely. I’ve named it The Centricity Index.

The principle is straightforward. You survey your internal team across all levels of the organisation using ten questions about how customer-focused the business is. That gives you an internal score of what the business thinks of itself. You then run the same survey with a representative sample of your customers, giving you an external score of what customers actually think. The combined scores give you your Index. But more importantly, it also calculates your Delta (or the gap between the two).

For businesses that do this exercise honestly, the Delta often makes for uncomfortable reading. Internal scores tend to be high; customer scores tend not to be. And it's the size and direction of that gap - not the headline Index score - that tells you where the real work is needed.

It's also a far more useful conversation to have with your CEO than a vague commitment to "putting the customer first". Show them a number, a gap, and a direction of travel and suddenly you're talking about something that can be tracked, improved and reported on. Senior leaders will tend to respond well to that.

One last thing

The businesses that take the "you are not the customer" epiphany genuinely seriously – i.e. as a working culture rather than a motivational poster - don't just do better marketing. They build better products, make better pricing decisions, set more useful objectives, and waste less money on communications that nobody cares about. Customer centricity is the foundation that everything else rests on, and if it's shaky, everything built on top of it is shaky too.

Most marketers still need to have their epiphany. They need to accept that their instincts about customers are unreliable, that their assumptions need testing, and that saying "I don't know, but I know how to find out" is not a weakness. It’s the most important sentence in the job.

That mindshift is what separates the marketers who are genuinely effective from the ones who are just busy.

Want to understand how to make your business more customer centric? That's exactly what you'll cover inside The Academy. Find out more here.