Peter Drucker, one of my business heroes, said the purpose of a business is to attract, retain, and profitably grow customers. I’m going to focus on the grow part of the definition. The term that’s often applied is earning customer loyalty. Going academic for a minute, Kotler and Keller in their book Marketing Management define it as a deeply held commitment to re-buy or
re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.
At the risk of being overly simplistic, here are the basic differences. A product centric view means you build a product, you sell the product, and then you sell more products to others. A customer centric view means you understand a need in your target market, then you deliver a superior set of user experiences to the target customers in that market.
There are significant differences in these two views. A customer centric view is broader in scope. It’s not just the code that’s installed on the server; it encompasses a wide range of interactions between the customer and the company over a longer period of time. Product centric companies view the competition as directly comparable products, while customer centric
companies consider alternative experiences. For example, Borders could have focused on Barnes and Noble with a product centric view or on Amazon and its Kindle as an alternative experience their customers may select.
For a product centric company the critical time frame is from the qualified lead to closing the order. The relationship is two-sided. We sell. You buy. We give you product. You give us money. The measurements focus on revenues and margins. The customer centric company considers from the initial contact with the prospect throughout the usage of the initial product and its predecessors. The relationship is a partnership in jointly solving a problem. The measures focus on customer retention, customer satisfaction and lifetime value.
What signs should you look for to see how your company behaves in the continuum of these two views? Here are a few questions to ask yourself.
- What is the quantity and quality of communication with your installed base?
- How much do you personalize and customize the information to provide the type of content they want, when they want it and in the form that they want it?
- How good are you at meeting post-sales commitments?
- Do you carefully manage detailed information about individual customers and all customer touch points?
What about your company? What examples of activities demonstrate an interest growing loyal customers and what benefits have you seen as a result?