Instead of the product at the center, the customer should be there. What's needed are managers who engage individual customers in a dialogue, creating two-way communication that helps develop future product offerings, create engagement, and build lasting relationships.
What you choose to measure and why are key to this discussion. In a recent conversation with a well-known leader of CRM solutions for large national retailer, I learned just how important these decisions can be. She relayed to me how the chain had recently abandoned a product line that proved unprofitable. The product line not only was very expensive to maintain in the stores, but also customers were purchasing far less of the line than anticipated.
But analyzing the data from the customer's point of view tells a very different story. This product line was rare for most retail chains, so interested customers were willing to drive further in order to buy the items. These customers typically would not go the extra distance for either the staples or the other items that were a large profit center for the company. But this specialty line was enough to persuade them to make the journey. Not only was the "unprofitable" line bringing in new customers, but those customers actually bought far more staples and consumables than the chain's "typical" customer.
If we only look at the data in this example in terms of products, we can see that the new line was unprofitable. The decision to remove this product line seems obvious. But by shifting perspective and looking at the example in terms of customers, a new and valuable demographic had been reached, adding to overall profitability.
Unfortunately, this retail chain ultimately removed the product line before changing its perspective and putting the customer at the center of the equation. Only after the change had been made did it learn that it had actually initiated the unintended consequence of removing one of its most profitable customer segments as well.
Placing the customer at the center also begs for revised organizational structures. In a recent article in the Harvard Business Review, the authors posit the idea of being bold and eliminating the CMO position. Instead, a Chief Customer Officer should be recruited, to whom product management, marketing, customer service and CRM will report.
This change in leadership presents real challenges in the typical organizational structure where R&D will still want autonomy, yet it makes sense to align these efforts closer to the voice of the consumer. Product innovation will come from conversations and dialogue with the customer, increasing the likelihood that product will be on target the first time around.
In the day and age where customers have much more of a voice, when a single video placed on YouTube can bring an company to its knees, when a viral marketing campaign can increase your visibility to the national stage overnight, it's important that you look closely at the goals of your marketing department. For proof, just look to the success of organizations such as Zappos, a company where its competitive advantage is its focus on the customer.
In our organization, marketing leadership is not to be focused on lead-generation activities, paid search and product marketing. These are all areas marketing has under its wing, but they're not the core of what we're trying to measure. The real goal is to better understand where and how we can add additional value to the client. What innovations must we bring to the table? What can we do to increase Net Promoter Scores? What data are we gathering at the customer level?
However daunting these questions are, I feel the shift from product to customer is inevitable and the only way to compete.