Which approach do you take in your business: product-centric vs. customer-centric?
Earlier large organizations were built solely on product-centric approaches. However, as customers have evolved, businesses are gradually shifting towards a customer-centric approach. The greatest quandary that modern businesses face is the choice between a product-centric and a customer-centric approach.
These two perspectives are two sides of the same coin. Without the other, neither can grow. Nonetheless, businesses are weighing the benefits and drawbacks of both approaches. In theory, combining the strengths of both approaches is the best solution.
In this article, we’ll look at product-centric vs. customer-centric approaches and their differences.
What is a product-centric approach?
In the product-centric approach, a company’s primary focus is on its product rather than on its customers. Product-centric businesses strive to innovate, upgrade, and advance their offerings constantly. It is based on the idea that an innovative and robust product can enter the market and fill a previously unmet need among customers.
What is a customer-centric approach?
A customer-centric company focuses its efforts on determining what its customers require and then developing products or services to meet those requirements. Customer centricity is a culture that prioritizes the customer in everything you do.
A customer-centric business focuses on providing customers with seamless and consistent experiences across multiple channels and touchpoints.
Understanding your customers, combining it with customer relationship management to collect behavioral and engagement data, and then identifying relevant opportunities to wow them throughout their customer journey is all part of the process. Customer satisfaction is prioritized in the customer-centric approach, and customer feedback is regarded as the holy grail.
The definitions describe the fundamental functional distinction between product-centric vs. customer-centric. Let’s look at some more differences now.
What are the primary distinctions between product-centric vs customer-centric?
The primary distinction between the customer-centric and product-centric models is how they reach customers. While the customer-centric approach seeks to reach out to customers and listen to their demands, understand their needs, and adapt the product to meet those needs, the product-centric approach seeks to attract customers through the quality of its product.
However, the differences between these two approaches are not limited to how they approach customers. The method you choose is directly related to the structure of your company.
For example, the customer-centric approach relies on inter-branch operations between your departments, whereas the product-centric approach takes a more independent approach with your departments.
The duration of these two approaches is another distinction. Because following the patterns of customers is a long-term game, the customer-centric approach takes time to succeed. The product-centric approach, on the other hand, produces results much faster, whether they are good or bad.
Remember that deciding whether to take a product-centric vs customer-centric approach is highly dependent on the size of your company, industry, and brand.
Assume your company cannot afford the product-centric approach’s innovative steps. In that case, you might be better off taking the customer-centric approach rather than attempting to create a hybrid of the two.
You can better determine which approach is best for you by developing your sales strategy, taking into account your metrics, and deciding your objectives.
Here's a table that explains the distinctions between product-centric and customer-centric approaches:
Your products will attract customers
You will attract customers to your product.
Depends primarily on R&D
Depend primarily on PR
Departments with a high degree of autonomy
Departments that collaborate
Product-centric vs. customer-centric – Is it truly necessary to transition from product to customer-focused?
The simple answer is yes. Customer experience has always been a critical driver in all transformational processes. Forrester Research found that 59% of consumers rated their experiences as just “Ok” while 23% rated theirs as “poor” or “very poor”. You foster customer loyalty by improving the customer experience. Customer satisfaction leads to customer loyalty.
Amazon is an example of a customer-centric company—everything they do revolves around the needs and desires of the customer. Their one-of-a-kind service platform provides them with both data and the ability to learn and predict what site visitors want using advanced algorithms.
According to Jeff Bezos, “being customer-centric allows you to be more pioneering.” Customer-centricity gives businesses the advantage of designing products and services that customers will buy — and a happy customer is more likely to also be a repeat customer.
The obstacles to becoming customer-centric
We believe that starting with a customer-centric approach may be a more viable solution. However, there are some obstacles you must face and overcome:
1. Functional divisions
It is critical to transform your entire organization, rather than just one function, to be customer-centric in order to provide a consistent experience to your customers throughout their journey. This necessitates extensive cross-functional collaboration. Companies that are not already aligned in this manner must undergo structural and procedural changes at the organizational level. And that is a massive and time-consuming task.
2. Obtaining a 360-degree view of the customer
Data aggregation across departments is another headache you must deal with. Customer data is scattered across the organization in various forms such as support calls and tickets, CRM, recorded touchpoints from your customer success manager, and so on. To obtain a 360-degree view of the customer, all data must be aggregated, which is nearly impossible if you do not invest in a customer success tool.
3. Bringing about behavioral change in the workplace
Most businesses still have a traditional mindset that associates growth with customer acquisition. Being customer-centric entails putting more emphasis on retention rather than acquisition. This is a radical shift that must permeate every department at every level. This takes time and persistence.
Product-centric vs customer-centric - ideal examples
Here we will discuss the ideal examples of each approach to help you understand which would be best for you.
When a new product is launched by a product-centric company, it may not always be met with overwhelming demand. While you’re attempting to stay ahead of the curve, not every prospective consumer immediately understands that it will scratch an itch they didn’t know they had.
Dyson is one company that bets on itself. Due to cutting-edge scientific and engineering research, the company provides vacuums, fans, and a variety of other goods based on air movement that outperform the competition by a wide margin.
By combining this with a sleek and fashionable aesthetic, they have carved out a niche for aspirational consumers willing to pay more for top-of-the-line products.
Customer-centric companies are obsessed with making their customers happy, and they constantly anticipate demands before they are expressed while streamlining and improving every step of the customer journey.
From discovery to purchasing decisions, learning curve reduction, and maintenance minimization, everything revolves around reducing friction and increasing value realization.
Zappos, which Amazon owns, is one company that prioritizes customer satisfaction. Whether you enjoy or dislike shoe shopping, not every pair will fit. eCommerce appears to be a poor fit for footwear because you need to try on shoes, but Zappos has figured it out.
Zappos’ customer-centric strategy is built on free returns. They remove the main impediment for online shoe buyers who do not want to return items. Aside from that, their focus on studying and researching their customers results in satisfied customers and a sizable market share.
Product-centric vs customer-centric - on which should a business company focus?
Most of the time, business companies should be customer-centric. The primary reason for this is how they operate. Because most business companies rely on subscriptions to operate, this necessitates constant change and adaptation; otherwise, your subscribers may switch to competing products.
Seasonal trends in the majority of business companies support this conclusion even more. Analyzing pattern changes and planning your product are critical steps in achieving a high user retention rate and a low churn rate.
That is not to say that the product-centric approach is completely ineffective for business businesses. Even if you follow the rules of one approach, that does not mean you should ignore the benefits of the other.
A strong supporter of the product-centric approach, for example, can easily leverage their position as an innovator to increase brand awareness and loyalty. A strong supporter of the customer-centric approach, on the other hand, could easily use customer feedback to improve their product.
A single company cannot stand alone in marketing or hope to gain traction and influence through a product. You must combine the best features of these approaches while eliminating their drawbacks.
This sums up our guide on which approach would suit you the best; product-centric vs customer-centric. To thrive in the long run, all businesses require a combination of the two. You can’t build a customer base unless you have a great product. And you can’t keep customers happy unless you provide an excellent customer experience.
The challenge is to do both at scale without going bankrupt. That is why the flywheel is so revolutionary. With a great product as a foundation, you can focus on designing the best customer experience possible.
This process will not only help you improve your products through constant feedback, but it will also help you build customer loyalty and word-of-mouth.