As a CEO or executive competing to win in an industry weighed down by margin pressure, you’ll probably want to transition the business from cost plus to value-based pricing very soon. You may also have a fair bit of doubt running through your mind about transforming your culture to a customer centric culture.

  • How will you integrate pricing within the business?
  • Will you need a dedicated pricing team, or can you align the resources you have already?
  • How will customers and stakeholders react?
  • Do people understand why they need to change?

In this article, we will discuss some of the barriers to better pricing and offer five ways to create a customer centric culture to deliver financial benefits not just for the company, but for your customers, your team, and you.

What is customer centric company culture?

A culture without values has no meaning. Where there’s no meaning; there’s no customer or employee engagement.

A customer centric culture is a new system of laws, principles (of which value-based pricing is vital), rules, customs and norms that bind your people to your customers in a meaningful and harmonious way. A customer centric culture not only encourages your staff to value their customer’s viewpoints about price, value, product, and brand, it stabilises employee engagement by providing people a shared code.

A customer centric culture is an alternative system of values, practice, and beliefs that motivates and drives your people to adopt new ways of thinking and working to serve and add value to your customers.

When you start changing how you price, you are challenging your entire workforce to think differently about how they relate to customer-centric and view the nature of work, their customers and each other. You are also asking them to change their values, which is by no means something easy to do.

Your good people will try and leverage new thinking and pricing with customer centric culture and look outward to the market for validation.

The not so good will be reluctant to let go of what they know and want to maintain the status quo and find customer feedback an affront to their traditional sensibilities (i.e., cost, operations, and efficiency).

A cost-plus culture conversely is a shared belief system that is too difficult to un-learn, but also dangerous to deny and avoid. Cost-plus pricing endangers your connection to your customers because it overcharges some customers and undercharges others.  The customer wants you to offer them highly personalised experiences and value, not to feel ripped off by a crude pricing system.

Customer-centric culture 1

The difficulty involved with creating a customer centric culture

After reviewing the experiences of twenty Australian businesses, embedding a customer centric culture is a problematic endeavour. Most companies underestimate the enormous impact changing pricing has on company culture. They focus more on installing expensive price software solutions and strategy, rather than skills building and improving communication.

Many employees find the transition from cost plus to value-based just as confusing as your customers. For employees, I have learned that there’s nothing more important than the maintenance of a shared belief system. If it’s threatened, the great ship of state rocks.

People do not just embrace a customer centric culture with open arms just because you told them to do so. Your people and your customer will feel confused and anxious when they hear you’re changing the way you price. They will be wondering why you need to do this now when before this point in time, you didn’t give much thought to pricing. They may also be worried that they don’t have the right level of pricing skills and knowledge to run more sophisticated price models, systems, and processes – and rightly so because they may not.

In the absence of a system of value to define and educate your workforce on what it means to contribute and work within a customer centric culture, people cannot act. You’ll initially be surprised by the size of the skills gaps in your teams. You may think a bit of training will help them achieved new goals. However, broad-based training does not work – an expensive waste of time. Pricing expertise takes years to accumulate; you cannot install values and in-depth learning in an afternoon workshop.

Transforming from cost plus to customer centric culture

The transformation to a customer centric culture often takes business years to accomplish. Many executives complain it feels like a long, hard slog. Nearly all of them say they would have done it differently. Many CEOs have told me that it’s almost impossible to follow strategy without the right capability and culture in place.

Asking how to improve pricing skills and knowledge is riddled with false perception and blind spots. Many managers and executives like only to tell the CEO good news. They will say that they can cope with new demands of a customer centric culture and have the capability to adapt to changing working practices.

After carefully examining 20 major pricing transformations, we find what people say they can do and what they can do are two very different things. When you ask a manager, “Can you perform new pricing roles and duties? They almost always say they can. A mixture of wishful thinking, barefaced confidence and their survival instinct kicking in. The threat of losing their jobs if they admit their mistake or their status creates fear.

The hard reality is that 75% of all price improvement initiative and transformations are abandoned or struggle to achieve anticipated results. Your people want to contribute positively to building a customer centric culture.  Many do not understand why you are changing the way your pricing. Others may not have the know-how or pricing skills to get the business to the next level – including what training and skills building is required.

Customers aren’t the only ones who get confused when the message to embrace a customer centric culture is unclear. Your people must have the meaning inherent in a customer centric culture or the horror of existence rapidly becomes paramount. No value, no meaning.

How to create a customer centric culture

As a leader, you know why the business needs to change. However, do your people or customers understand what a customer centric culture means for them? Let’s say your people’s previous code of practice and beliefs was inward focused. We’ll also assume asking for discounts is something your customer knew to do. Is it fair to expect your staff or customer to accept or even understand what a customer centric culture is?

At this point, you may be thinking, I’ve got a great team. With a bit of training, they’ll come up to speed in no time. Unfortunately, culture does not work like this.

It is a truism of biology that evolution is conservative. Existing production is to be built upon when something transforms. Adding new features and altering old ones is fine, but most things remain the same. Nature laid down the cornerstones for fundamental transformation long ago.

But it is possible to hack our hard wiring and get the dollar value from our past investment in pricing strategy, team resources, and software? Here’s how:

  1. Point the corporate story at the customer. Employees will experience cognitive dissonance and work to align the actions of the company with the core values they’re supposed to reflect when there is something bigger than themselves to believe in.
  2. Train, support, hire, and, if necessary, use discipline to reinforce the importance of the customer. The right people and energetic guidance are essential to building and maintaining a customer centric culture. This needs to be nurtured in the same caring way as a teenager.
  3. Make your values visible. The brand’s entire core beliefs, plus shared basics of customer and employee interactions, should be easy-to-understand and laid out in various visuals.
  4. Show your commitment to these values. People copy people. Offer regular constructive feedback. Empower people to collaborate closely with customers – give them the right tools and targeted training to fill skills gaps quickly.
  5. Include stakeholders from the broader business.  Your people want to be part of an organisation with a sense of purpose. Expecting executive to drive price improvement lacks accountability. Executives are not the custodians of vision. They set a direction and goals.
  6. It’s the people on the frontline. Your sales teams and customer services centre have the information you need. They create a customer centric culture that resonates with your workforce and customer base. Culture is not a top-down directive. It’s a way of life, and we are all responsible for its evolution – good and bad.

Customer-centric culture 2

Conclusion

As a CEO, you need to know that a pricing change has an enormous impact on your company culture. Not focusing on your people at the beginning of the price improvement program will lead to a long and painful change process to customer centric company culture.

People will tell you everything is fine. However, you’ll realise late in the process that their feedback was less than reliable. This inconsistency will become apparent when resistance overruns your mission to create a customer centric culture.

Sometimes, proactive intervention is required to influence a customer centric company culture and set people in the right direction, especially when the business strategy is heading toward unfamiliar territory or transitioning from something old to something new.

Transitioning from cost plus to value-based is not as clear-cut as consultant make out. It’s not as simple as establishing a pricing team and installing a simple command and financial control structure to govern pricing. There’s lots to consider and lots to lose if your people and customers reject your new pricing offers.

Leveraging pricing to create a customer centric company culture is a great way to contextualise value for your teams. Balancing customer needs and business with the requirements of staff is an alchemy that is profitable and healing.

Do you want to save yourself years of pain, angst and conflict and cost as you create a customer centric company culture?

To learn more about how to leverage pricing to build a customer centric culture, download our complimentary guide. You can also watch the Director of Taylor Wells, speak on the topic of pricing transformation.

Taylor Wells helps CEOs and executives accountable for high stake price improvements and business transformations. We help avoid the pain, angst, and conflict of change with a clearly defined skills building program. Our program eliminates the risk of bad hires and underperforming teams while driving profitability and team engagement.