Declaring that "the customer is always right" has been a common guideline for businesses forever. But today, many businesses take a more nuanced and profound stance, seeking to be customer-centered—as opposed to product- or producer-centered—in search of ways to distinguish themselves from competitors and cement their market position.
Customer-centered companies tend to focus on identifying and satisfying customer needs and ensuring customers have pleasant experiences when they have complaints, questions or other interactions. Product-centered businesses emphasize developing superior products, adding new features and improving internal processes and efficiency.
Yet even though focusing on customers is often regarded as the best approach, it seems as though product-centered businesses are more common.
"Many leaders operate under the illusion that they and their organizations are customer-centered and put customers first. The evidence says otherwise," says Robin Lawton, creator of Sarasota, Florida, customer-centered culture consulting firm C3 Excellence and author of Mastering Excellence.
—Steve Wunker, managing director, New Markets Advisors
When businesses focus on products rather than customers, they may be at risk of losing touch with the market, missing new trends and being replaced by more responsive competitors. "Producer-centered organizations suffer from process preoccupation, constantly seeking efficiencies without commensurate emphasis on effectiveness as defined by customers," says Lawton. "They emphasize how work is done, not why."
Becoming more customer-centered can be a way to help many businesses improve customer satisfaction and loyalty, and boost sales and profits. "We have seen even the most seemingly product-oriented industries out there, like surgical equipment makers, gain from taking a more customer-centric perspective," says Steve Wunker, managing director of Boston consulting firm New Markets Advisors and co-author of Jobs to Be Done: A Roadmap for Customer-Centered Innovation.
The Value of Customer-Centricity
Experts on customer-centricity recommend that businesses measure and try to improve the degree to which they focus on customer needs.
"It's never a good idea to be producer-centered and not customer-centered," Lawton says. "I have seen no examples—having worked with every kind of enterprise you can think of—where it would be a wise idea for them to not be customer-centered."
When choosing a market to compete in, businesses may do well to recognize that not all customers will welcome the offerings they are capable of producing. "You should choose the market that lets you be successful and then design around that market," Hunsaker says.
Wunker agrees that researching opportunities and carefully selecting customers is important. "Ultimately you can't do everything for everybody," he says. "You have to choose. But first understand the landscape of opportunity, then focus. Focusing before gaining perspective is a form of blindness."
Customer-centricity may even become more important in the future. "The internet and globalization have combined to commoditize industry after industry," Wunker says. "If companies want to escape incessant price pressure, they have to redefine how the game is played. Becoming more customer-centric is a critical way to do so."
So, Which One Are You?
Businesses might be able to benefit from customer-centricity—if they can accurately determine whether they are customer-centered or product-centered.
"It is important to have clear criteria for determining how customer-centered an organization is and dramatically strengthening that focus and culture," says Lawton.
One way to determine whether your business is customer-centered or product-centered is to ask for an outside opinion: Business managers may think their companies are much more customer-oriented than the customers do.
"Ask customers whether they think you're customer-focused," says Lynn Hunsaker, a customer experience maturity strategist and CEO of ClearAction, a Sunnyvale, California, consulting firm. "[Businesses will] usually give a high rating like 80 to 90 percent—then you ask the customers and it's usually 10 to 20 percent."
Wunker agrees that customer opinions are the best source of information on customer orientation. "Have a broad conversation with a customer, not a sales meeting," he says. "Ask about what their frustrations [are], what makes a successful day and what keeps them up at night. Understand the full context for when your product is used, and what functional and emotional jobs it gets done for customers. Then ask about all the ways customers would address those jobs if your product wasn't available."
Businesses may also want to look for evidence of customer orientation in corporate policies and documents. "Take a look at your mission and value statement," Hunsaker says. "To what degree are you in sync with what customers need? To what degree are there gaps or things at odds with what customers need? How are we rewarding people and what criteria are we using to hire people? If the customer experience is not at the center of those, you're not really customer-centric."
Lawton has developed a free, 21-question customer-centered self-assessment businesses can use to measure themselves. "The maximum score you can get on that is 125. The norm is around 60," Lawton says. "If they get 100 out of 125, they're pretty close to walking on water."
Yet customer-centeredness may not be helpful if it is done incorrectly. "It is surprisingly easy to focus on the wrong customers," Lawton points out.
And, while focusing more on customers may be something many businesses benefit from, that doesn't mean it's appropriate to neglect products. Business has focused largely on improving products and production processes since the Industrial Revolution two centuries ago, Lawton says.
"This is not wrong, just unbalanced," he says. "Balance means leaders put at least equal emphasis on understanding the customer-desired outcomes that spawn innovation."
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