Making The Move From A Product-Centric To A Customer-Centric Organisation

Back in the day, most MNCs and enterprise companies relied on product-centric approaches, and focused their efforts on developing new products by leveraging technology or specialized skills. These days, however, companies are increasingly seeing the value of adopting a customer-centric approach, and putting their customers at the heart of all they do.

Thinking of making the switch, and implementing a customer-centric mindset? In this blog article, we discuss all you need to know about building a customer-centric culture, including:

• What is customer-centricity
• What is product-centricity
• How do product-centric companies differ from customer-centric ones
• How you can make the shift to a customer-centric organisation

Read on to find out more!

In a nutshell, customer-centricity refers to the act of putting your customers at the core of your business. This means that your business objectives, goals, and mission should revolve around the idea of creating a positive experience for your customer, and/or delivering value to them.

Generally speaking, customer-centric businesses believe that their clients are the primary reason that they exist, and they’re happy to go the extra mile to keep their customers happy. Examples of customer-centric companies include Amazon and Zappos.

There are plenty of strategies that customer-centric companies rely on, but all these strategies fall into three broad categories:

• Customer development
• Customer retention
• Customer acquisition

Firstly, customer development is all about making your existing clients more valuable. Here, companies analyze their data and identify patterns to come up with cross-sell and up-sell opportunities. This helps them increase the Average Order Value (AOV) and Lifetime Value (LTV) of each customer.

Note that customer-centric companies do not aggressively up-sell customers just to hit their sales goals. Instead, they make it a point to only up-sell customers when it makes sense, and when it results in a win-win.

With customer retention, companies basically engage and cultivate their customers so that these customers stick around for the long-run. Again, this helps the company increase their customer LTV.

One major benefit of investing in customer retention is that it helps companies increase productivity and save cost. Acquiring a new customer can cost up to 5x more than retaining an existing customer, and the success rate of selling to an existing customer is 60% to 70% (as compared to the success rate of selling to a new customer, which is 5% to 20%) (Source: OutboundEngine).

Finally, customer-centric companies also take great pains to fine-tune their customer acquisition strategies so that they acquire the right type of customers. More specifically, these companies tend to focus on acquiring customers based on behaviors instead of demographics.

For example, a customer-centric company might use a tracking code and their CRM system to keep an eye on their leads’ behavior and actions taken on their website, and reach out to leads who have engaged in certain actions (say, viewed their Pricing page five times in a single session, or downloaded three different lead magnets from their site).

Some companies mistakenly equate being customer-centric with having good customer service, but in truth, customer-centricity is so much more than that.

Think about it this way: truly customer-centric companies offer their customers a great experience throughout their buying journey, and delight their customers at every touchpoint.

If you’re hard at work optimizing your support strategy, that’s great, but don’t just stop there. You should also try to improve your other interactions with your customers, and think about how you can create a better overall experience for said customers.

While there are still plenty of product-centric companies (some of which are highly successful), businesses are increasingly pivoting and adopting more customer-centric approaches instead. According to Google Trends, there’s also been a slow but steady increase in the number of searches for the keyword “customer centric” over the last few years:

Now, you might be wondering… why are companies moving away from product-centric strategies, and choosing to utilize customer-centric approaches instead?

First and foremost, consider the fact that customers today have access to more options than ever — this is true for the most part, regardless of what industry/product you’re looking at.

Bearing this in mind, companies have to do all they can to differentiate themselves from their competitors, and they’ve found that one way of doing so is to provide their customers with a great buying experience. That’s where being customer-centric comes in.

On top of that, the advent of social media has also resulted in companies having greater accountability for how they treat their customers.

A decade or so back, a dissatisfied customer might’ve complained about a product or company to their colleagues, but that was about it. Today, a dissatisfied customer can take to social media to lambast a company, and if the post goes viral, this could easily destroy a company’s reputation overnight.

On the bright side, companies that go the extra mile for their customers are often lauded on social media as well, and you can generate a ton of buzz and word of mouth for your company if you play your cards right. Again, this incentivizes companies to shift from a product-centric approach to a customer-centric approach, and give more thought to how they can put a smile on their customers’ faces.

Simply put, product-centricity refers to the act of building and structuring your company around your key products. Product-centric companies tend to invest heavily in R&D, and focus on developing newer and more advanced products. These companies expand by adding new product lines to their portfolio, or expanding to serve newer markets.

The advantage of adopting a product-centric approach is that this gives management a clear structure, and makes it easy for the team to identify their focus. If a particular product line is doing well, the team might consider launching this line in a new country, or innovating even further to come up with a superior version of the product. If a particular line isn’t doing well, then the solution is to kill it, and invest the company’s time and resources in other better-performing products.

That said, the downside of product-centric companies is that these companies tend to produce siloed organizations that compete for customers and cannibalize each others’ efforts. At the same time, these companies also run the risk of being myopic, and not being able to adapt to key changes in the market.

The following graphic from MarketCulture Blog nicely sums up the difference between product-centric companies and customer-centric ones:

While product-centric companies and customer-centric customers have the same goal of maximizing their shareholders’ value, the difference lies in how they intend to achieve their goal.

Generally, product-centric companies achieve their goal through economies of scale (in other words: high volumes and cost reduction). These companies typically strive to increase their share of the pie, and if possible, dominate the market. While a product-centric company might have a lot of expertise in a certain technology or area, this might lead to them being less receptive to customer feedback, which is obviously problematic.

For example, think about the American multinational automaker, Ford. Ford first launched its iconic Model T in 1908, and this was hailed as the first affordable, mass-produced car to hit the market. Initially, Model T was only available in black, but Ford later produced the car in different colors, and also modified it in other areas, including the cowl and the hood. As Ford sold more cars, this reduced their fixed production costs, and increased their product margins.

Instead of relying of economies of scale to achieve their objectives, customer-centric companies do this by aligning their development and delivery around current and future needs of companies. More specifically, these companies invest time and energy into cultivating customers that spend more in the future, and tap on their relationship expertise (as opposed to product-centric companies’ product expertise).

To cultivate their customers, customer-centric companies structure their processes around three key concepts:

• Future
• Segmentation
• Personalisation

As mentioned earlier, customer-centric companies focus on retaining their customers and place an emphasis on the “future”. For instance, a product-customer company might stop contacting their customer post-purchase, but a customer-centric company is more likely to follow up post-purchase to make sure that their customer has everything they need.

On top of that, customer-centric companies also analyze their data to segment their customers, and distinguish their most profitable customers from less profitable ones. From there, they invest more resources into engaging their most profitable segments, and win over these customers for good.

Last but not least, customer-centric companies also make use of personalisation techniques to build rapport with their customers. Personalisation also has a significant impact on a company’s bottom line: 44% of consumers say that they will likely become repeat buyers after a personalised shopping experience with a company, and 49% say they have purchased a product that they did not initially intend to buy from after receiving a personalised recommendation (Source: Econsultancy).

If you’re currently working in a product-centric organisation, but you’d like to move towards adopting a more customer-centric approach, this means radically changing how your company is engineered, in areas such as design, structure, processes, metrics and even incentives.

In this section, we discuss three things that you can do to help your company become more customer-centric.

If you haven’t already done so, start collecting all the data you need to segment your customers, and learn more about each segment. We also recommend creating detailed buyer personas (for example, check out Hubspot’s templates), so that you have a more thorough, intimate understanding of your customers.

Here, it isn’t enough to know basic demographic information about your customers, such as their age range, geographical location, job titles, etc. You’ll want to do a deep dive to understand what motivates our customers, what challenges they’re facing at work, and more. This will help you align yourself with your customers, and tailor your messaging to be more relevant to them.

The next step is to speak to your team, and to impress upon them the importance of being customer-centric. Here, the best companies steer clear of micro-managing, and give their employees the autonomy to fix or improve their customers’ experience.

As shared in our blog post on building a customer-centric culture, The Ritz-Carlton encourages its employees to do whatever they need to give their guests a better experience; the hotel chain even lets employees spend up to $2,000 per guest to achieve this.

The rationale behind this? Sometimes the most delightful “wow” moments happen in the blink of an eye — and if your employees need to wade through a ton of red tape to do something for a customer, these moments could be lost forever.

Finally, considering setting up some sort of incentive scheme or program to reward employees who prioritize your customers.

For example, if a customer writes in to praise Employee A for something they’ve done, you might choose to publicly commend them in a team meeting, and/or provide them with a reward ($20 Starbucks voucher, let them work from home for a day, etc). This helps to move the focus from short-term results (deals closed, sales revenue, etc) to bigger, more long-term goals.

To learn more about pivoting to a customer-centric culture, watch this video on Riccardo Osti’s Youtube Channel.

Team members who aren’t senior manager or C-level executives can also influence their organisation’s culture, and take small steps to adopting a customer-centric approach.

For example, say you’re in a client-facing role, and you interact with clients on a daily basis. Simply ask your clients for feedback on your product/service/processes, and take notes to detail all the areas of improvement. From here, segment your findings based on different customer personas to get a more in-depth understanding of how to meet each segments’ needs.

If possible, get another colleague to join you in your effort; this doubles the amount of feedback you’ll get, and increases the accuracy of your results. At the end of the week, compile all the data and come up with actionable strategies based on them, and call for a quick 20 minute meeting to discuss the feedback and strategies with your team.

From here, pick a few strategies to experiment with, and implement the changes. Keep tracking feedback as you do so, and monitor customer sentiment to see if your customers’ satisfaction levels rise or drop. Don’t forget to communicate and advertise the changes to your customers as well — they’ll be happy that you took their feedback into consideration, and updated your product/offering based on said feedback!