Last Updated: September 2024
The debate between product centric and customer centric approaches has been in existence since the beginning of the modern business era. Businesses are constantly searching for the answer of which is better, or what can be the perfectly balanced approach.
To understand this it’s crucial to know the difference between the two popular strategies. Then only someone can decide which approach aligns with their business.
Statistics say that the businesses that focus more on customer centric approaches are 60% more profitable than others. This highlights the importance of customer centric approach in modern business. But the product centric approach also has its own benefits.
In this article, we will widely discuss the debate about the product centric vs customer centric approach and will try to find out which approach fits your business and goal. Let’s start:
Product-Centric Approach
A product centric approach is focused on the product and uses it as the primary driver to attract customers and business growth. Product centric businesses prioritize innovation, upgradation, and advancing their products or services constantly.
So, these companies invest heavily in research and development to keep their offerings updated and advanced all the time. The belief is that a great and superior product will definitely attract customers and drive sales.
Examples of Product-Centric Companies:
- Apple: Apple Inc. has spent $29.92 billion in research and development in the fiscal year 2023. The company is known for setting industry standards because of its product centric approach and continuous investment in innovation.
Key Characteristics:
- Emphasis on product innovation and features.
- Significant investment in R&D.
- Focus on product performance and technical specifications.
- Marketing efforts highlight product benefits and superiority.
Benefits of a Product-Centric Approach
- Innovation and Differentiation: A strong focus on product development can lead to breakthrough innovations that set your company apart from competitors.
- Market Leadership: By consistently delivering superior products, a product-centric company can establish itself as a market leader and command premium pricing.
- Scalability: High-quality products often have the potential to attract a global customer base, facilitating rapid growth and scalability.
- Brand Reputation: A reputation for excellence in product quality can enhance brand loyalty and attract a loyal customer following.
Weak sides of the product-centric approach?
- The product-centric approach allows you to disregard your customers’ needs and challenges.
- Lack of customer research can mean underestimating or overestimating the need for a product.
- You fail to define your product-market fit, leading to your business failing.
- Your competitors can easily imitate your products and sabotage your efforts.
- You have to spend lots of time and effort educating and convincing prospective customers and early adopters in the market to give your product a try.
Customer-Centric Approach
On the other hand, a customer centric approach always prioritizes the needs and wants of a customer. Businesses adopt strategies to understand their target audience, the customer journey, and pain points, then identify relevant opportunities to wow them by providing the missing parts. Companies with excellent customer experience stand a 17% higher chance of growing consistently year on year.
Businesses that use this approach always measure their success through various metrics and indexes such as customer retention rate, net promoter score, and customer lifetime value guarantee.
Examples of Customer-Centric Companies:
- Amazon: Well, Amazon is a known name all over the world, because of its customer-first philosophy. They focus on delivering the best quality of service and convenience to their customers.
Key Characteristics:
- Emphasis on customer experience and satisfaction.
- Extensive use of customer feedback to shape products and services.
- Personalized marketing and communication strategies.
- Commitment to resolving customer issues promptly and effectively.
Benefits of a Customer-Centric Approach
- Customer Loyalty: By prioritizing customer satisfaction, companies can build strong, lasting relationships, resulting in repeat business and referrals.
- Adaptability: A customer-centric approach enables businesses to quickly adapt to changing customer preferences and market trends.
- Reduced Churn: Focusing on customer needs and providing exceptional service reduces the likelihood of customer churn.
- Personalization: Personalized experiences can increase customer engagement and drive higher conversion rates.
Weak sides of the customer-centric approach?
- There are so many customer-centric businesses, and this means only one thing – increased competition.
- Due to more focus on the customers, your product quality might suffer, which is bad for your business.
- The customer-centric approach requires extensive preparation and market research, which is cost and time-intensive.
- Although customer-centricity creates more flexibility within your company, your business structure is more prone to problems.
- Unlike the product-centric approach, it takes much longer to build a solid brand reputation and position with the customer-centric approach.
Hybrid Approach or The Coexistence
Businesses can benefit from both approaches, as both of these approaches have many good sides, and can establish your business as a brand. Then is it not possible to adopt both approaches for achieving a bigger result faster?
Many successful companies find a balance between product-centric and customer-centric strategies, and leverage the strengths of both approaches.
This hybrid model can be particularly effective, allowing businesses to innovate while maintaining a strong focus on customer needs. Organizing around the product team and focusing on making your product innovative and updated, doesn’t mean you can’t be customer centric, and vice versa.
Being customer centric helps you build a great customer loyalty base, and a product centric approach helps you build an effective and efficient product across the industry. Why follow only one approach to succeed, when you can get both?
Examples of Hybrid Approaches:
- Google: Google is continuously working on its products and innovations, such as search algorithms and AI technologies. Simultaneously it also emphasizes user experience and feedback and works accordingly to deliver the best customer experience.
- Nike: In the same way Nike is also known for its innovative athletic products, and the company also prioritizes customer centric approach. Some of its initiatives towards customer centric approach are its community-building initiatives and focus on customer engagement through personalized marketing.
Choosing the Right Approach for Your Business
Now we have discussed all the pros, cons, and characteristics of both approaches. Though the debate of product centric vs customer centric approach is a never-ending dilemma. But you need to be sure that which approach suits you the best and can bring success for your business.
Do you know, a 2% of customer retention has the same effect on profitability, as it cuts the marketing cost? But the question is, how you can earn that customer loyalty, by following with approach?
For that, I have listed some factors that should be considered while selecting the appropriate approach for your business.
- Industry and Market Dynamics: An appropriate approach can strongly depend on the industry in which you are operating. For example, technology businesses like mobile manufacturing companies can be benefitted by following the product centric approach, while service oriented businesses like hospitality companies may thrive with a customer centric approach.
- Competitive Landscape: Analyze your competitors’ strategies. If the market is saturated with customer-centric companies, a product-centric approach might help you stand out, and vice versa.
- Customer Insights: Conduct thorough market research to understand your target audience’s preferences and pain points. This information can guide your strategic decision.
- Resource Allocation: Assess your company’s resources, including budget, talent, and technology. A product-centric approach may require substantial investment in R&D, while a customer-centric approach might need advanced CRM systems and customer service teams.
Saufter to streamline your customer centric approach
Saufter is a cutting-edge helpdesk solution designed specifically for e-commerce businesses, providing a comprehensive suite of features to streamline customer support. With seamless integration across popular platforms like Shopify, WooCommerce, and social media channels, Saufter enables efficient management of customer interactions.
Key functionalities include live chat, email helpdesk, order monitoring, and proactive support, all powered by advanced AI and automation. This robust tool ensures businesses can deliver exceptional customer service, reduce response times, and maintain high levels of customer satisfaction, making it an invaluable asset for any e-commerce operation.
Conclusion
Deciding which approach to follow between product centric and customer centric approach, completely depends on various factors like your business goals, customer base, competition, industry, and available resources.
In product centric approach the focus is on innovation and achieving the best of product excellence. On the other hand, a customer centric approach prioritizes customer satisfaction.
According to a report by Gartner 89% of companies are now competing primarily on customer satisfaction. These statistics clearly highlight the importance of customer first mindset of businesses nowadays.
Additionally leveraging tools like Saufter can enhance customer satisfaction and streamline support processes. That ensures your business stays at the front in this competitive customer-focused market.
