Aquila Capital Partners

Austin &
New York City

Why Customer-Centric Organizations Stay Ahead in Business

The trend toward customer-centricity has been going on for decades and shouldn’t be treated as anything new. But it saw increased relevance during the pandemic. Businesses were suddenly in a sink-or-swim environment and developed entirely new models for how to serve their customers. This often involved pivoting their products and messaging to adapt during difficult times or get left behind. 

So what exactly does customer centricity entail? A customer-centric organization considers every aspect of the customer journey and anticipates customer needs beyond one single transaction. Every individual at a customer-centric organization understands that their contribution has an impact on the customer, and therefore, on the success of the business. It isn’t just about customer service, but understanding where the market is headed and how to best serve their customers’ needs.

What Makes Customer-Centric Organizations Different? 

The biggest difference between this and a product-centric approach? A customer-centric approach is not product-oriented, nor is it transactional. It requires more engagement. If your entire goal as a business is just to create a better product, you are not thinking about the environment that your customer lives in. And of course, many external factors can affect your success, which we will discuss below. 

In 2020, the way companies engaged their customers changed in the span of 24 hours. Companies had small digital footprints scrambled, re-doing websites, bolstering their ordering systems, or creating apps for a smoother ordering process. With COVID, businesses really had a chance to engage the customer directly instead of going through an intermediary. They could gather and track more data, take surveys, and see what methods worked and which didn’t, all in real-time. 

If you didn’t learn how to engage your customer directly in the last year and a half, you probably got left behind. Several companies thrived in this environment, while many more learned this the hard way—even companies in the same industry selling very similar products. Look at the three big sports apparel companies—Nike, Adidas, and Under Armour.  

How 3 Different Sports Apparel Companies Fared During the Pandemic 

Nike, Adidas, and Under Armour serve as three poignant examples of how companies operated in the new digital age to best serve their customers. Nike launched itself to a new level during the early stages of the pandemic. They were already set up to engage the consumer directly, so when lockdowns began, their customers knew how to find them online versus relying on an in-store experience. Their preparedness and accessibility to their target market set them apart from the competition—and the numbers prove it. One study found that “despite a 38% drop in total sales during the fourth quarter, Nike’s digital sales grew 75%. Meanwhile, the company’s Nike commerce app has been downloaded more than 8 million times since February (2020) while revenue through the company’s SNKRS app reached $1 billion for the first time in fiscal 2020. Nike also added 25 million new members in the fourth quarter with half coming from activity apps. Women also accounted for half of the new members.” 

Adidas—less prepared for the sudden shift to online-only shopping—saw a negative impact on their bottom line and was severely buffeted by the economic downturn of 2020. Their net income from continuing operations dropped by 97%, while their eCommerce revenue went up 35% with acceleration to 55% growth in March of that year. 

The reason for this? With most of its retail stores closed globally, the company scrambled to bolster its digital presence and overall sales, including an ambitious five-year recovery plan. The company’s digital transformation will be backed by over $1 billion in investments. Much of this is centered around eCommerce, direct-to-consumer membership programs, and digital campaigns. This is more than enough proof that the company is taking digitization seriously. 

There’s one company in the sportswear industry that was hit even harder: Under Armour. They were already struggling at the start of 2020. They missed sales expectations at the close of 2018, which put them on the rocky ground leading up to the pandemic. The reason for these poor 2018 numbers is likely due to ignoring trends. They were slow to digitize, leading to their loss in revenue before the pandemic—while Adidas and Nike sailed ahead, thanks to their social media success. One major demographic Under Armor lost out on was teens, in part, due to a lack of influencer marketing or major brand celebrity endorsements. Simply put—they weren’t serving their audience.

In August 2020, Under Armour announced that it would “reinvent” itself to best suit our new digital economy. But it was a little too late. They could not have picked a worse time to reinvent a failing brand. The economic state of our country and their sluggish adaptation to modern marketing tactics didn’t set them up for success. 

One thing remains certain for businesses globally: if you aren’t selling your product, what you are doing isn’t working. Those with a customer-centric approach are dedicated to finding and serving their customer base. Many businesses get too obsessed with creating and refining their product and lose sight of the fact that they need to view everything through the lens of their customer. You can’t build something and expect them to come to you. In the digital age, it’s all about figuring out where they are and removing any obstacles that will prevent them from engaging with your company. To succeed, it is imperative to become students of your customers and quickly adapt to emerging technologies. Companies that do this well will see financial benefits now—and well into the future. 

So what are the key lessons we can learn from these companies? You must build ways to engage your customer socially and digitally, not just when it is time for them to buy something. Secondly, you have to remove obstacles from your customers’ ability to purchase your product. Companies can no longer make excuses for not updating their systems. If you aren’t consistently updating ordering and payment systems, you’re already behind.

Third, make sure you optimize your website for mobile or consider making an app. Nike’s SNKRS app directly targets and serves sneaker fanatics, one of their most consistent customer bases. It provides insider access to product launches and releases. This creates a sense of exclusivity that is still accessible, caters to a target demographic within their existing audience, and finds new avenues to reach their customers.

Read more for additional insights from Mark E. Watson III