Customer or product-focused?

A company is either customer or product-focused. But hardly ever both.

For the last hundred years (at least), big businesses have attempted to put the customer first. This has led to sayings like the one below, where the importance of the product is downplayed and the sole focus becomes the happiness of the customer.  

お客様は神様です – “The customer is a god”

– Japanese saying

On the other hand, we need a product/service/solution to offer customers – otherwise there is no business! So, which comes first – the customer or the product? This is often a chicken or egg scenario.

Let’s unpack customer and product-focused businesses and see how they differ first, and then decide which one is right for your business.

Customer driven businesses

No customers mean no business. 

Customer-driven businesses, as the name, suggests focusing on the customer first. They tailor their offering to suit their customers. If the customer asks for a feature or product, they change their solution/offering to fulfil the need. This makes sense for small businesses targeting a niche market. 

Let’s say your small business offers frozen dinners. If your customers ask for a vegan, low carb paleo option with only pork – you can change your product and offering to suit their needs.  

Many small businesses start with the customer first, as they can customise their offering. It is much more difficult for big corporates to change and adapt for a few customers – they would rather focus on the masses and serve 80% of the customers generically. 

Being customer-focused allows a company to be agile and flexible. For example, if a certain feature will add more value to the offering, the company can easily pivot to address the need. An excellent example is William Wrigley Jr. (1861–1932). He sold soap but offered chewing gum as an incentive to customers to buy his soap products.

It soon emerged that the customers preferred chewing gum above the soap products. He pivoted the company to form Wrigley’s – currently owned by Mars Inc. 

Customer focused marketing

No product, no business.

Customer-focused marketing doesn’t necessarily have to be in-person chats and conversations. Research and insights into customer activities are vital to moving the business forward. For this reason, a lot of time is spent digging into customer behaviour, needs and user experience.

Customer focus differs depending on the industry. For example, for online businesses Google Analytics and action tracking software is used to understand what the customer does and what is important to them. With physical products such as frozen dinners, one can track sales and customer feedback through conversations and follow-ups.  

Product driven businesses

Many big businesses have this problem: they have legacy systems, existing relationships with suppliers and complex legal frameworks to function in. For this reason, companies may decide to tweak their product and sell it to a bigger market.

Capuccino Pty Ltd is a large corporate selling coffee. The executive team made the decision to tweak their existing offering/branding to find a bigger market for their products. 

As the company is already known for their coffee, it cannot drastically change its product offering. The decision is taken to change their logo and packaging. They are also adding free coffee spoons to their ground coffee as a value-added feature. 

It is not only corporates that decide to do a product-first approach. Some startup founders have a bright idea but need to show customers the value their product would offer. Once they have a prototype/minimum viable product, they need to find a product/market fit – essentially taking their product to their chosen market segment.

Product focused marketing

When it comes to a product first approach, finding the fit can be challenging. Many corporates tend to throw money into advertising: more money in advertising means more customer acquisition. It thus makes sense to use mass media advertising including billboards, TV/Radio ads and online banner ads to drive customer awareness and sales.

Startups, on the other hand, using a product-first approach can use focus groups to find the right person for their product. 

Is it product OR customer focus?

Most companies try to involve customers in their offering before going to market. I do find that businesses/startups tend to favour either changing their target market to fit their product or change their product to fit in with their customers. 

Though a tweak of both might be needed, in my experience small businesses tend to focus on people more than big corporates. 

Conclusion

So, to answer the initial question: should we start with a product or with the customer? The answer is: it depends on which stage of business your company is in. 

Small businesses tend to focus on the customer to build their product/service – simply because they generally don’t have big advertising budgets or decide to be agile in their offering while getting a product/market fit. 

Big corporates generally have an existing offering. They need to expand their market and thus will use advertising to target more people. As the product could be quite complex, it is not always possible to make changes per individual client.  

Whether you have a product or have the audience – you need to get a product/market fit. While having the audience is often easier, having a product that offers value to your chosen market can give your company a solid foundation to move from.

Happy investing! 

Sources consulted


Money Local

Frugal Local runs his own company (Effectify). He does software development and helps small businesses and startups with digital solutions. He enjoys writing articles and simplifying complex things - such as the article you're reading!