Can a product-centric company become customer-centric?

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GdeGConsulting

in

Sell

A product-oriented company enjoys advantages that should be kept

• The company’s mission comes true with the product. The product makes the work of employees meaningful. It encapsulates an amazing accumulation of design and manufacturing know-how.
• The product culture, the jargon used, are prerequisites to belong to the company’s community. A young recruit will start by learning about the product.
• A product brand is associated to the product. This brand has often been existing on the market for a long time, and its strength reflects the health and the legitimacy of the company.
• Users demand the highest level of product expertise from the producer. This is the building block for the customer trust.
• If the product is new, and marketed at the right time in a favourable environment, then this product can make history. Companies have risen to the level of world leaders thanks to the success of a flagship product: one thinks of the BIC pen, the Michelin radial tyre, or the LEAP aircraft engine from Safran.

External events reveal the limits of product-centricity

• Being successful with a product attracts sooner or later newcomers who offer similar solutions at a lower cost.
• If the market is in structural decline, or if alternatives to the product appear, the company’s survival is at stake.
• In the case of a merger with a company that manufactures different products, no commercial synergy happens: the sales people remain within their field of expertise, and customers meet two sales teams working in silos. The merged company does not provide benefits for customers, nor does it improve its power relationship.

Drifts and opportunity losses can occur

• Engineering has a strong clout and drives the company into a techno-centric approach, selecting technical changes that are secondary from the point of view of the market. Another consequence is the increase of the number of product variants, with the consequence of high engineering and manufacturing costs.
• In the company’s commercial communication, the hero of the story is the product, not the customer.
• The potential of the product brand is under-exploited. The brand content can mean a lot to customers: roots, values, positive events, emotions, and symbols. This intangible asset could be leveraged to extend the product offer, or to find new paths to growth.
• The company’s mental model no longer evolves in line with changes in its environment: the current business model is taken for granted; the company’s key differentiating skills are overlooked.  Customers who no longer buy, or who choose to buy from the competition, are ignored. Weak market signals are poorly decrypted. Sometimes we can hear that the customer product change request should be turned down, because it jeopardises the product performance as initially defined by the company: this sounds like the mindset of a besieged fortress.

The critical stakes of customer orientation

• Making the voice of the customer heard within the company is a key starting point for any operational improvement project. The production, engineering and customer service teams are more strongly engaged when the customer visits the factory and explains directly to the teams what is going well, what needs to be improved and why.
• Customer orientation allows the company to strengthen its product expertise by better understanding how it fits into the wider system: understanding the context of the customer’s selection of the solution, the implementation or integration of a product, and its use and maintenance can only be achieved by immersing oneself in the customer’s perspective. You always come away with ideas to make the customer’s life easier and more efficient.
• The quality of the company’s relationship with a privileged customer provides a real “relational rent“: by collaborating closely, the producer gains in-depth knowledge of the customer’s needs and expectations, of the complexity of his product’s stakeholders, and can engage in innovation initiatives with less uncertainty. The customer benefits from the relationship by improving its own competitiveness, or by sharpening its differentiation. This relational rent is a strategic intangible asset, difficult to copy, and a source of innovative projects and growth initiatives. It goes without saying that it lifts the customer’s market share.

Obstacles to change

• A first perceived risk is that, in a context of permanent power game with the purchasing departments of customers, customer orientation is a trap that only leads to lower prices. ‘Listening to the customer’ means ‘making concessions with no return’.
• The pressure on individual targets can undermine the attention to the customer. This applies to sales forces, who may feel that they are primarily asked for a quantity of order intakes and a margin rate, leaving them little time to strengthen the customer relationship, anticipate, or explore other collaborations. This also applies to logistics or customer service teams, who will prioritise their efficiency criteria and costs to the detriment of solving a critical problem for the customer: “sorry, we need a minimum batch of 1,000 pieces to launch the order… we may deliver in 6 months”. The value for the company trumps the famous “customer value”.
• The scope of relationship with customers can be limited to the technical functions “who understand our product” and the purchasing department “we are obliged to go through”. This limited scope of relationship does not allow to encompass the full scope of customer value.
• If the company is aware of its weaknesses, the need to change is played down by saying that competitors also have their weaknesses, and that it is therefore sufficient to be at the same level as the others.

The first steps that can be taken without risk of error

• Change of perspective: choose to leave the comfort zone, and see the company’s product purely from the customer’s point of view. The relationship with the product will change, because the customer will talk about integrating the product into his system, about using it, sometimes for decades.  It is a question of cultivating a different attitude. How can this be implemented? Methods vary according to the context of the company:
  • Gather a customer advisory committee regularly, to discuss the company’s offer, projects, priority improvements.
  • Go to the customer’s premises with probing questions or observation grids and show that you are interested in the customer’s problems, rather than trying to be interesting.
  • Carry out customer surveys, on their experience, satisfaction, difficulties in working with the company. Then disseminate the messages received widely in a lively manner, with an action plan.
  • Draw on the experience of employees who have worked with customers in their previous professional lives.
• Even if they are collective, these actions are made possible because a few individuals are eager to understand what is going on with the customer. This motivation can be found everywhere in the company. I was often surprised by the curiosity of some workshop staff members and, as a marketing manager, I found myself bombarded with important questions about the uses and perceptions of the product by customers.
• Changing the way sales teams view their role: beyond their numerical targets, sales people are responsible within the company for getting to know their customers, scouting and reporting on evolutions and priority needs. They monitor the quality of the overall relationship with the customer. Internally, they play the role of spokesperson in decision-making arenas, informing about the consequences for customers of any decision. The need to revisit what it means to be efficient in one’s job applies also to operational and customer service teams.
• Taking advantage of a strong dissatisfaction expressed by a customer to show the way, and ensure that the handling of the customer dissatisfaction is done in an exemplary way, e.g., avoiding to turn the back to the complaint, and solving the customer problem efficiently. This sends a clear message throughout the company to resolve a difficult situation without delay in order to preserve the customer’s trust. “It is better to lose money than to lose the trust of others”, according to Robert Bosch, the founder of the German company of the same name.
• Walk the talk during an important and complex tender, and nominate an ambassador, a single point of contact responsible for simplifying the relationship with the customer and acting as an advocate for the customer’s needs within the company. In the event of commercial success, his/her mission can be extended throughout the contract lifetime.

Embedding routines in daily life

Once the collective awareness stage has been completed, small changes can be implemented within the existing routines and processes of the company. The regularity of implementation, and the adaptation to the company’s culture, are more important criteria than the number of actions and the extra effort required. We list below some possible actions: 

• Organise an annual customer review with senior management and company stakeholders to review a major customer, its business priorities, expectations, relationship with the company, future risks, and opportunities.

• Involve sales teams in quality audits that address customer satisfaction, or customer complaints. Sales representatives ensure that the way problems are delt with does not undermine the customer trust.

• Encourage sales teams to engage into exploratory business conversations with their customers, decoupled from day-to-day operational matters. Based on a few open-ended questions, they take time to listen to them, and understand their business context, their issues, and priorities.

• Structure customer intelligence, either through customer relationship management tools or in shared directories. The stake is to have a single access point bringing together different sources of information, and to minimise the efforts to access, transmit, store, and retrieve it.

• Revisit the product design and development process to strengthen the upstream part, the one that addresses the capture and understanding of customer needs. Ensure no shortcuts are made on customer prospective.