Survey: How Customer-Centric Are Malaysian Brands?
By Vase.ai and Prof Willem Smit, Assistant Professor of Marketing, ASB, and International Faculty Fellow, MIT Sloan | Thought Leadership, Marketing
ASB x Vase.ai Study on Customer Centricity in Malaysia 2021
The world has been in constant turmoil for much of this past year, the first five weeks of 2021 has been a rollercoaster full of unusual events. We’ve developed a deeper sense of empathy toward one another as many of us share similar experiences during these trying times. From a siege on the US capitol, to the dramedy of the Gamestop/Robinhood chaos, to blockchain currencies fluctuating erratically thanks to Elon Musk, more than ever, there is a large sense of unpredictability within the business world. A few of the most critical stakeholders and allies in navigating 2021 are our customers: putting current and prospective customers first in all of the strategic decisions. And 2021 can be the year to prove the true value of Customer Centricity
What does this all mean for Malaysian companies? What is customer centricity and how do we organize it? To get a deeper understanding on how firms perform, Asia School of Business (ASB) and Vase.ai have recently partnered together to run a Malaysian Customer Centricity Study.
Method: How do we measure Customer Centricity?
Together, we ran a survey based on well-cited studies conducted in the US, Germany, Netherlands, Australia, and Italy. Besides measuring the Market Orientation and Customer Centricity, the survey is also based on (1) the Influence of the Marketing Department, (2) the capabilities of the Marketing Department, (3) the connections with the Top Management Team, and (4) the degree of collaboration with other departments, such as Sales and Finance.
We have received 37 valid reports from 12 Conglomerates, 15 MNC subsidiaries and 10 SMEs. These companies operate in many (23) different industries, ranging from Construction (5), Property (4), and F&B (4). 60% of the companies we studied reported to have a Marketing Department.
Findings: How Malaysian brands are performing
The preliminary results of our study can be summarized into 7 main findings:
1. There is a wide variety in Customer Centricity: 57% of the companies placed Customers among their Top 3 stakeholders. The group most prioritized is Investors/Owners/Shareholders with 81.1% in the top 3.
2. The more Market Orientated firms are, the better the Business Performance: Among our respondents, we find a clear correlation between Market Orientation (as a measure of Customer Centricity) and their reported superior business performance. Among highly market-oriented firms, 52% have a superior business performance, whereas 22% of the firms with low marketing orientation perform above their peers.
3. Marketing Departments have a strong influence within the firms: Overall, we find that Marketing Departments are influential on the marketing decision domains, like advertising messages (47%), loyalty & relationship measurements (46%), Segmenting-Targeting-Positioning (37-42%), customer satisfaction & service (35-38%). All of these percentages are higher than other departments.
4. Marketing Departments have moderate Strategic Influence (at par with other departments): In more strategic and general domains (geographic expansion, new product development, corporate strategy and IT/digitization), we see that the Marketing Department is just as important as other departments. This sort of pattern is common and very similar to other international benchmark studies.
5. Influence of the Marketing Department comes down to three capabilities: 3 of the 5 capabilities make Marketing Dept. influential: (1) agility, (2) accountability, and (3) customer connectedness. Malaysian firms in our sample perform high on these Marketing Dept. capabilities compared to international benchmarks. Creativity is also scored very high, but innovative ability is (unfortunately) not, and scored under par.
6. There is Limited Access to the Top Management Team (TMT): While the CEO background (16%) and hierarchical position of the Marketing Department (2 steps away) is at par with international benchmarks, marketing is still poorly represented in the TMT. 33% of the companies do not have a marketing representative in the top management team. Only 40% of the top management teams have monthly or more frequent updates on marketing performances.
7. The collaboration and coordination with other departments can be improved: Especially, interactions with the Sales department are related with “problems” and “hindrance” to reach objectives. What is critical for developing further Customer Centricity is the collaboration with Finance, on setting CC-based KPIs, related to Customer Lifetime-Value (CLTV).
Recommendations: How can Companies become more Customer Centric?
Given the 7 preliminary findings of the study, we can provide the following advice moving forward.
1. Not everyone in the company is a marketer: Don’t assume everyone in your organization understands Customer Centricity (CC). CC often gets confused with being kind and available to clients. CC is more than just about serving clients, CC is about recognizing that all customers, along with their wants and needs, will vary. You have to determine which aspects are more valuable (“some of them appreciate our offerings more than others do”) and creating products and services targeted around those customer groups (“we can create products and services that serve those valuable groups better.”)
2. Assess the organizational readiness: Take a closer look at our “Organizing for Customer Centricity” Model, based on international benchmarks. Determine where you and your organization are in terms of Market Orientation, Marketing’s Influence, Marketing Department’s Capability, Connection with TMT, and assess how this applies to your firm and industry.
In the case of low customer centricity:
3. Start by treating customer groups as assets: Build Marketing Department strategies to determine the value of the different customer groups, based on Customer-Lifetime-Value.
4. Create an entrance into the top management team: Once you build your CLTV modeling, share your insights with a TMT member who is critical in building a “coalition” to enter CC into the corporate agenda.
5. Maintain regular TMT conversations on marketing: Marketing’s Influence is further solidified by the regular connections it has built with the TMT.