Key factors in e-commerce: Insights into the sixth chapter!
Finally, the time has come! The 2nd edition of the successful “Key Factors in E-Commerce” is now available. Get a small foretaste here already and gain first insights. If you don’t know the first chapters yet, click here for the first, here for the second, here for the third, here for the fourth and here for the fifth!
Prof. Dr. Richard C. Geibel and Robin Kracht from the E-Commerce Institute have jointly revised and updated the work. Secure your copy now here as an eBook or softcover!
6. Customer Centricity – Customers at the Center
In e-commerce, the establishment and organization of long-term customer relationships is becoming increasingly important. The background to this is the high intensity of competition for the attention of online users. Strong competition increases contact costs and puts pressure on the margins of online retailers. Innovative companies have an advantage when it comes to organizing customer loyalty. They regularly find new solutions to inspire their customers and thus retain them.
While a high propensity to innovate reflects opportunities and potential due to technological progress, the Customer Centricity factor is a response to the high level of transparency in the online channel. Information, ratings and user comments are available without restriction at all times, so that those companies that give high priority to excellent customer experiences are rewarded.
6.1 Delimitation
Customer centricity can be described as a strategy and orientation of the corporate culture in which the focus is placed on the customer groups with the highest earnings potential (Billy 2019, p. 175 ff.). Due to the narrower focus on individual customer groups, a higher level of customer loyalty can be achieved than with a general customer orientation. In turn, the narrow focus on individual customer segments enables a customer-centric company to increase its value creation.
In the customer-centric company, the role of transparency in the online channel requires that customer reactions to service processes be recorded and analyzed immediately. The results of these analyses are then used in the short term for changes and adjustments to products, service processes, and also business models.
Thus, Customer Centricity does not mean – as is sometimes assumed – a mere increase in customer orientation. Since customer orientation is to be expected in saturated markets from all companies in competition, there would hardly be any difference in quality associated with such an understanding of customer centricity. However, Customer Centricity differs from Customer Orientation precisely in the higher and more significant relevance of customer reactions for the decision-making processes of the company. While customers are a means to an end in product- or shareholder-centered companies, the lasting satisfaction of the most important customer groups is the raison d’être of the company in customer-centered companies.
Example
From the early years at Amazon, it is reported that founder Jeff Bezos had an extra chair placed in the room to establish a culture of customer centricity at meetings – “for the most important person in the room – the customer” (Baldacci 2013).
Customer centricity thus leads the company to a continuous improvement process, which is necessary to sustainably incorporate customer reactions into processes and products. The focus is on the customer experience (user experience), the quality of which is reflected in measurable customer reactions. However, Customer Centricity can only succeed with specialization. Therefore, segmentation, i.e., the differentiation of target groups into homogeneous subgroups, is an inevitable part of Customer Centricity.
6.2 Requirements
The importance of customer centricity in e-commerce arises because the interplay of customer segmentation, measurement of customer responses, and integration of resulting insights into service processes and products can be orchestrated primarily on digital platforms. Digital platforms are significantly superior to non-digital processes, particularly in capturing usage by definable customer seg- ments and the associated customer response. This high level of transparency on digital platforms is also the main reason why digital platforms increasingly dominate marketing processes.
