Deciding Between Product-Driven versus a Customer-Driven Business

“Most products are still created in a vacuum, driven by what is technically feasible rather than what is needed by customers.” – Kristin Zhivago

In today’s highly competitive business world, it is extremely important for companies to look at every aspect of their business. One of the important aspects would be not taking for granted the significance of having a customer-driven business as opposed to a product-driven business. Most companies would argue that both business models would serve the same purpose of profitability and growth, and hence it would not matter which model a company followed. However, market and industry experts disagree stating that there is a marked distinction between both the concepts / models, and understanding the differences would help leaders know how run their business and the kind of decisions they must make.

While making a profit and growing are extremely critical aspects for any business, they are not the only ones. Understanding the other aspects requires a company to identify whether a customer-driven business would work or whether it would benefit from a product-driven business. When a person ventures to start a business, it would be necessary to understand the type / kind of business to be set up, and once that is decided, the vision is a lot clearer in terms of the direction that the business would take. However, the fact about any business is that it never remains the same – there would be changes in its operations and basic structure, with a genuine need to redefine the business. Hence, the hallmark of a good entrepreneur / manager would be to be able to identify the difference between a customer-driven business and a product-driven one.

A product-driven business would be one that would pay more attention to the product – to its development, and then seek to find buyers and a market for it. The assumption would be that a great product would instantly attract top class customers, which in turn would lead to revenue, profits, and growth. The common scenario of a company with a product-driven business would be a set of knowledgeable and talented people, headed by a senior leader sitting together to discuss top class ideas around the development of a product. The focus here would be on the opinions and brainstorming ideas of the individuals, without really taking into account the current trends in the market, and more importantly without considering the needs, expectations, and preferences of the customers – the end users. Every aspect of such a business would be focused on the product – ranging from the features, to the use, the design, the cost of manufacturing, and several other such criteria surrounding the product.

In a product-driven business, the products are handled as standalone business segments and sometimes even as independent businesses. A group of people would be assigned to a product and all the efforts and resources would be directed towards the product and the designing. There are several examples of extremely successful product-driven companies – the ones that make their decisions around products. The main drivers of the ‘route’ a company would follow would be the people directly responsible for the products of the company. A product-driven business, would obviously then focus entirely on the product and not the customer. The reason being that such a business would assume that a large customer base would already be there for the products to be made, and hence mass marketing would be the idea strategy. A mass marketing approach ensures that a large number of the potential customers can become aware of the products.

A product-driven business must ensure that every product is unique, distinctive, and immediately usable for the customers. This means that customers should be unable to source these products from anywhere else in the market. However, if the company is unable to guarantee uniqueness, it should be able to position the product in a way that it appears to be the most beneficial and favourable, and certainly the best in the market. A lot depends on the creativity of the company’s marketing team in ensuring top class product positioning.

The customer-driven business on the other hand, as the name suggests, is one where the company focuses on the customers – their opinions and information. The products are developed based on the feedback and information received from customers. The focus of a customer-driven business is to understand consistently how to make the customer happy, what more can be done to address their expectations and needs, and how to constantly delight them. Such businesses understand that their survival depends on the satisfaction and happiness of their customers, and hence their actions are directed towards ensuring these feelings in customers. They constantly make efforts to deliver top quality offerings, complemented by excellent customer service. In a customer-driven business, the products are fashioned around what customers expect and want – that is taking their needs and preferences into consideration at all times. Even after the creation and launch of the products, such businesses constantly endeavour to personalize and customize their offerings in order to keep pace with the dynamic and evolving needs of their customers.

Despite the attention and focus on customers by a customer-driven business, there is no doubt that the products offered by such a business must be top quality – that means products that have benefits, features, and serve a purpose well. Since a customer-driven business depends extensively on the customer and data surrounding them, the company would need to focus on activities such as database maintenance, mining of data, and business intelligence. Amongst the top priorities of customers, speed is extremely important. Customers expect products and service that would speed up ‘their lives’, save them time, and make things a lot easier. For companies, providing such offerings is a means of saving themselves from the fierce competition that exists in the market today. The need for speed is possibly the reason that a number of companies now conduct most of their operations online – real time transactions, which cut down on the waiting times associated to the traditional ways of conducting business.

In addition, customers also expect speedy responses – even if it may not be in their favour. Customers are more likely to appreciate a company that responds to them speedily, with a reasonable and sensible response. The fact is that customers hate to wait and companies, which understand and satisfy their need for speed, are usually preferred by customers. Apart from speed, the other aspects important for customers are agility and convenience. The more convenient and flexible a company’s offerings would be the greater the preference of customers for them. For example – ready to use products, appropriate packaging, several payment methods, priority offered to senior citizens, and other such convenience enhancing factors. Additionally, a customer-driven business would make time and effort to keep in touch with customers, and would have a teams dedicated to support the customers and serve as a link between them and the business. Customers love companies that give them attention and importance.

In today’s business environment, having a product-driven or customer-driven business depends largely on a company’s method of operation, its products, and the customers.  A product-driven business does not assume that there would be customers for its offerings, but once they build a product they employ strategies to attract customers. A customer-driven business on the other hand, works towards understanding the wants and needs of their customers, and then building products and their operational strategies around those expectations. Whatever the approach, what really matters in the end is that customers remain happy and satisfied, in turn making a company more profitable and sustainably successful.

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