Customer Centricity: Focus on the Right Customers for Strategic Advantage

by Peter Fader

A powerful call to action, Customer Centricity upends some of our most fundamental beliefs about customer service, customer relationship management, and customer lifetime value

NOT ALL CUSTOMERS ARE CREATED EQUAL

Despite what the tired old adage says, the customer is not always right. Not all customers deserve your best In the world of customer centricity, there are good customers…and then there is pretty much everybody else.

In Customer Centricity, Wharton professor Peter Fader, coauthor of the follow-up book The Customer Centricity Playbook, helps businesses radically rethink how they relate to customers. He provides insights to help you

Customer Centricity will help you realign your performance metrics, product development, customer relationship management and organization in order to make sure you focus directly on the needs of your most valuable customers and increase profits for the long term.

ALSO Once Fader convinces you of the value of customer centricity in this book, The Customer Centricity Playbook, with Sarah Toms, will show you where to get started.

“Reveals how to increase profits from your best customers, find more like them, and avoid over-investing in the rest….Decidedly accessible and absolutely necessary.”
―Jim Sterne, Founding President and Chairman, Digital Analytics Association

“Perfect read…It’s short (60-90 minutes), clear, and the best summary I’ve read of why companies should rethink their approach to customers.”
―Andrew McFarland, SVP, Chief Customer Officer, Black Box

“Knowing what your customers are worth is the secret to focusing your time and money where it makes the most difference. You can’t be all things to all people, so you need to learn to find out who really matters to your success. Fader makes it clear with great ideas and a readable style.”
―Andy Sernovitz, author, Word of Mouth Marketing

THE WHARTON EXECUTIVE ESSENTIALS SERIES
The Wharton Executive Essentials series from Wharton Digital Press brings the ideas of the Wharton School’s thought leaders to you wherever you are. Inspired by Wharton’s Executive Education program, each book is authored by globally renowned faculty and filled with real-life business examples and actionable advice. Wharton Executive Essentials guides offer a quick-reading, penetrating, and comprehensive summary of the knowledge leaders need to excel in today’s competitive business environment and capture tomorrow’s opportunities.

Genres: Business, Nonfiction, Management, Entrepreneurship

128 pages, Paperback

First published May 1, 2012

About the author

Peter S. Fader is the Frances and Pei-Yuan Chia Professor of Marketing at The Wharton School of the University of Pennsylvania. His expertise centers around the analysis of behavioral data to understand and forecast customer shopping/purchasing activities. He works with firms from a wide range of industries, such as telecommunications, financial services, gaming/entertainment, retailing, and pharmaceuticals. Managerial applications focus on topics such as customer relationship management, lifetime value of the customer, and sales forecasting for new products. Much of his research highlights the consistent (but often surprising) behavioral patterns that exist across these industries and other seemingly different domains.

In addition to his various roles and responsibilities at Wharton, Professor Fader co-founded a predictive analytics firm (Zodiac) in 2015, which was sold to Nike in 2018. He then co-founded (and continues to run) Theta Equity Partners to commercialize his more recent work on “customer-based corporate valuation.”

Fader is the author of Customer Centricity: Focus on the Right Customers for Strategic Advantage and coauthor with Sarah E. Toms of the book The Customer Centricity Playbook. He has been quoted or featured in The New York Times, The Wall Street Journal, The Economist, The Washington Post, and on NPR, among other media. In 2017, Professor Fader was named by Advertising Age as one of its inaugural “25 Marketing Technology Trailblazers,” and was the only academic on the list.

Reviews

[Camille Fabre · Rating 2 out of 5]

Peter, a marketing professor at Wharton, is a specialist of customer analytics and has spent his academic years on research on customer data and statistical models. Unfortunately none of his research is reflected in this book. Peter Fader defines customer centricity as a strategy that aligns a company's development and delivery of its products/services with the current/future needs of a select set of customers. We are more familiar with the product-centric model, the best example of this strategy being Apple. The authors defends his theory that customer-centric companies will be the ones which will enjoy the maximum growth and generate the most value for their shareholders in the years to come. However transitioning from a product-centric to a customer-centric company is a difficult process as it requires huge changes of the financial and organizational company structure. While I found the thesis interesting, I could not find enough evidence in the book to support the author's point of view. Customer centricity lacks terribly of precise facts (except the Nordstrom example that appears 5 times in the first 40% of the book) and numerical data. While I appreciate that the author wanted to make his work accessible outside an academic circle, it does not mean that casual readers do not deserve to be presented with some rigorous analysis.

[Geoff · Rating 3 out of 5]

More of a "why you should care" book than a "this is how to do it" book.

[Kirsten O · Rating 1 out of 5]

Was immediately turned off when he made a sweeping generalization about my generation backed up by a single anecdote: "I have two teenage children, so I can speak with authority when I say today's kids are spoiled. They are the most demanding generation the world has ever seen.... They have no patience whatsoever, they want what they want immediately. And they don't care how they get what they want, as long as they get it when they want it and in the format they want it."

Pretty sure you just described your own generation were was so gluttonous for money you crashed the world economy knowing full well what you were doing didn't make any sense and wasn't sustainable.

[Jeffrey Jose · Rating 2 out of 5]

As someone who took the in-person classes with Fader at Wharton, this book is nowhere near the quality of his course. I knew not to expect math (which Fader does it excellently in his classes btw) but even the main thesis of heterogeneity wasn't made forcefully enough in the book.

[Lukas Vermeer · Rating 2 out of 5]

Customer centricity is a misnomer. Customers are not at all central to customer centricity; maximizing business profits is. It is capitalism taken to a logical extreme: humans reduced to numbers to optimize against.

This book is totally devoid of evidence (and references), any mention of causality or incrementality, and any regards for humanity or ethics. Some of the (anecdotal) examples used directly contradict the arguments they are intended to support.

Fader does a decent job of explaining what he believes, but fails utterly to convince me that his beliefs have merit.

The good: it’s a short read.

[Mohammed Zaitoun · Rating 2 out of 5]

Very general not specific
Exaggeration of customer centricity
Not explaining really how to do it

[Nirupama P.R.V. · Rating 4 out of 5]

This book was good and a little disappointing for varying reasons.

Good:
This audiobook is good to handy to hear and well formatted with intonation and modulation to make interesting for the audio format. Both with regards to holding attention and being easy to follow.
I picked this book to learn a bit more about customer centricity. It does so. It also touches on things like Customer Lifetime Value and case studies, allied concepts like product centricity and so on. All explained well with examples and even a few easy to follow formulae. Definitely another plus for the audio version and content.
Lacking:
I picked the book as I had enjoyed DrFader's MOOC on Marketing. Clearly, my expectations were a Bit high. I had expected the same info packed practical content. This one is not. It is more theory and does not have too many concrete steps. So it will fall short of how to judge those "Ideal" customers, what to do to acquire and keep them and so on.

Overall a good primer on customer centricity and allied concepts- but more theory and business ideas than actionable insights.

[Michelle · Rating 4 out of 5]

There are so many fun and counter-intuitive examples in Prof. Fader’s probabilistic marketing models class that I’m quite disappointed how few of them show up in the book. The book feels unnecessarily dumbed down for the marketing executives when more marketers are becoming data-savvy.

[Gen Larocque · Rating 1 out of 5]

This book felt like a fluff piece - a surface-level assessment that you should partake in customer-centricity (in fact, you’re a fool not to!) but not why nor how. It was thankfully a quick read, but was thoroughly disappointing, for multiple reasons:

- The book offers very little facts to prove the author’s theory around the long-term benefits of customer centricity. There is no evidence to back the ROI of a drastic organizational overhaul such as the one required by consumer centricity if you want to “do it right”.

- Peter Fader obviously has skin in the game when it comes to this topic but infused none of his knowledge into this book. I WANTED the mathematical equations and the link between RFM and CLV he mentioned from a separate publication. I felt like I was served smoke and mirrors.

- There were lots of repetitive concepts and confusing paradoxes that do nothing to help further the author’s point around the benefits of customer centricity. “Customer centricity is essential, but not all companies should do it”. “Only care about the most important customers, but don’t discard the rest”.

- The book also reads like a one-hour university lecture with lots of interjections from the author which I typically enjoy, but in this case further contributed to the confusion as they were only acknowledgements of the confusing nature of the concepts with little to no explanations or solutions offered to help the mental exercise of making sense of these paradoxes.

- Finally, while the preface acknowledges that this book is meant as a Time Capsule of sorts, the lack of adaptation to the text made it that the book didn’t age well. Surely in the past 20 years, enough companies have adopted customer centricity in a significant enough way to provide the reader with tangible and relevant examples and benefits of the practice. It felt old, impractical and soft.

Don’t waste your time reading this book. The learnings of this book can fit in a page:

- Not all customers are created equal and therefore shouldn’t be treated as such
- Adopting customer centricity requires a drastic organizational overhaul
- Not all companies are well-suited to embrace customer-centricity
- To identify top customers, use CLV to predict individual contributions to profitability (don’t fall prey to defining CLV as a customer’s past contributions)
- Customer equity is the sum of all CLV. Your goal is to maximize this value.
- Proper CRM processes and infrastructure are required to activate the concepts behind customer centricity on an ongoing basis, in a systematic way.

UPDATE: Skip this book and go straight to "The Customer Centricity Playbook" by the same author - which gives more practical examples and reiterates the notions of this book with less 'fluff'.

[Paul · Rating 4 out of 5]

This book reads like a manifesto with a vision and general strategic point of view on what customer centricity is, what it means and doesn't mean, etc. It is NOT a how-to guide.

If you're in the business of data-driven digital marketing, paid media targeting, relationship management, personalization via machine learning, you'll find this book short on real world application, but you'll appreciate this author is as a strategist and evangelist of your spaces (it's written in 2012) and perhaps someone who can help us all stay focused on the purpose and mindset for finding, collecting and using data to better understand and serve the customer.

Key takeaways:
1. There are two high-level approaches to making money in business: (1) the product-centric way and (2) the customer-centric way. It seems that the former is more reliable but the latter, if it works, can differentiate your business from the rest and save it from commoditization.

Also, the customer-centric approach seems to be the primary approach for marketers these days anyway, at least in my world. Meaning, once the product is more or less set, the marketer's goal is to acquire, retain and boost the frequency of customer transactions.

2. The customer-centric approach is about identifying the "right" customer and focusing your time on this person and leaving your other customers to fend for themselves, more or less. I'm exaggerating, slightly.

2. CLV is the key to unlocking a customer-centric system, but Fader's way, not the traditional CLV calculation. He is short on explaining the calculations.

3. You have to create a heterogeneous set of profiles of your customer, by segmenting the customer base into different CLVs.

4. CRM is critical for CC to work, but the author thinks the practitioners think of CRM as an end in itself and not a means to end.

[Lawrence Chen · Rating 2 out of 5]

I have to say I am absolutely disappointed. I admire wharton. therefore, I am bias Wharton press is way better than Harvard press.
As a book lover plus BN premium cardholder, is can have almost all ebooks for free or big discount. but just like a pilgrims to the god, when I buy books from Wharton, I prefer full price.
well, for this one, it is a waste, horrible writing style. I suggest Peter go back to learn business writing during undergrad. he took 39/120 before he even touch the theme. after that, his again start his theme drift. furthermore, no reliable evidence to support his finding. besides, he said IBM is a typical customer centricity. I just think what he is really talking about called"Vertical integration". A player combine all software, hardware, service and customer needing customization. however, IBM almost fail from this mode, they got 24% margin at their least money making department (PC Division, 24% from 2004 IBM annual report) but they still lost some bucks. therefore, if Prof. fader is talking about VT, that would be a dinasour. As for Nordstrom example, as we utilize AI and day collection, we can custize for some people. well, this bopk really disgusted me. So I left 2 stars, one is for Wharton after all, one star is for the book. Do not buy it, it worth less than a dollar instead of 17 bucks.

[Danique · Rating 3 out of 5]

I heard about customer centricity when I did my master's degree two years back. It should be a new way of marketing, something a marketer should know about, so I thought it would be a good book to listen to. However, it is written in such an American "superiority" kind of way that it bored me to death. The first chapters are all about how the old way is bad and he states constantly that customer centricity is the new way, however never gives examples of how it works better for certain companies, what tangible things they learn. Only in the last 45 minutes this comes to light shortly, but not enough for my idea. He writes like someone with practical experience, but in the information he gives it looks like he never really implemented the strategy fully. So in that regard the book felt unfinished. The ideas are there and it sounds great, but the testimonials of practice aren't really there. It's been a couple of years, so I guess there are now practical examples, and I see he has written a follow-up, so maybe that helps to grasp the concept fully.

[Corey Burton · Rating 3 out of 5]

I appreciated reading this one from a professor leading an online course I’m taking at Wharton on Business Foundations. “No, not ‘the customer.’ But rather, their customers — a broad mix of individuals, with different needs to fulfill and different value to the company and different responsiveness to marketing action.”

Growing, but still understanding your customer base and the unique individuals, their cultures, experiences, backgrounds, and needs has always been an interest of mine, and learning more about it a decade + in education keeps me inspired. Knowing and valuing people on a highly individualized level, and operating at a pace that allows you to do so is a value that I hope to always ensure is a part of my life’s work.

[Gisela Peralta Mansilla · Rating 3 out of 5]

"Customer centricity more than anything else, is about targeting the right customers in the right way to generate the right results". Interesante libro pero debatible perspectiva. El autor te invita a la reflexión del valor de clientes antes del valor de la marca pero en una era digital con la tecnología que cambia tan rápido, aplicar una perspectiva cliente está más ligada a la transformación digital de la empresa (cultura y tecnología). Asimismo, este enfoque puede ser excluyente con algunos segmentos si solo se toma el valor del cliente a futuro sin ver el impacto en marca. En un mundo que enfoque sostenible el impacto también debería verse en la sociedad. En el libro también falta más aplicación.

[Hugo Baraúna · Rating 3 out of 5]

Great introduction

The book is a great introduction to the why and general concepts of customer centricity.

For example, it clearly differs customer centricity from customer service.

Also, if you watched professor’s Fader customer centricity module on his coursera’s marketing course, the book is a good follow on.

That said, the book is not good from a “know how” perspective, it’s more about “know why”. I’m looking forward to read his next book on the topic, hope it closes that gap.

[Niels Philbert · Rating 2 out of 5]

Hmm. I work with customer experience everyday. And I respect, that the author tries to define some of the superficial terms e.g. "Customer Centric". I just don't agree on the way he thinks about being customer centric. It's very narrow and the lacking depth of the book makes it seem simplistic and easy. And it's not easy. It's simple all right, but not easy. That's my experience.

There are better books on the subject: Seth Godin and Bernadette Jiwa as examples.

[Gabriel · Rating 4 out of 5]

I liked this book quite a bit but if I did have to find a critique, it would be that at times it felt like the core argument of the book, which is that spending a lot of energy on a few customers is a more effective strategy than spending a little energy on a lot of customers, does feel a bit beaten by the end. It's a great argument which the book does a wonderful job of relaying but it feels like a book that could have been an article.

A great read all around though!

[☃️ Quirk · Rating 4 out of 5]

Taken for what it is, I enjoyed this book. Heard a lot about customer centricity and thought the fundamentals were not at all what I was expecting.
1. Customers will all have different retention/spend distributions and should be marketed to differently.
2. Focusing on the right customers is more important than treating all customers the same. Brand equity and customer equity are different.
3. If you find a good idea even if it’s simple you can write a book and make a ton of money 😉

[Lucas Rodrigues · Rating 3 out of 5]

I learned about the author when taking the "Customer Analytics" course from Wharton in Coursera. I'm sure many people got really engaged by his way of teaching, and I'm a fan of his since then. This book brings relevant ideas about Customer Centricity that makes you think about the course of what's being done nowadays. It's a quick read and it opens the courtains of one's mind to the matter.

[Gustavo Lichtenberger · Rating 3 out of 5]

Good book- mostly common sense

This is a fairly quick read. The book is a bit superficial and brings a lot of common sense. The chapter on CRM is very relevant. Some people still think you buy the "system" or licenses and then wait for the magic.

[Gregg R. · Rating 5 out of 5]

This is one of those rare books that looks at a common issue from a unique and thought provoking perspective. It changed my perspective on my own customers, and which customers I should be focused on the most.

[wly · Rating 4 out of 5]

- customer lifetime value
- not every customer is equally valuable
- at the start you have to cater to everyone until you know who the valuable ones are
- every customer is unique
- not the same as customer service
- understanding the customer

[Hamilton Noel · Rating 3 out of 5]

I took Faders class at Penn and it was really eye opening and inspirational. This book was a good reminder of the principles he taught us but not quite as technical as I was hoping. Planning on reading some of his newer stuff

[Luciana Nunes · Rating 3 out of 5]

Um livro para quem quer entender mais sobre o pensamento por trás da tomada de decisão e experiência do usuário e explorar a máxima de que o cliente está sempre certo. Tem exemplos relevantes, porém achei pouco aprofundamento.

[moneer kilany · Rating 2 out of 5]

Very little value there

Very short read with Very little value - unbearable repetition of the same piece of information about customer centricity. Glorified the importance of the CLV concept but provided Very shallow explanation about it

[Tumi Ferrer · Rating 3 out of 5]

Nice read, but lacked tools for the reader to try the ideas in practise. The book could be read as a sales pitch.

[Ricardo Praelli · Rating 5 out of 5]

An amazing short read! I also believe that customer centricity is a must for many sectors.

[Irina Ioana · Rating 4 out of 5]

Basic introduction into product vs customer centered businesses. Basic CLV math and formula. Customer segmentation.

[Fernando · Rating 3 out of 5]

Basic concepts about customer service level, portfolio prioritization, CLV and CRM

[Alexander Holzmann · Rating 4 out of 5]

CLV.