I have already examined and explained the meaning of customer centricity for medical device companies in this post.
Here, I’ll focus more on how to transition from existing product centricity and traditional structural models to new ones that deliver what customers want.
Know that the first step toward a customer centric organization is understanding the difference between customer centricity & product centricity, and identifying issues & challenges.
These topics will be discussed in-depth as you read on.
Product Centricity Versus Customer Centricity
In the table below, I’ve listed some distinctive characteristics of the product centric and customer centric strategies.
| Product centricity | Customer centricity | |
| Basic idea | We sell product. Product push approach with little or no customer segmentation. | We serve customer segments. Tailored product offering based on diverse customer segments. Customer insight supports the entire company decision-making process. |
| Sales model | Transactional-oriented. How many customers can we sell the product to? Key metrics are new business volume and market share. | Relationship-oriented. How many products can we sell to this customer? Customer lifetime value management is a key metric. There is a clear focus on meeting the needs of profitable customer segments across their life cycle. |
| Distributor management | Distributor relationships driven by sales volume. Little involvement of the manufacturer in sales or post-sale customer activity. | Highly selective approach to distributors, driven by customer and distributor profitability. Full partnership approach with selected distributors with joined developed initiative of customer engagement. |
| Commercial structure | Product managers and product focused sales team. | Customer relationship manager and customer focused segment sales team. |
| Customer knowledge and customer relationship | It is considered a marketing thing. | It is considered a critical asset for the entire company. |
| Organizational focus | Internal focus. | External focus. |
| Positioning | Features and benefits. | Meeting individual customer needs. |
| Customer segmentation | Broad, undifferentiated offering, not specific to any distinct customer segments. One size fits all. | Clearly defined target segments based on a deep understanding of current and potential customer lifetime value. Tailored product offering. |
| Brand | Low brand equity among target customers (maybe known but not valued). | High brand recognition and strong positive associations among target customers, based on a reputation for customer focus. |
| People | No ownership of the customer within the organization. Compensation drives inconsistent behaviors. Customer-facing employees not adequately backed by supporting functions, lack of authority to solve customer’s problems at the point of contact. | Customer–centric culture accepted at all levels of the Organization. Customer insight is a key component of the company’s strategy. Employees take clear ownership for customer problems and manage issues through to resolution. |
Common Issues And Challenges
There are many issues and challenges to adopting a customer centric approach in the medical device business.
Keep in mind that the following list is based on my years of experience, but it cannot be considered as exhaustive.
1. Company Culture
Let’s begin here: The company culture plays a fundamental role in shaping how the strategy is implemented. In my opinion, companies where customer centricity is achieved show a central value i.e., every decision begins with the customer.
High Customer Centricity
Customer centricity means that employees from all the departments are customer advocates. Everyone shares information about the customer within the company, so the entire organization is aligned and in a better position to serve the customer.
Also, customer loyalty is considered important and seen as a long-term profitability driver.
Finally, the time spent with customers is considered a valuable activity and a source of key insight.
Low Customer Centricity
On the other hand, customer centricity is low if customer knowledge is limited to the marketing and sales departments and information is not shared through the organization. Moreover, in such organizations, marketing is seen more as a cost than an investment; therefore, marketing expenditure is reduced as soon as cost control is needed.
2. Company Structure
Customer Centric Company
The organizational structure of a customer-centric company presupposes that all the functions are well integrated and aligned to create and deliver superior customer value. The degree of customer centricity is a function of the integration and the development of the customer dimension of the organizational matrix with, for example, customer segment managers or customer-based units.
Product Centric Company
Conversely, in a product centric company, the organizational structure implies the functional silos defined by product categories. As such, the resources allocated are based on the type of product(s) being sold. The typical situation is each product manager pushing the sales force to sell the corresponding product or each sales rep promoting his product to the same customer without investigating what the customer’s needs are.
The challenges of moving from product-centric to customer-centric arise from the fact that functional differences are deeply rooted in the companies.
3. Key Performance Indicators
Developing and measuring customer centric metrics is important to track the transformation from product centric to customer centric. Typical tools are KPI that accurately estimate customer satisfaction, loyalty, advocacy, and price sensitivity.
The customer-centric paradigm requires changes in marketing metrics. For instance, these metrics should be modified in measures such as net promoter score, customer equity, and customer relationship management. And metrics like market share should be less considered.
4. Processes
The key challenges concerning customer-centric processes is developing the capabilities to optimally define the customer’s requirements to develop products and services that match these requirements. To achieve this, the company should be able to perform a deep analysis of the customer’s needs and address the increased customer heterogenicity.
Hence, the more a company can segment the customers into different groups with different needs and expectations, the better it can serve them.
To be customer centric, according to the desired degree of customer centricity, the organization needs to implement a number of processes. One of such is the multichannel integration process that includes all the customer touchpoints (sales rep, website, social media, customer support channels, congress, courses, training events, etc).
Another process is the information-management process. It comprises the data collection, data analysis, and the dual value creation process for the company and for the customer that is the base of the exchange.
Companies struggling to move towards a customer-centric approach have weak procedures to share customer information across departments and lack a diffuse culture around the customer’s needs. This needs to be corrected for things to work!
Obstacles To A Customer-centric Paradigm
In order to increase customer centricity, most of the challenges are within the perimeter of the organization.
Resistances are found typically in developing cooperation among the different departments, influencing the change of current practices, and implementing cross-functional initiatives with a focus on building customer value.
Some emblematic obstacles are:
- The lack of strong leadership commitment; for example, when the senior management declares customer centricity as a strategy, but day by day decisions go in different directions.
- Strongly rooted corporate culture where changes are not welcome and in which there is suspicion of ideas challenging the status quo. We have always done like this! Sounds familiar?
- Legacy systems, internal processes, and poor quality or inadequate customer data limiting many organizations in properly managing customer relationships.
- Poor integration of communication channels across different departments (sales, service, marketing, etc). Thus, preventing the delivery of a positive and brand-reinforcing customer experience at every touchpoint with the customer.
As the importance of digital channels continues to grow, MedTech companies need to define a strategy for integrating these touchpoints as part of their overall marketing and sales structure.
Conclusion
The pathway toward a customer centric organization requires; overcoming some obstacles and implies some challenges.
Becoming more customer centric has proven to be a slippery objective for many medical device companies. This is primarily due to a failure to understand and address one or more of the organization’s level issues and challenges discussed before.
Are you still working in a product centric or even technology centric medical device company? What are your takeaway points from this discussion?
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