What Are the Advantages & Disadvantages for Every Company Becoming a Customer-Focused Business?
Companies typically operate with either a product- or customer-centric focus. During the mid-1900s, companies often operated from a product- or production-oriented perspective because of the importance of quality products and limited competition. In the early 21st century, the role of a company and its marketing and sales processes have become more critical because of heightened competition. This has contributed to greater use of customer-focused business practices, which has advantages and disadvantages.
A customer-centric focus helps throughout the marketing process, which includes product research and development as well as promotional communication. A customer-centric focus typically leads to companies maintaining closer contact with core customers. Focus groups and other research methods are used to maintain awareness of customer feedback on products and desires for improvements. Tailoring products and services to fit the strongest desires of your target market helps you establish a more marketable product concept.
Strong familiarity with the needs and desires of your customers helps you better promote your brand's value proposition. Effective research gives you a better understanding of what product features and benefits are most valued, as well as which messaging strategies and techniques will have the intended effect. Customized solutions that align well with a particular customer's interests usually carry greater weight than more mass-marketed products or services with little direct appeal.
Though not inherent, a customer-centric focus may lead to innovation lags against more product-centric competitors. Cutting-edge technology leaders often rely on faster, more advanced products to attract the interests of a larger customer base. When you enter the market behind or with products lacking some of those advanced features, you face greater pressure to deliver a strong value proposition that your target customers buy into.
The activities involved in carrying out a customer-focused business operation add time and expense. Research before, during and after product or service launches takes significant time and investment. Product-oriented companies are often using this time to further product research and development. Additionally, customer-focused businesses often invest in customer care and service activities such as follow up, returns and other efforts to satisfy customer demands. While the hope is that these efforts garner more customers and greater loyalty, they take time and money to manage.