There was a time when large organizations were built solely depending upon the product-centric approaches. But as the customers have evolved, companies are slowly shifting towards a customer-centric approach. Product centric vs customer centric approach is the biggest dilemma that modern companies find themselves dealing with.
These two approaches are the two sides of the same coin. One cannot grow without the other. Yet companies are evaluating the efficacies of both the approaches to find the pros and cons of both. Theoretically, the best solution is to leverage the power of both approaches.
With the evolving nature of competition and customer behavior, customer-centricity is becoming a more effective approach in driving business growth. Yet, product centricity cannot be fully ignored for it has its own plus points that add into the business. So, let’s examine product centric vs customer centric approaches in detail and find out how they contribute individually to the business growth.
What is Product-centric?
A product centric company places all of its focus on product and develops newer and advanced products irrespective of its demand in the market. All the strategies and business processes are built around the product and work accordingly. These companies invest heavily on R&D to develop advanced products and the company expands by adding new product lines to their portfolio.
Any product that is doing exceptionally well in a market, the company decides to launch it to the newer customer segments or even to a new country. For the better performing products, the company decides to invest further to upgrade the quality of the product. They continuously release the advanced versions of the product to the market.
And, for the product that is underperforming, the company decides to kill the product line and instead deploy its time and resources to the high-performance products.
Product-centric companies don’t work on the principle of meeting the customer’s needs and challenges. They work on the principle of presenting the product which customers have not yet realized that it’s needed. Steve Jobs had put it very wisely when he said:
What is Customer-centric?
A customer-centric company places the customer at the center of all their strategies. They identify the needs, challenges and pain-points of their customers and then build the solution to sell them. They have a keen understanding of their customer segments to which they would be marketing their products.
Apart from giving focus to the solution they offer, customer-centric companies articulate the whole customer journey for a greater customer experience. They keep a keen eye on building customer loyalty and thereby growing their business.
Their focus is on maximizing the customer lifetime value for turning every customer into a profitable asset of their business. Customer lifetime value also plays a crucial role in the valuation of the company and influences the investor’s decisions on further investing in the business.
Customer-centric companies rely on generating business through their repeat customers and aim at maximizing their recurring revenues. They provide more than just good support and service. To help their customers achieve their business outcome, they invest in customer success which is becoming a whole new industry and science in the SaaS world.
Product centric vs Customer centric: Key differences
As per the definition of both the approaches above, the main difference lies in the area of the focus. But if we can fragment the two approaches on various business strategies, we get a much clearer comparison. Below are few of the areas in which they differ fundamentally.
Product-based companies have their end goal to create the best product. They would invest most of their resources towards this end. Their success relies mainly on the quality of the product.
Customer-centric companies have their end goal to create the best solution for their customers. It could be either in the form of a product or a service. These companies start with identifying customer needs and challenges and then go on to build their product. They know their customers as much as their product.
Product-centric companies build their growth strategy around the upgradation of their product. They are on a continuous path of evolving their product with evermore better ideas and product innovation.
Customer-centric companies have their growth strategy built around identifying customer needs. Their customer success team is solely dedicated towards collecting valuable customer insights. These insights are used by various other teams like product management or sales and marketing for building their own customer-centric strategies.
Product-centric companies depend mostly on their product itself to self-promote their brand. They build their customer base on the basis of how good their product is and how great a value it offers. Hence, these companies build their success through product-led growth.
Customer-centric companies have a lot of strategies in place to market their product. They aim at turning their loyal customers into brand advocates who help bring new prospects to the sales funnel. These companies also focus on building long-term relationships with their customers so that continuous flow of incomes can be generated. This helps them in shaping the sustainability of the business in a competitive environment.
Final Thoughts: Which is better?
To decide which is a better approach between the product centric vs customer centric, you must understand your business offering well. There are great examples of both kinds. Google, Apple are few of the product-centric brands while Amazon is a good example of customer-centric brand.
If you are building an innovative product that is one of its kind and whose need has not yet been realized in the marketplace, then going product-centric is the way. Whereas for the case where you already have a customer need in the market and many other competitors too, then going customer-centric is more viable.
Being customer-centric doesn’t mean you can ignore product success. Product success still lies at the core of your organization with the only difference of the company’s vast expanse towards customer-centric strategies as well.
Becoming customer-centric would allow you to build your business sustainably with a steady growth. Customers have to develop trust in your brand and that doesn’t happen overnight. It takes years of perseverance to forge customer loyalty and become a leader in your niche.