It’s no longer good enough for companies to cater to the needs of many di�erent customers. Ifbusinesses really want to build loyalty and lasting value, they must �gure out the di�erentneeds within a single customer.

That’s the advice from Wharton marketing professor Eric Bradlow, who encouraged �rms tothink beyond the old-school de�nition of Customer Lifetime Value (CLV) — a metric thatcaptures the worth of the entire relationship between �rm and consumer. He said the modernde�nition of CLV includes how a single customer’s needs change over time.

“Ignoring heterogeneity does not seem very 2021 to me,” said Bradlow, who moderated a recentworkshop by Wharton Customer Analytics in partnership with Teradata. The workshop, titled“Analytics in Action: It’s Still All About the Customer,” featured industry experts along with

Nov 15, 2021  Analytics North America

MARKETING

One Person, Many Needs: How CustomerCentricity Has Changed

Wharton faculty who o�ered their insights on how companies can become more customer-centric.

To explain how the view of customers has evolved, Bradlow went back to basics with the Four Psof marketing: product, price, placement, and promotion. These concepts have long been heldsacrosanct as the key to unlocking the most value from a business. While the Four Ps are stillrelevant, they aren’t the only way to capture customer value because they don’t account for theheterogeneity within the same person, he said.

Bradlow o�ered himself as an example. He’s a professor, a radio show host, a business partner,a husband, a father, and a sports fan. What he’s looking for as a consumer largely depends onwhich role he’s �lling.

–Eric Bradlow

“Ignoring heterogeneity does not seem very2021 to me.”

“I’m as much to blame for this as anyone else, because I thought for the �rst 20 years of mycareer that understanding heterogeneity [among customers] was enough,” he said. “Whatabout the concept that there isn’t just one me?”

Customizing at Scale

Realizing and reacting to the full range of needs within each customer is a big challenge thatneeds big data, according to Kartik Hosanagar, Wharton professor of operations, informationand decisions. He encouraged �rms to harness the power of algorithms that can analyzecustomer preferences and provide a unique experience for all the hats an individual wears.

“To do this at scale, you have to rely on algorithms,” he said.

Hosanagar, who is also faculty co-lead of Wharton’s AI for Business, said Amazon, Net�ix, andYouTube have mastered this technology, showing how machine learning helps keep customersengaged. When he visits Net�ix, for example, his homepage is loaded with o�erings based onhis previous viewing habits. But those choices begin to change once he clicks on somethingdi�erent, like a comedy instead of a drama.

“YouTube does this brilliantly, as well,” he said. “We’ve all experienced this. We go to watchone video on YouTube, and before you know it, you’ve lost a couple of hours because they werejust so good at recognizing the context and providing that level of personalization.”

Hosanagar did not dismiss the risks associated with automation, including data quality andprivacy concerns, and worries over human biases that can get baked into an algorithm. He saidcompanies have to be mindful of such issues while they build out their capabilities.

“No doubt, there’s tons of risk, but I think the opportunities are immense,” he said. “It’s allabout having a governance structure in place while you’re embracing all of the upside and thepotential.”

–Katy Milkman

“Too often, we’re looking for a single answer anda silver bullet that comes readily off the shelf andis well-tested by science.”

Making a Change

Bradlow said it’s hard for companies to shift their old ways of thinking about customers, so heasked colleague Katy Milkman for some insight. Milkman, a Wharton professor of operations,information and decisions, and co-director of Penn’s Behavior Change For Good Initiative, isthe author of How to Change: The Science of Getting from Where You Are to Where You Want toBe. The book o�ers science-based strategies for creating lasting, e�ective change.

While the book was written for individuals, Milkman said the strategies it contains have beentested on organizations, making them perfect for business leaders looking to navigate changesboth large and small.

“The good news is people seem to be people across the board, whether they’re in managerialroles, employee roles, customer roles,” she said.

According to Milkman, marketers can borrow lessons from behavioral science that can beapplied to customers, who often see their life stages as chapters in a book. From college tocareer to retirement, each chapter is a chance to start anew. It’s called the fresh start e�ect, shesaid, and it’s what drives consumers to make New Year’s resolutions, birthday promises, andother commitments that companies can capitalize on.

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“When you feel like you have a chapter break and you’re turning the page, you feel like you havea bit of clean slate and a fresh start,” she said.

Milkman o�ered one important caveat for companies pursuing a more modern customer-centric course of action: there is no one-size-�ts-all solution.

“Too often, we’re looking for a single answer and a silver bullet that comes readily o� the shelfand is well-tested by science,” she said. “It really depends on the context and what the barriersare to change.”

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