Outlines and challenges of customer orientation
Customer orientation is an old hand in the young management literature. The concept appeared a little more than 30 years ago1 and has been attracting the attention of researchers, consultants and managers ever since.
1.1.1. Customer orientation framework
1.1.1.1. Customer and market orientation
The notion of market orientation was first proposed in the academic literature, whereas a more managerial literature would later more easily refer to the term customer orientation. Market orientation has historically been defined on the basis of three pillars: customer focus, broad involvement of different departments in the company and profitability (Kohli and Jaworski 1990, p. 3).
Here the preferred term “customer orientation” seems to be more anchored in reality and pragmatic. While the invisible hand of the market does not need to be tightened, on the other hand, many customers will judge one by one’s handshake! Nevertheless, a full and true customer orientation must also integrate competitive issues and more broadly a set of stakeholders that will be presented throughout the book.
1.1.1.2. Customer orientation between cultural and behavioral approaches
The literature on customer orientation has been built around two approaches that are more complementary than truly opposed: the cultural approach and the behavioral approach. The cultural approach speaks of a state of mind, values, beliefs and attitudes, rituals and even a philosophy, centered on the customer in order to create maximum satisfaction and achieve the ultimate goal of long-term profitability2. The behavioral approach is more operational and focuses on understanding the conditions for implementing this orientation. It questions the organizational behaviors to be implemented, the organizational and managerial structure to be put in place and the actions to be taken to make this orientation effective3. More specifically, we are looking at the conditions that will enable the organization to understand the market, to anticipate its changes and to respond favorably. Information is at the heart of this behavioral approach: the collection of information, its dissemination and its translation into strategies, decisions and actions.
Today, we find these two questions in the company: how to spread an actual customer culture within the organization and also how to implement strategies, actions and behaviors that are truly customer oriented.
1.1.2. Benefits of customer orientation
Customer orientation is an investment for the company. Specific resources will be mobilized to implement this new orientation. Disseminating a strong culture within the company, listening to the customer, collecting and analyzing information, relaying it and building offers that take this information into account are all direct or indirect investments for the company. The question of return on investment is legitimate. Does customer orientation have a positive impact on the company’s performance? Will this investment in customer orientation really be profitable? Will it allow the company to really build a sustainable competitive advantage? Will it be a means of differentiation from the competition? These are all questions that can be asked at the overall level of the company to validate a customer orientation, as well as for managers who wish to implement this orientation in their area.
1.1.2.1. Customer orientation and company performance
The impact of customer orientation on factors such as return on investment (ROI), sales volume, market share and sales growth was quickly identified. Studies based on different methodologies have validated the link between customer orientation and performance, including:
– a meta-analysis of 114 empirical studies (Kirka et al. 2005): the results of 114 empirical studies on the effects of market and customer orientation on performance were analyzed. The results show that market and customer orientation have an impact of 20% on a company’s ability to innovate, 10% on its market share and 7% on its profits and sales;
– a longitudinal study over three periods (Kumar et al. 2011): the observation of the same sample of companies, in 1997, 2001 and 2005, showed that the first companies to have adopted a market orientation benefited from an impact that was twice as strong on their sales and profits, compared to companies that adopted this orientation later;
– an analysis based on a sample of 7,500 French companies (Pekovic and Rolland 2012): the relationship between customer orientation and EBITDA per employee was highlighted. The relationship appears to be stronger the more the company operates in a competitive, growing and uncertain market.
If we consider the strategic dimension of company performance, it is widely accepted that market and customer orientation have an important impact on building a sustainable4 competitive advantage. It is by keeping abreast of what customers expect, how their preferences evolve and change, and by disseminating this information widely internally, that the company and its members can identify the resources needed to build the value expected by the markets, and thus maintain a sustainable competitive advantage. By going beyond the simple observation of current customer expectations, and by asking questions about the evolution of these expectations, the company puts itself in a position to capture latent market expectations more quickly than its competitors and thus to strengthen its competitive position over time (Narver et al. 2004).
1.1.2.2. Customer orientation and its impact on the customer
Customer orientation can be expected to trigger positive attitudes and behaviors from the customer. Customer satisfaction is of course the most important consequence of customer orientation. As a corollary to this satisfaction, the customer’s positive word of mouth is more active and thus has an impact on the company’s reputation. Customer loyalty is also easier to build from a stronger customer relationship (Mullins et al. 2014). Knowledge of markets, consideration of customer expectations and preferences makes it possible for the company to develop and perform better services (Hartline et al. 2000).
The employee, immersed in a customer-oriented culture, should more naturally engage in building strong and lasting relationships with the customer. It is the values, attitudes and behavior of the customer-oriented employee that will increase the customer’s trust and encourage the latter to behave cooperatively with the service provider (Poujol and Siadou-Martin 2012). It is, therefore, not surprising that customer orientation is an approach that is now in demand in the sales context (Julienne and Banikema 2017).
1.1.2.3. Customer orientation and its impact on the employee
From a more social perspective, a number of empirical studies have sought to establish a relationship between a company’s customer orientation and the work attitudes of its employees. These studies have focused on variables such as job satisfaction, organizational commitment and involvement. Strong links between customer orientation and these variables have been consistently shown. Customer orientation would build esprit de corps among employees, greater job satisfaction as well as greater commitment5.
1.1.3. Implementing customer orientation
While it is clear that customer orientation is a relevant strategic approach, the challenge is to implement it within the company. A gap may exist between what the company says about its customer orientation and what its customers say about it.
When
