Customer-obsessed organizations know their customers, and it shows.
A customer obsession model can help brands stand out from their competitors. It acts as a guiding philosophy that leaders can use to inform important business decisions across all operations. This business model requires key components, such as an effective first- and zero-party data strategy, resourceful leadership, empathy, and the ability to anticipate customers' needs.
Although only a small percentage of organizations have a customer obsession strategy, this model can offer significant benefits.
"Customer-obsessed companies report 1.6 faster revenue growth than non-customer-obsessed companies," said Shar VanBoskirk, an analyst at Forrester Research.
At Forrester Research's CX North America 2023 conference, VanBoskirk and other analysts discussed key components of a customer obsession model that organizations can implement to improve customer retention.
Customer obsession vs. CX
Customer obsession is a business approach that puts customer needs at the center of an organization's culture and operations. This approach can generate customer loyalty, as it helps organizations maximize the value of their products, services and experiences.
Although customer obsession may sound a lot like CX, the terms aren't interchangeable. Customer obsession is an organization's commitment to customer needs, whereas CX describes how customers perceive their interactions with an organization, whether good or bad. In other words, organizations can implement a customer obsession model to help them improve CX.
Who is responsible for customer obsession?
Unlike CX, which often has a dedicated department within organizations, customer obsession is an enterprise-wide strategy for which C-suite leaders must share responsibility. A successful customer obsession model permeates many aspects of a business, such as its leadership, strategy and operations; no single executive can oversee it alone.
"For a lot of companies, what keeps them from being more mature with customer obsession is that they are expecting one individual or maybe the leader of a team to affect enterprise-wide change. But of course, one person or team can't change everything a business is doing," VanBoskirk said in her session on the chief marketing officer's (CMO) role in customer obsession.
However, organizations that don't yet have a strong customer-obsessed culture in place need someone to advocate for that initiative. Most commonly, a CMO could lead this change, VanBoskirk said.
4 components of a customer obsession model
Customer-obsessed organizations must understand their customers and offer empathy and convenience throughout the customer journey.
1. Effective first- and zero-party data strategy
Customer-obsessed organizations need a deep understanding of their customers to offer them the right products and experiences. In the past, many organizations purchased data from third parties to learn about customers. But this practice has fallen out of favor due to privacy concerns. Instead organizations increasingly rely on first- and zero-party data. Organizations collect first-party data as customers interact with them, whereas zero-party data is information customers voluntarily offer organizations.
Organizations can ask customers for information, such as their email address or shopping preferences, at many points throughout the customer journey but should only do so when it makes sense. Many organizations let their first-party data strategies create poor digital experiences, said Stephanie Liu, an analyst at Forrester Research, in her session on building a data strategy.
For instance, an online retailer's website may use pop-up windows to offer new customers a 25% discount in exchange for their email addresses. If these ads pop up for customers that already provided their email and are logged into their company account or app, they can become frustrated. A customer-obsessed retailer uses customer accounts, loyalty programs and mobile apps to recognize existing customers and only target them with offers they can use.
2. Leadership that can source talent
Customer obsession is a company-wide effort, but it starts with effective leadership. Leaders in customer-obsessed organizations know how to source talent, whether full-time, part-time or freelance, according to Katy Tynan, an analyst at Forrester Research, in her session on customer-obsessed leaders.
As people more commonly work as freelancers and independent contractors, leaders in marketing, CX and other departments cannot always rely on hiring new full-time employees like they did in the past. To find the right people, leaders should consider additional ways to source talent.
"We can't expect to go out into the world and hire the people we need. So training and upskilling is definitely one of those … tools in your toolbox. But there's another one, which is this idea of employing consultants, freelancers and gig economy [workers]," Tynan said.
An organization cannot implement and operate a customer obsession model without people in marketing, data, IT and UX design positions to create quality CX. If leaders cannot find the talent to fuel their customer-obsessed operations, they should look beyond hiring new employees and instead consider how upskilling, freelancers and consultancies could help them find the resources they need.
3. Empathy throughout the customer journey
A customer obsession model adds CX principles like empathy into all operations. Many organizations demonstrate empathy in customer service, but empathy can also improve digital experiences earlier in the customer journey. For example, a healthcare provider's CX design team might aim to be more inclusive in their language. They could design a digital intake form to include pronoun fields and expanded gender options for transgender and non-binary patients.
Many organizations fail to effectively incorporate empathy into their digital experiences because they view it as a box to tick instead of something that can significantly improve customer loyalty, said Senem Guler Biyikli, senior UX researcher at Forrester Research, in her session on empathy in digital experiences.
Organizations often demonstrate empathy in a single moment or instance within a digital experience. However, customer obsessed brands show empathy and understanding across various experiences and journey phases, which can boost brand loyalty.
4. Anticipate customer needs
AI and stream processing technologies let organizations collect and process real-time data to anticipate customer needs. Like an automatic door that opens as people approach, this anticipation in digital experiences offers customers convenience, said Julie Ask, an analyst at Forrester Research, in her session on how to anticipate customers' needs. For example, a navigation app that automatically redirects drivers around high-traffic areas saves them time so they don't need to pull over and search for alternative routes themselves.
Organizations need a sophisticated data strategy to bring these experiences to life, which many have yet to develop. To anticipate and act on customer needs, organizations can invest in emerging technologies that process customer data in real-time and integrate with customer-facing software.
"You really have to think about emerging technology because it's constantly changing what is possible. So stay versed in emerging tech to stay ahead of customers' needs and competition," Ask said.