August 8, 2022

Product-centric vs. Solution-centric Marketing

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Marvin Tekautschitz
Partner @ Demandbay

The concept of centricity has broad implications in business. When companies decide on their focus, it influences all decisions, from resource allocation to marketing campaigns. Traditionally, companies adopted product-centric approaches, which, by definition, leave out an essential aspect – the customers. 

We have recently been witnessing a shift, especially in light of research findings that favor a solution-centric (aka. customer-centric) approach showing that customer-centric companies are, among other things, more profitable. Understanding the difference between product-centric vs. solution-centric approaches will ensure you're choosing the best path for your business.

What is Product-Centric?

Companies adopting a product-centric approach put all the focus on developing their product. This means that they allocate most of their resources to product innovation, constantly working on and updating the product's core features to make a more advanced version.

Such companies put their product above everything. Their main goal is to create the best possible product without giving much significance to the customer experience. They invest a lot into research and testing, and their growth is aligned with product development phases.

Their primary sales strategy is to promote the value of their product and build their customer base around it. They measure success by looking at how the product quality changed over time and how it compares to competitors. If the product is successful, the company is too.

Deciding to adopt a product-centric approach comes with specific pros and cons. Here's what you can expect if you decide to go down this path.

Pros of the Product-Centric approach

  • Integrate the most innovative features into the product – since most resources are allocated to product development, there's ample room for improvement, and you can create remarkable products that work.
  • Become known for product quality – this relates to the previous point and contributes to brand positioning and building a solid reputation for providing high product quality.
  • Strong customer loyalty – thanks to the outstanding quality of your products, the customers who need them will always return. Providing consistent and continuous value never goes unrewarded.

Cons of the Product-Centric Approach

  • Lack of customer research – since you're focusing on the product and not your customers, you're missing valuable information about what your customers actually need.
  • Failing to define product-market fit – since you don't know your customers and their needs, there's a high probability that your product doesn't fit the market. If you're not familiar with your customer's demands, you can't meet them.
  • More expensive – this approach requires a change in the behavior of your customers. Instead of you creating a solution for their problem, your goal is to get them to love the product they didn't even know they required. This takes plenty of resources, and it is risky.
  • High risk – not knowing if anyone will actually need and use your product is extremely risky. Although this approach can be very rewarding, the risk of failure should not be disregarded. Influencing people's behavior and needs is difficult, even if you have the best product in the niche.

What is Solution (Customer) Centric?

Customer-centric companies focus on the customer or the solutions their customers require to solve their problems. Instead of the product, these companies invest their resources in researching their customers, discovering problems and pain points, and improving all parts of the customer experience.

Such companies make all decisions based on their customers. Their main goal is to use their customer's understanding, the buyer's journey, and challenges to develop the best solution. They invest a lot into customer success and support, and they define their growth by the ability to address their customers' needs.

Their primary sales strategy is providing the best experience, nurturing long-term relationships, and building a customer base through the satisfaction and advocacy of their existing customers.

These companies are successful when they have happy customers (rather than having the best product) and when the entire experience is fine-tuned and perfected from the point of entry into the sales funnel to the end. They look at customer loyalty, referrals, upsells, etc.

Pros of Customer-Centric Approach

  • Understanding your customers – there are plenty of benefits to this. It solves the problem of reaching product-market fit, but it also helps you create the most effective marketing message.
  • Product development is guided by customer needs – knowing customers' needs will help you meet them. The customers already have a problem you can solve, and the product is adapted. Customer behavior can stay as it is without changing to adapt to your product.
  • Building long-term relationships – understanding your customers allows for better communication. You will get a better retention rate, a lower churn rate, and an increased customer lifetime value. Happy customers tend to come back! In fact, 73% of customers say that customer experience directly influences their loyalty.
  • More difficult to copy – while a product can easily be copied by your competitors, this becomes a lot harder when you have a connection to your target audience. Features can be copied, but not relationships. Your competitors can try to do everything you are doing to form bonds with your customers, but it will take time, and it's questionable whether it can actually work.

Cons of Customer-Centric Approach

  • Multiple focuses – even though the focus is on the customer, you can't disregard the product development. However, since customer satisfaction is primary, it may be difficult to devote enough resources and attention to the product. Chasing customer feedback may leave you without a clear understanding of customer needs.
  • Competition is increasing – due to the success customer-centric companies have, more and more companies are turning away from product-centric to customer-centric.
  • Expensive market research—understanding your target market takes time and money. Be prepared to set a significant number of resources since this is your focus.
Product-centric vs customer centric approaches

Key Differences between Product and Customer-Centric Approaches

Essentially, product and customer-centric companies approach customers differently. Both have a common goal – creating demand and achieving sales. However, they reach this goal differently. Product-centric companies focus on creating the best product. Their message emphasizes and relates to product features, and they always look to outshine the competition. This doesn't mean they aren't concerned with their customers but are not focusing on the experience.

Example of product-centric ad by Škoda, with emphasis on all the features

On the other hand, solution-centric companies focus on their customer's needs and how they can meet them with their offer. They still care about their product, but they focus on how to solve problems with the product. Essentially, they adapt more to the customer than asking for the customer to adapt to them.

Example of a customer-centric loyalty program by Starbucks

The choice you make for your company matters greatly since it influences all parts of your business. Customer-centric strategies showed much better results when it came to profitability and customer satisfaction. You are maybe in love with your product, but what you need for success is your customers' love. The best way to achieve that is to listen to their needs. So if you're currently leaning towards product-centricity, consider making a shift.

How to Become More Customer-Centric?

Given the success of the customer-centric business approach, you may be thinking of integrating more customer-centricity into your company. The following section outlines several essential steps to start making this shift.

Get Relevant People On Board

Every change in a company needs to start from the top. It's essential to get all executives on board if you want to set a company up for success. Executives and senior members of the company oversee resource allocation and change company structure and processes. This is why getting a yes from them is key to implementing customer centricity in the company.

Integrate Customer Centricity into All Processes

To become truly customer-centric, it's not enough to implement the principles of this approach into individual functions. The entire company culture needs to change. Every team, team leader, and team member should be on board and accept that the customer and their needs are now the focus. To achieve this, most product-centric companies will have to adapt their entire company structure and internal processes.

For example, the engineering team should plan the product roadmap taking customer input into consideration, the sales team will need to adapt the strategy to speak to customers' needs instead of product features. The marketing team will have to take on the inbound marketing approach, implement a content marketing strategy, etc.

Set Up Communication Channels between Your Teams

Another critical step is ensuring that all teams have open channels of communication. The customer support and sales team need to be able to convey customer questions and concerns to the engineering team, which in turn has to keep customer-facing teams up to date on what the product roadmap looks like. The marketing team must know what customers struggle with, and they have to be able to notify other teams about their insights.

Segment Your Customers

Once you get approval from everyone in the company, it's time to start doing the actual work. Your current customer base should be divided into customer segments, facilitating an understanding of needs and pain points within these segments. Not all your customers are the same, and grouping them allows you to pinpoint specific characteristics of each group. Further on, you will be able to adapt your marketing and sales approach based on the group.

Let Customers Influence the Product Roadmap

To become customer-centric, you need to gather and consider customer feedback when it comes to product development. Given that now your customer needs and pain points are the focus, it's essential to prioritize product features that will address and solve their problems.

Building a product with customers in mind means regularly collecting valuable customer insights, letting them vote on what they want to see, and ensuring that the engineering team works on that. Keeping everything in one place is an excellent way to ensure that customers' requests aren't forgotten.

Leverage the Power of Content Marketing

Now that your company's focus is on the customer, there are tools and strategies you can use in your marketing to explore the full potential of this approach. Developing a relationship with your prospective customers entails providing constant and consistent value. In other words, you need to be helpful every step of the way. To accomplish that, you must develop a content marketing strategy aligned with the customer journey.

Your customers aren't just waking up and deciding to buy something on a whim. Usually, there's a thought process behind making a purchase, consisting of several stages. In each of these stages, the customers have different questions and goals. With a well-planned content marketing strategy, you can address these questions and help them reach their goals. This is the foundation of inbound marketing,

Final Thoughts

The customer-centric strategy focuses on your customer's needs. It ensures that your product is in demand and serves your customers well. In turn, the positive customer experience results in loyal customers who continue to support and advocate for your brand. Less risk, lower chances of failure, and more profit. Sounds in line with your company's goals? Then it's time to switch from product-centric to customer-centric.

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