Why the customer is always right…but some are better than others

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Luke Metcalfe

16. 11. 2021 | 5 min read

Why the customer is always right…but some are better than others

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Curious about customer-centricity? Then let’s talk about Harry J Selfridge for a minute. Yeah—the shop dude. US expat. Big old sideburns. Victorian kingpin. 

He retired at the turn of the 20th century. Got bored. Sank £400,000 into a business venture that became the retailer Brits know and love. 

(Or have at least wandered around in once, pretending to be richer than they are.) 

Old Hazza is synonymous with one phrase in particular: “The customer is always right.” 

Oh boy. Did that phrase have legs. 

Think about all the times you’ve heard it from vendors, or better still, uttered it through gritted teeth as a customer. 

“No – I don’t want a gift voucher for this returned item despite losing the gift receipt. Please refund in cash! #TCIAR.”

“The fact I drank the next table’s pint thinking it was mine is irrelevant! I am still owed the one I ordered originally! #TCIAR.”

“Well sir, I can only suppose we inadvertently sold you the trousers in a pre-soiled state. Accept our apologies. #TCIAR.

“The customer is always right” often fails the sniff test, but B2C leans into it as a useful insurance policy anyway. It guards against bad PR and adds shine to brand halos. Most of all, it empowers customers.

Real customer-centricity = selectiveness

Use it in B2B, though, and things get fuzzy. 

Concepts like “service” and “customer experience” still matter. But the power balance between vendors and customers shifts. You appeal to budgets, not disposable income. You’re experts selling to experts.

Though you might not notice. Because B2B marketing often does its damndest to run with B2C’s cool kids.

One of B2B’s biggest narratives in recent years has been a loud, deliberate re-assertion that we’re still selling to humans. 

But that’s a tricky path to tread. And when you get it wrong, as many do, it sounds impersonal. 

Don’t believe us? Look around you. There’s a 902 pound elephant in the room named “customer-centricity.” 

Many of the world’s biggest firms have a CX obsession. And though bulletproof in principle, you conflate it with traditional, TCIAR sentiment at your peril. 

There’s a very simple reason for that: if you’re customer-centric to everyone, are you really customer-centric to anyone? Customers are different. They’re not a homogenous blob.

Real “customer-centricity” demands selectiveness. Apply it blindly and you’re not really applying it at all. 

Strategy wonks agree; when it comes to the choices we make as companies, there’s just as much power in what we choose not to do. 

Duck those hard choices and “customer-centricity” becomes B2B’s warped version of TCIAR.

The right kind of customer-centricity

What if “customer-centric” meant something else? Less vague sentiment and more focused nuance?

What if it meant not loving your customers equally?

And what if it meant prioritizing your best ones (those who spend more, and more often) at the expense of your less valuable ones?  

Peter Fader, a Wharton Marketing professor, made this principle his life’s work. Marketers, he says, have long talked about what they do (tactics) but not enough on who they do it for (the customer). 

If Sarah’s company spends £5000 a month on your latest services, you go out of your way to keep them in the fold. If John’s company maintains the same few basic licenses with little intention to grow, they’re way less important. 

This isn’t a new idea, but it’s remarkable how the shine of “customer-centricity” can gloss over the gaps between your biggest fans and your languishing long tail. 

True customer-centricity sets a clear view of the customers you want, and those you don’t.  

Honing in on the right customers unlocks real power for companies. It transforms vague ideas of “customer-centricity” into something more tangible for the people it impacts (your core audience)—and more profitable for you. 

Smart marketers know this. Customer Lifetime Value—the gold standard in customer-based KPIs—has gained traction in recent years precisely because it brings this reality to life. 

The metric acts like a high-end metal detector. You distinguish the Saxon gold (Sarah) from the old coke can (sorry, John) quicker.

And when 5 percent of your customers drive up to 40 percent of your revenue, you better believe you won’t end up with a CRM full of proverbial coke cans. 

Believe the hype?

Authentic customer-centricity—the data-driven kind—exists beyond textbooks. Fader and his colleague, Daniel McCarthy, dragged it from the shadows of academia and into the cold light of the board room. 

Customer-Based Corporate Valuation (CBCV) flipped traditional valuation upside down.

Most boffins start with top-line revenues. However, CBCV examines underlying customer factors, asking things like:

  • How many customers will Company X acquire? 
  • How long will those customers keep buying from them?
  • How many transactions will they make, and what margin will Customer X make from each of them?

These questions unlock great—or damning—insights. They can also make headlines. 

At one point Blue Apron (subscription meal kits) was Wall Street’s darling, with impressive growth and a hyped IPO imminent. 

A customer deep dive saw differently. For every 10 customers acquired, seven churned after six months. Its rapid growth was fueled solely by gung-ho marketing spend. The wider market caught on, and the under-fire company slashed its projected share price. 

The joy of segmentation

Where then, dear reader, does this leave your business goals? Should you stick with lofty pledges? Or blow a penny farthing-shaped hole in Selfridge’s maxim?

Competition has stiffened thanks to uncertain times. In response, businesses have doubled down on being “customer-centric.”

But are such mantras pragmatic? A lot depends on their marketing folks. 

The best teams boast data and influence like never before. They dictate how Sales sells and Support supports: they drive the vision of what “customer-centricity” means.

And for the shrewdest operators, it’s a code word for contrast.

Maintaining general satisfaction is fine. But you can’t push the boat out for everyone. Nor should you.

Trade-offs fuel sustainable growth, not blanket treatment. 

So cast down the old mantra, and indulge in segmentation. It’s okay to be picky.

Published in:

  • b2b-marketing

  • customer centricity

  • Thought Leadership

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