Product-centric and customer-centric approaches shift the emphasis away from pure technology innovation and project-based management. It’s not about chasing every short-term dollar or squeezing every ounce of profit from every product. Instead, each takes some somewhat risky bets that may pay off down the road. Understanding the difference between product-centric vs. customer-centric can help your product-centric organization focus on creating and augmenting innovative products.
Product-centric organizations with heavy investment in R&D and technology continually push the envelope to build new solutions that the market may not even realize they need yet.
By creating markets versus chasing them, they position themselves as early leaders in new spaces. They evolve into incumbents that are hard to dislodge. But not every moonshot is a success. Therefore, these businesses require a healthy appetite for failure. And on some fronts, they may encounter a lot of quick pivots.
In short, product-centricity espouses an “if we build it, they will come” mindset, which is one of the significant differences between product-centric vs. customer-centric businesses. Make cool stuff, and the market will follow, and the best product will eventually win out.
Customer centricity, on the other hand, emphasizes the customer, full-stop. Every decision gets made with the customer in mind. If it doesn’t improve the customer experience, it doesn’t happen.
Creating happy customers and keeping them happy is the entire focus for the product team and the company. This requires customer-centric organizations to prioritize customer delight and value over profits, which is another example of the differences between product-centric vs. customer-centric organizations. Customer-centricity allows for a loyal fan base, which eventually leads to long-term success.
Successful customer-centric organizations invest heavily in customer research to better understand the needs, pain points, and wishes of their customers. No decisions are made based on hunches or guesses, and pet projects and shiny objects are shelved unless customers clamor for them.
This doesn’t mean these companies don’t develop plenty of new products and line extensions, but when they do so, it’s to tackle a unique customer pain point or bring value to a different market segment.
When a product-centric company releases a new product, there’s not always an instant crushing demand for their offering. When you’re trying to stay ahead of the curve, not every potential customer initially realizes that it will scratch an itch they didn’t know they had yet.
For example, when Sonos hit the market with its simple, attractive home audio solutions, most consumers weren’t already clamoring for what they were selling. For decades, audiophiles had been kitting out their listening rooms and home theater systems with complicated components and wiring. At the same time, the rest of us sat on the sidelines, content with boomboxes, clock radios, and other all-in-one solutions.
But by making it easy and relatively affordable to play any song in any room of the house (or all of them), casual consumers saw the appeal of wireless streaming audio. They began dipping their toes in the market. A visit to an early adopter’s house or an in-store demonstration flicked on the lightbulb in their heads that they might also enjoy this kind of thing, and soon enough, the sales started piling up.
Sonos created categories with every new product release, creating a demand for smart speakers that didn’t exist beforehand. They made cool stuff that people didn’t know they wanted and now can’t imagine not having the product.
Of course, this territory is nothing new for Apple, which has been blowing people’s minds since the 1980s by introducing seemingly inconceivable products to the market over and over again. There was no focus group telling Steve Jobs and his minions that they needed a graphical user interface for their computers or the ability to carry around their record collection in their pocket. But once the market learned about these groundbreaking products, demand quickly followed.
The company has taken a two-pronged approach to product centricity. First, they introduce products no one had ever dreamed of before. Then they refine the heck out of the user experience, obsessing over every detail and pushing the product specs to offer top-of-the-line options at a premium price point.
Apple’s product centricity gave them a catalog of attractive, robust products that work, unlike many of their competitors that can’t manage to hide the complicated parts of computing and technology from consumers. Of course, with that success comes hubris that sometimes pays off (ditching headphone jacks on iPhones to spur AirPod sales) and other times flops (such as the before-its-time Newton and coldly received HomePod). Most Apple criticism usually focuses on the unexciting incremental improvements that have replaced game-changing innovation in recent years.
Dyson is another example of a brand that bets on itself. Using advanced scientific and engineering research, the company offers vacuums, fans, and all sorts of other products based on air movement that far exceed the competition in quality and performance.
Combined with a sleek and stylish aesthetic, they’ve carved out a niche for aspirational consumers willing to pay a premium for top-of-the-line products. Copycats like SharkNinja are always on their heels, so they must continually push the envelope to stay ahead and maintain the elite brand they’ve built.
Obsessed with delighting their customers, customer-centric companies constantly anticipate customer needs before they’re declared while simplifying and improving every aspect of the customer journey. From discovery to the purchase decision to shorten the learning curve to minimize maintenance, it’s all about removing friction and accelerating value realization.
One business delivering delight to pet owners’ doors is Chewy. They’ve taken the monotonous routine of stocking up on pet food and other supplies to a whole new level that their dot-com predecessor Pets.com failed to achieve.
Not only did they solve the immense logistical hurdles of getting these large, heavy packages to customers on time and cheaply, they’ve also created a delightfully sticky user experience. With auto-shipping subscriptions that are easy to tweak and modify, millions of pet owners no longer need to worry about whether they’ll have enough dog food, cat litter, or wood shavings for their hamsters. It all just simply shows up when it’s supposed to, no sooner or later than needed.
Amazon-owned, Zappos, is another brand delivering customer-centricity. Whether you love or hate shoe shopping, it’s a given that not every shoe will fit. The need to try shoes on makes eCommerce seem like a poor fit for footwear, but Zappos cracked the code.
Free returns are at the heart of Zappos’ customer-centric strategy. They remove a primary barrier for online shoe shoppers who don’t want to return items. But beyond that, their obsession with customer research and analysis leads to happy customers and significant market share.
In the brick-and-mortar retail universe, customer centricity is popular as well. One company leading the pack is Trader Joe’s. The company prioritized discovery and selection, with a smaller footprint, by limiting multiple brands into their store.
By using the private Trader Joe’s label, they can focus on selling various products compared to other brands. Trader Joe’s feels like a fun adventure rather than a routine trip to the grocery store. The product remains competitively priced to other stores, and customer service remains a priority for the organization.
Does Product-Centric vs. Customer-Centric matter?
When a company truly embraces a product-centric or customer-centric philosophy, that decision ripples throughout the entire organization. Businesses can’t successfully do this halfway. It impacts everything from who owns the P&L to staffing to budgeting to marketing.
Product-centric organizations invest far more in advanced research and development. They investigate and experiment with creating truly innovative offerings for the market. And while some product-centric companies may do a lot of rapid product updates for some of their digital offerings, their model also requires lengthier projects that may or may not pan out in the end if they don’t achieve product-market fit.
These businesses need deeper pockets, more patience, and higher risk tolerance. They do this to see if their breakthrough innovations win over the masses. In some cases, their go-to-market efforts may also require much more education than a typical new product introduction.
Meanwhile, customer-centric companies require a significant commitment to customer research and analysis. They’re constantly in read-and-react mode to what they’re learning from their various feedback channels. Furthermore, they always look for new ways to enhance the overall customer experience.
While also experimental, their trials are minor in scope and more incremental. These companies must also frequently make decisions that maximize revenue or profits, focusing more on lifetime value and churn than a big-ticket, one-time sale.
As the above illustrates, the contrast between these approaches trickles down far below the C-suite, influencing organizational structure, hiring, IT systems, tools, and technology choices. Product roadmaps and success metrics will also vary quite a bit, with many customer-centric companies having much shorter time horizons and more emphasis on net promoter scores.
Product-centric vs. Customer-centric
Product centricity and customer-centricity both have plenty of merits. By adopting either of these strategies, companies create internal alignment. The alignment allows them to ensure everyone is working toward the same goals.
However, customer centricity is usually a better bet, especially in the digital space, where switching costs for consumers can be pretty low. Customers want to associate themselves with brands they admire and rely on providing quality. Products should satisfy their needs, and Customer-centric companies can provide that.
Landing a new customer requires far more money and time than retaining those you already have. The concept plays to customer centricity’s strengths. Focusing on an ideal customer experience typically reduces churn. Moreover, it also increases satisfaction and overall sustainability.
Customer-centric companies also excel at breaking down silos since their cross-functional goals. No one is uninvolved in the overall customer experience, so everyone feels like they succeed in its success, and product management plays an integral role.
Product centric firms
Revolutionary innovations are more likely to come from product-centric firms. However, these businesses also face a steeper challenge to achieve ongoing success. A completely new product may be amazing. Yet it may take much more convincing to win over new users. For example, if that new product may not be in a prospect’s current budget. The sales cycle will lengthen, which can test the patience of executives and investors.
However, being product-centric doesn’t mean you ultimately get to ignore the rest of the customer experience. And customer centricity doesn’t work when your product isn’t delivering enough value on its own. Keeping the customer top of mind at all times is a good strategy. However, businesses can’t ignore the product at the core of what they’re selling.