Steve Jobs once said that customers don’t know what they want until you show it to them. This can very well be the mantra of product-centric companies that focus on developing novel and more advanced products regardless of the demand that is existent in the market.
But the Age of the Customer has given customers instantaneous access to information about products and services over the Internet, allowing them to compare and select brands that cater to their needs and wants. This has driven forward-thinking businesses to shift their focus on satisfying the needs of their customers, to the detriment of less agile companies that are more product centric.
Companies with a product-centric approach are at a competitive disadvantage because:
#1. Customers may not be interested in what you’re selling. This is especially true if you don’t have an established reputation. Customers may not believe you can deliver a first-rate product. You may have to resort to costly marketing initiatives just to drum up interest in your product
#2. It can alienate your customers. Inwardly focused companies whose only goal is to develop a superb product can alienate customers whose real wants and needs are not being met.
#3. You are vulnerable to market fluctuations. Today’s customers tend to compare benefits, features and prices of competing products across the market before buying. So, if your product costs go up and your customers are not willing to pay more, then your profits can suffer.
#4. It limits your growth. A product-centric business model tends to market and sell products transactionally — a ‘one-at-a-time’ approach that is focused on short-term product sales without looking at the long-term benefits of customer loyalty.
#5. Your competitors are more customer centric. Customer preferences, concerns and opinions are the driving force of customer-centric companies. Their product or service offerings are based on their customer’s changing needs, channel preferences and price sensitivity.
Product-centric companies have a natural tendency to sell siloed offerings that in the long run will not be beneficial to their customers. It’s critical to know your customers so you can satisfy their needs by adapting your offerings. Otherwise, you might lose your relevance to them, which may lead to loss of market share.
Taascom enables companies to embark on their business model transformation by helping them shift from a product-centric to a customer-centric business model. If you want to kickstart your business model transformation, contact us today.