Many software companies these days focus heavily on selling a product-first experience. Claiming that their product is the best, that their product has features that no other product has, that their product has the best technology. This has been the push in recent years, and typically results in the majority of the company’s funds being focused on developing the best product possible. And while these aren’t bad practices, they tend to ignore the arguably most important aspect of a company; their customers.
If a customer is unsatisfied with their experience within your product, it doesn’t matter how great your technology is or how much money you’ve spent on research and development. That’s why many companies are starting to shift towards a customer-centric approach to ensure their satisfaction and loyalty with your product. Companies that use a more customer-centric approach are experiencing an increase in customer lifetime value and a reduction in churn, however this does not mean you should be neglecting your product. Rather, you should be using customer input to develop a product experience that will best suit your users, but that’s easier said than done. Let’s take a look at a few different ways that we’ve found work best.
What is a Product-Centric Approach?
Before we get too far, let’s quickly define what a product-centric approach is. Now, if you guessed that it’s a company that places the vast majority of its focus on developing its product, you’d be correct! Product-centric organizations are driven by the desire to focus their attention on building and bringing products to the market rather than the customers that purchase their products. Organizations that maintain product-centricity defines their entire culture by the products that they develop Typically, a product-centric company will focus heavily on developing advanced versions of their existing product or adding new product lines, investing large amounts of their funding into research and development and creating their strategies and processes around further development of their product.
Whether the company is looking to launch in a new market or upgrade the quality of the existing product, a product-centric company considers the actual product itself to be the most important aspect of the business and will be prioritized over everything else. They focus less on listening to specific customer requests or needs, but instead focus on building the best possible product.
What is a Customer-Centric Approach?
Now, a customer-centric company focuses more heavily on, you guessed it, the customer! Customer-centric is an approach to doing business that focuses on providing a positive customer experience both at the point of sale and after the sale in order to drive profit and gain competitive advantage.This type of approach relies on identifying pressing customer needs or challenges and building the solution that resolves that pain. Iterating on the entire customer journey and understanding what would give the best possible customer experience is key to executing a successful customer-centric approach, and they typically rely on generating repeat business through existing users instead of acquiring brand new folks.
Because a customer-centric company focuses so heavily on creating the best customer experience possible, they typically see higher customer loyalty rates, lower churn rates, and higher customer satisfaction scores. Instead of investing heavily in research and development, these types of companies will invest more in customer success and customer support teams to provide them with everything they need to keep their customers successful and satisfied.
Product-Centric vs. Customer-Centric: What’s the Difference?
While it may seem fairly clear to see where these two approaches differ, it can be helpful to break it down even further and see the approaches in action. Let’s take a look at how each a product-centric and a customer-centric company would approach developing goals, growing their company, and creating a strategy.
Goal
The main goal of a company with a product-centric approach is to create the best product possible, regardless of what the user experience is like. Their funding is going to go towards research and development, as well as investing in talented and experienced product and engineering teams. They would typically measure success by looking at the quality of the product to see if it has improved over time and to see how it compares to other products in the market with little focus on customer input.
On the other hand, the main goal of a company with a customer-centric approach is to create the best possible customer experience as possible and to ease a pain point that their customers have. Their funding will typically go more towards customer success and customer support areas rather than product development, and their time and resources will be devoted to identifying and addressing customer needs and challenges. Success in a customer-centric company is more focused on how good the customer experience is and is less focused on how the product’s logistical features compare in the market.
Growth
A company’s growth plan is also going to differ whether they’re using a more product-centric or customer-centric approach. If a company is using a product-centric approach, their end goal is to build the best product possible, so their growth plan is going to be built around advancing their product as much as possible. They are going to be constantly iterating and evolving their product to the next phase, so their growth plan is going to be focused entirely on how they can improve the functionality of their product, with a heavy investment in product innovation.
A company with a more customer-centric approach has an end goal of creating the best customer experience, so their growth plan is going to be focused heavily on identifying the most pressing customer needs that they can resolve. A customer-centric growth plan will likely include an emphasis on collecting valuable customer insights and building teams to support their customer base. They will build and grow their product around their customers’ needs, rather than off their own internal vision of the product.
Strategy
The strategy of a product-centric company differs from a customer-centric company in that a company centered on their product is going to build their customer base on how much value the product itself brings, and will rely heavily on the product’s core features and functionality to sell. They strategize, grow, and sell their company around their product, and determine the company’s success based on the success of the product.
A customer-centric company’s strategy is going to differ in that they focus heavily on keeping their existing customers satisfied, and turning them into collaborators and evangelists for the product. They’re going to focus much more on building long-term relationships with their customers that result in increased contract values and high-quality referrals. They strategize, grow, and sell their product through their customers and their customer experience, so the company’s success is determined by the satisfaction of their customers and their renewal, referral, and upsell rates.
How to Become More Customer-Centric
Most organizations these days have a more product-centric approach, with a few customer-centric aspects sprinkled throughout. And while have a balance of the two approaches is important, more often than not, companies don’t have enough of the customer-centric side, despite it being the more cost-effective and more successful in the long-term. If you’re looking for ways to make your company more customer-centric, you’ve come to the right place. Here’s just a handful of the most effective ways to put your users back into the center of your company.
Start at the top
Shifting the focal point of your business from your product to your customers is not going to be an easy process that happens overnight, but it isn’t going to happen at all if you can’t get executive buy-in. Getting the senior members of your team on board and seeing the full potential of a customer-centric approach is key to implementing it company-wide. Plus, they’re the ones that will be able to allocate company funds to more customer-facing aspects of the company and can help set and communicate the new vision. Without the right people on board, it would be incredibly difficult to get a new more customer-centric approach off the ground.
Create a customer culture
As important as it is to get executive buy-in for a more customer-centric approach, it’s something that needs to be woven into the company’s DNA for it to be truly successful. Every team needs to be on board with putting the customer at the heart of everything, guiding the path forward and all the decisions that are being made.
If your engineering and product teams aren’t planning their roadmap around the needs of your customers or if your sales team is developing a strategy around the merits of the product rather than the satisfaction of current customers, then your overall company approach is quickly going to fracture and break down. Creating a company culture around the customer is key to implementing this new strategy.
Segment customers
In order to bring a customer-centric approach to your company, you need to actually engage with your customers! The best way to do this is to segment your user population into different segments based on the kind of information you’re looking to gather. Maybe you create a group of your highest-paying customers to send them a survey of what they feel is missing from your product, or maybe you create a VIP group of your most active users in your product to ask what they would like to see next. Segmenting your users into distinct groups gives you the power to easily identify your customer’s biggest pain points and concerns so that you know what your team should be addressing next.
Break down silos
Teams within product-centric companies tend to be very siloed; everyone has their own agenda, their own goals, their own strategies, and their own factors that affect their teams. One of the hallmarks of a customer-centric approach is that every single team member is on the same page about what matters most, what’s being built next, and discovering that next customer pain point to resolve.
Customer-facing teams need to be able to communicate to the engineering team what they’re hearing from their customers, the engineering and product team needs to communicate with the sales team what they’re building next, the sales team needs to communicate to the marketing team what questions prospective customers are asking, and so on and so forth. Breaking down team silos and creating an open flow of communication is crucial to creating a customer-centric company (and is something Parlor can help you with!)
Let customers drive the product roadmap
In order to be a truly customer-centric company and create the best customer experience possible, you have to build your product around your customers’ needs. This means that your customers’ inputs, requests, and biggest pain points should be prioritized in your roadmap.
Let your users vote on which features they would most like to see, route customer requests directly to your product team, and make sure that feedback collected by your sales and support teams through ticketing systems or live chat software doesn’t fall through the cracks by keeping everything in a single source of record. Doing so ensures that you’re building a product with the customer in mind, and that you’re creating the best possible customer experience, which in turn, will lower your churn rates and keep your users satisfied and feeling heard. Win-win!
Product-Centric vs. Customer-Centric: Final Advice
Most software companies nowadays focus heavily on building the best product possible, when it’s vastly more cost-effective and user-friendly to focus on building the best customer experience. Satisfied users become collaborators and evangelists for your product, meaning that they’ll want to work with you to improve the product and share their positive experience with other prospective customers. While building a great product is obviously important, listening to your customers’ needs, implementing the proper solutions, and incorporating their requests is going to save you time, money, and resources in the long run.
