Customer Centric Strategy – Definition

Cite this article as:"Customer Centric Strategy – Definition," in The Business Professor, updated April 30, 2017, last accessed July 7, 2020,


A customer-centric strategy, as the name implies, regards focusing on the customer or user experience. Basically, the business attempts to provide a positive or desirable customer experience before, during, and after the purchase of the product or service. This might include the process of researching the company (awareness), approaching the company with a customer-business relationship, consummating the sales transaction, and the assurance of a positive experience with the product or service after the purchase. The entire process revolves around customer needs and sentiment. In essence, this strategy creates a positive experience and fosters customer loyalty to the company brand. Two great examples of companies with a customer-centric strategy are Chic-Fil-A and USAA Federal Bank.

Developing a Customer-Centric Strategy

Developing a customer-centric strategy begins with understanding the customer’s needs or wants. Companies generally use direct or indirect consumer data to better understand their market segments. This information is used to begin aligning the company’s mission to meet those of the customer. This may require redefining the company’s goals and objectives, restructuring operations, modifying the product or service offerings, and promoting a company culture that embraces these goals and objectives. The end result should be enhanced customer satisfaction.

Measuring the Results of a Customer-Centric Strategy

A customer-centric strategy should lead to positive company results, such as building a long-term customer relationship and brand loyalty. Two metrics are useful in measuring the effect of a customer-centric strategy:

  • Customer Churn Rate – Measures the percentage of customers who discontinued the relationship with the business during the past year. This is useful for companies that receive recurring revenue from customer membership or subscriptions. The churn rate is measured by summing up the number of customers discontinuing business products/services during the last year. Then take an average number of customers transacting with the business over the year period. This may fluctuate throughout the year, so a 12-month average is used. Then divide the number of leaving customers by the 12-month average. The churn rate will vary depending upon the types of product/service and industry. A lower-than-average churn rate is a positive result of a customer-centric model. If the company is able to continue obtaining customers while keeping the churn rate low, it will lead to overall growth.
  • Customer Lifetime Value – This is the measure of total revenue or profit a business can expect from a single customer over the span of all transactions with that customer. The most straight-forward manner of calculating the customer lifetime value is to calculate the average customer’s order value and multiply it by the average rate of repeat purchases. A less direct method of calculating this metric is by starting with the revenue earned from a customer, subtracting the average cost of serving the customer, then dividing it by the annualized time value of money.

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