by Noriyuki Morimoto
A customer-centric management approach means adopting the customer’s perspective in a true sense and daring to state things that may be hard for them to hear. For example, a financial institution is being customer-centric when it refuses to lend money to someone seeking a loan in order to gamble. While the customer might feel in the moment that it’s none of the bank’s business, over time, they may gain experience and opportunities for rational reflection, which enable them to see the rejection as an act of kindness they come to appreciate. Holding this belief is the philosophy of customer-centricity.
Customer-centricity means appealing to the customer’s reason, enabling them to rationally recognize their own true interests. In other words, it means making the customer wiser. Therefore, it is the exact opposite of customer satisfaction that appeals to the customer’s emotions or psychological weaknesses, suspending rational judgment and inducing irrational behavior.
Most existing businesses are based on customer satisfaction. For example, gambling offers remarkably high customer satisfaction while simultaneously harming customers’ true interests, making it profoundly contrary to customer-centricity. And many businesses operate by moderating the intensity of gambling’s extreme nature, pandering to psychological customer satisfaction even when it runs against customers’ true interests.
Of course, this mechanism is the essence of a capitalist economy, so it cannot be denied. Moreover, if consumers acted completely rationally, and businesses strictly adhered to customer-centric principles, a dramatic contraction of the economy would be unavoidable. The essence of a capitalist economy is inextricably woven with the actualization of emotional desire, obsessive and sensual impulses, and irrational and wasteful consumption.
Moreover, customer-centricity is essentially meddlesome interference in the freedom of the customer. Unless this meddling is perceived as kindness—as long as it is perceived as just meddling—commerce cannot function. And if commerce does not function, then even the most thorough customer-centric approach becomes meaningless.
Thus, the economy rests on a delicate equilibrium between emotional customer satisfaction and rational customer-centricity. But shifting this balance toward customer-centricity is necessary for at least two reasons. First, in regulated industries like finance, healthcare, and education, the very purpose of regulation demands customer-centricity. Second, as society becomes highly mature, as in Japan, customers themselves inevitably face the problem of rationalizing household finances.
[Category /Deconstruction of Finance]
Chief Executive Officer, HC Asset Management Co.,Ltd. Noriyuki Morimoto founded HC Asset Management in November 2002. As a pioneer investment consultant in Japan, he established the investment consulting business of Watson Wyatt K.K. (now Willis Towers Watson) in 1990.