The focus of this edition of the John Keells IT CXO Disrupt series was on the importance of customer centricity in driving digital-first strategies led by Ramesh Shanmuganathan, Executive Vice President and Group CIO of John Keells Holdings PLC and Chief Executive of John Keells IT, together with Kamal Kanth Tummala, Vice President of Salesforce.
In today’s business landscape, the “Customer First” approach is crucial due to increased competition and the abundance of options available to consumers. Prioritizing customer needs not only helps businesses stand out but also fosters loyalty, as satisfied customers are more likely to return and recommend a brand. Furthermore, personalization has become essential; consumers expect tailored experiences based on their preferences. Listening to customer feedback provides valuable insights for continuous improvement in products and services, while positive experiences contribute to a strong brand reputation, especially in the age of social media where reviews can spread rapidly. Additionally, retaining existing customers is often more cost-effective than acquiring new ones, leading to higher profitability over time. Ultimately, a customer-first mindset encourages businesses to be agile and responsive to changing market demands, driving long-term success in a competitive environment.
The ensuing deliberation was built on this premise and excerpts of the discussion follow, and we begin with Ramesh and Kamal explaining what it means to be customer-centric in a fast-digitalizing world:
Kamal: Let me share a story my dad told me when I was a kid that has stuck with me. When I was 10, he gave me this example: if you go to a pharmacy to buy paracetamol, you might visit two different stores. At the first store, you simply ask for the medicine, pay, and leave. At the second store, the person behind the counter greets you with a smile, asks how you are, inquires about school, and even asks about your family. You pay the same amount and go home with the medicine, but next time you need medicine, which store would you choose?
This story teaches an important lesson about customer relationships. The store that takes the time to engage with you creates a better experience, making you more likely to return. This principle applies to any business, especially in today’s digital world. The more you know, relate to, and engage with your customers, the stronger the relationship becomes. Being proactive in understanding your customers and making them feel valued is the essence of putting the customer first.
Ramesh: With digitization, we’re seeing a decrease in the degrees of separation between people. What used to be five or six degrees is now often just two or three in the digital world. This shift has given consumers more power, as they now have access to the same information as sellers.
Consumers have become “prosumers,” producing and consuming content, and each has their sphere of influence. For example, my LinkedIn reach might be 25,000 at first but extends to about 25 million by the third degree. This exponential reach in the digital space is far greater than the linear reach possible in the physical world.
This gives consumers immense power as they have the same access to information as businesses. Customer centricity is crucial when consumers can easily compare and contrast brands based on peer recommendations rather than just marketing. In the digital world, focusing on the customer is more important than ever because both positive and negative feedback can spread rapidly. Negative feedback, in particular, can quickly damage a brand’s reputation, so organizations need to prioritize customer centricity and ensure positive experiences to protect and grow their brands in this fast-paced environment.
What are the implications for traditional brick-and-mortar businesses given the clear shift to digital?
Kamal: While it’s great that sellers and buyers now have access to the information they need, the key is how that information is used. To target customers effectively, you need to understand their demographics, segment them by age groups and consider other factors like gender.
Understanding behaviour within each segment is essential. For example, younger customers (10 to 30) may spend more time on digital and social media, where they consume content that influences their purchasing decisions even before they step into your store or visit your website. By the time they engage with your business, they’re often already knowledgeable about the product through reviews or online influencers. This means you’re not introducing the product to them for the first time; you’re reinforcing what they already know and persuading them to choose your product.
As an organization, you must be prepared to understand the different customer segments likely to buy from you. Analyzing data on when, why, and how often customers buy can provide valuable insights. Over time, this data can be used to predict customer behaviour and identify the best moments to engage them.
Additionally, understanding sales trends, such as dips in certain quarters or increases during festive seasons, allows for more accurate demand forecasting. By anticipating these fluctuations, you can better prepare your strategies to sustain or increase sales during key periods.
Ramesh: COVID-19 taught many businesses that relying solely on physical stores and channels are no longer sustainable. An omnichannel presence, including a strong digital footprint, is now essential. This shift has led to increased disintermediation, especially with the rapid growth of marketplaces and digital ecosystems, as we’ve seen in India.
Today, a company’s unique selling point (USP) isn’t just its product or service but the experience it offers. For Gen Y, Z, and Alpha consumers, loyalty stems from the experience rather than the product itself. Customer centricity is vital because creating a unique and personalized experience requires a deep understanding of the customer’s personality.
Personalization goes beyond generic segmentation; it’s about recognizing and catering to individual preferences. For instance, if a hotel knows a repeat guest is vegan and proactively meets their dietary needs, it significantly enhances the customer’s experience. Such attentiveness makes customers feel valued and understood.
In the digital world, personalization is even more crucial, as every interaction and piece of data can refine the customer experience. This provides businesses with an opportunity to differentiate themselves and disrupt traditional brick-and-mortar models by delivering highly tailored, memorable experiences both online and offline.
Why is repeat clientele important for a business?
Ramesh: It’s well-known that acquiring a new customer is more expensive than retaining an existing one. However, the concept of loyalty is often misunderstood. It’s not just about customers being loyal; it’s about creating stickiness. Stickiness happens when customers feel valued and cared for, recognizing that the business is consistently working to improve their experience with every interaction.
For example, if you go to a shop and one salesperson simply hands you a product without much engagement, while another takes the time to interact with you and show genuine care, you’re likely to prefer the latter. It’s less about traditional loyalty and more about feeling personally connected and valued.
This desire for personalized experiences drives consumer behaviour today. Even low-cost carriers, which operate with no frills, differentiate themselves through exceptional customer service. Their strategy focuses on enhancing the customer experience and ensuring positive interactions, emphasizing the human element in building strong customer relationships.
Kamal: To add to that, based on my experience, a customer who stays with us for five years can generate up to 12 times more business. It starts with a baseline in the first year, but over five years, the value of that customer grows significantly.
What does this 12x growth mean for a business? It means that as we develop new services, it becomes much easier to sell these offerings to existing customers, boosting revenue and enhancing customer loyalty. Retaining customers is often more profitable than acquiring new ones, as long-term customers contribute significantly to both revenue and profit.
Long-term customers are also more likely to refer others, expanding your customer base. They can act as a test market for new products, providing valuable feedback. This is crucial for a growing organization because it relies on customers who are genuinely engaged with the brand.
Can any business deploy technology to create personalized services, irrespective of size?
Kamal: Absolutely, anyone can do this. Take the example of a boutique that rents out clothes for special occasions. When a customer comes in, like I did to rent a suit for an award function, the boutique collects my information—preferences, anniversaries, birthdays, and family details—all with my consent. They use this first-party data to create personalized experiences.
For example, on my birthday, they might suggest an outfit for dinner and even partner with a restaurant to offer a discount. So, if I rent from them, I could get a deal at a place like Chutneys at Cinnamon Grand. This strategy not only builds a customer ecosystem but also encourages repeat visits.
By using the information they gather to offer tailored suggestions, like a dinner for two at a nearby restaurant for my wife’s birthday, the boutique increases customer loyalty and engagement. This approach creates stickiness and builds lasting customer relationships.
Ramesh: Today’s supply chain is becoming more digitized, allowing businesses to operate without holding inventory. To effectively serve customers, it’s more about having the right data on customer preferences. For example, instead of stocking suits, a business could work with a local tailor to stitch a suit within 24 hours based on customer data.
We see this trend in many brick-and-mortar stores in places like Singapore and Thailand, where you can quickly have a suit tailored. If this level of personalization is scaled, it can significantly enhance business success. A strong digital presence and a brand that offers personalized services can boost customer loyalty and drive growth.
One of the concerns for businesses today is the ethical use of data. How should an organization navigate this landscape while maintaining customer-centricity?
Ramesh: That’s why it’s crucial to have the right tools and platforms. While you might be aggregating data responsibly, it’s equally important to manage, store, and govern it properly. Tools like SAP and Salesforce are key, especially for consent management.
Consent involves asking permission to collect and use someone’s data, potentially sharing it to create value. This is vital for personalization and customer-centricity today. Customers consent to data collection because they value personalized experiences, but they also expect their data to be used responsibly and ethically.
For example, a supermarket can use point-of-sale data to understand consumer patterns, such as household income or demographics. While this data can provide valuable insights, it also has the potential for misuse. That’s where consent is essential, ensuring data is used appropriately and for its intended purposes.
Data protection laws help safeguard consumer interests and encourage responsible data aggregation. However, businesses still need tools to securely store this data and use it ethically, ensuring it isn’t compromised or misused.
Kamal: At Salesforce, we use something called the Einstein Trust Layer to ensure data privacy and consent. As Ramesh mentioned, it’s crucial to gather necessary data in a way that respects customer consent. While public AI models are widely used and beneficial, organizations must ensure these models learn only from public data, not from proprietary company data.
When implementing AI systems and tools, it’s essential to have a protective layer that differentiates between publicly accessible information and the private data held by your company. This private data often includes sensitive information collected with customer consent and should not be shared externally. The Einstein Trust Layer helps protect this data, keeping it secure within the organization.
Data privacy regulations, like GDPR in Europe and similar laws in India and other countries, are increasingly enforced as the importance of data protection grows. As data usage expands, organizations must implement strong safeguards to maintain trust and compliance, ensuring sensitive information is controlled and protected within their boundaries.
How should these organizations approach enhancing their CRM capabilities? Can they simply purchase an off-the-shelf product, like Salesforce, and integrate it with their existing systems and data?
Ramesh: The key is to consider the organization’s maturity level. Many companies have transaction data, which is mostly historical and reflects past actions. However, to serve customers effectively today, it’s crucial to identify emerging patterns that can predict future behaviour. This is the foundation for creating a customer identity. Without this, building a comprehensive profile or a 360-degree view of the customer is impossible.
Tools like Salesforce can help organizations understand customer demographics and behaviours by aggregating data from both internal and external sources. For instance, by analyzing data from social media, businesses can identify patterns and preferences. If a customer frequently searches for culinary content, the company could suggest recipes or promote relevant products, like specific supermarket ingredients.
The digital world offers vast opportunities to reach customers. Unlike in the past, when a customer had to visit a store for their needs to be known, today, online behaviour can reveal intent, allowing businesses to respond proactively. This underscores the importance of investing in digital platforms, which provide numerous opportunities to engage customers and build deeper relationships. These opportunities can only be realized by being present where the customer is.
Kamal: Every organization, like individuals, has a system of record. In a small business, this might be a simple ledger or notebook. A slightly more advanced business might use spreadsheets on a laptop or desktop. More complex organizations might have a system of record like an ERP (Enterprise Resource Planning) or a small MRP (Material Requirements Planning) system, often referred to as a Management Information System (MIS). Larger organizations have even more sophisticated systems.
A system of record is static—it stores data but doesn’t actively utilize it. The question then becomes, “When do I automate, and how do I use this data effectively?” This is where an engagement layer, like a CRM such as Salesforce, is essential. It leverages the data from your system of record to create meaningful customer interactions.
Organizations need to determine how much they can handle and where to begin. Digitally mature organizations might take a comprehensive approach, addressing multiple areas at once. Less mature organizations might focus on solving a specific issue first, like increasing lead conversion rates or improving customer service. For example, if customer service is the primary concern, they could aim to improve interactions with existing customers and boost retention.
As the organization grows and serves more customers—transitioning from managing 20 customers manually to needing systems for 2,000—the need for automation and engagement tools becomes increasingly important. The key is to understand your customers, use the data you have, and implement the right tools to enhance customer engagement and address specific business challenges.
Ramesh: To provide some context, an ERP (Enterprise Resource Planning) system typically sits at the core of an organization. It manages internal operations and enhances efficiency. Beyond the ERP, supply chain management systems handle your supply network, while CRM (Customer Relationship Management) systems focus on reaching out to consumers and managing customer relationships.
Digital transformation often begins with the ERP, which streamlines internal processes. However, CRM is crucial in the digital landscape because it is the primary tool through which customers interact with the business. It enables companies to adopt a customer-centric approach and personalize services, making it a vital platform for effective customer engagement.
How crucial is customer-centricity for businesses that operate on digital platforms? Is it more important for them than for traditional businesses operating in the same area?
Kamal: Customer centricity isn’t just a digital concept; it’s essential for everyone in today’s world. Consider the average person on the street—how do they spend their time? Whether they’re at work or watching TV, much of their attention is on their devices. Consuming content and using digital tools has become an integral part of daily life. Now, we conduct secure activities like financial transactions, checking in for flights, and accessing boarding passes, all through our mobile devices.
As digital technology becomes more ingrained in customers’ lives, organizations need to have a presence both online and offline. Even if you are a brick-and-mortar business, you must also have a digital footprint to stay relevant. This concept is often referred to as “phygital,” blending the physical and digital worlds. If businesses aren’t adapting to this shift, they’re missing where their customers are moving.
Ramesh: A good example of centralization, decentralization, and democratization in technology is how we use our mobile phones today. For instance, I can log into Amazon, buy a product, pay through PayPal, and have it shipped via DHL—all from one device. This shows that the traditional concept of a value chain has evolved into a value ecosystem. We temporarily assemble a network of services to fulfil a need at the moment of consumption.
The power of technology today is that it brings all these capabilities together in a single device. However, behind the scenes, there’s a complex network of operations at play. To navigate this crowded marketplace, where everyone is competing for attention and spending, customer centricity is more crucial than ever.
With 8 billion potential customers and the reach of digital platforms, anyone, anywhere, can sell to the entire world. This presents both an opportunity and a challenge for businesses today. In the digital landscape, focusing on the customer is essential because acquiring and retaining customers is key to business growth.
What challenges do you think Sri Lanka might face as it undergoes a similar transformation?
Ramesh: The biggest challenge I see in Sri Lanka is that many people still rely on cash. However, as digital wallets gain traction with banks going digital and launching their wallet services, one key element still missing is a national digital identity. If a digital ID system were implemented, similar to India’s Aadhaar, we could quickly see widespread adoption of digital wallets. The government could even require a digital wallet for transactions, much like how Aadhaar is linked with UPI for payments in India.
In such a system, your digital identity would be connected to a wallet ID and a payment ID, which would significantly drive the adoption of digital payments. Currently, many transactions are still cash-on-delivery, making cash a persistent issue. Once digital payments become a standard part of daily life in Sri Lanka, we could see significant growth in digital commerce, making tools like CRM even more essential for businesses to eliminate points of friction in customer journeys and drive personalized experiences that are sticky.