Agile Insights Blog

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Being Customer-Centric Isn’t the Complete Answer

May 16, 2016 11:47:08 AM

You can’t throw a proverbial rock in marketing and strategy literature these days without hitting an article about customer-centricity. Nine in 10 CMOs agree their organization is trying to become more customer-focused.

In fact, 2016 has been dubbed “The Year of the Customer,�? and there is a lot of talk about how we are now entering the “Age of the Customer.�?

This may sound dramatic, but there’s no denying it’s true. Several trends have converged to put a lot of power into the hands of customers, and companies have to change the way they work in order to adapt.

Jack Welch, former CEO of General Electric, has famously said: “We have only two sources of competitive advantage ― learning more about customers faster than competitors and turning that learning into action faster than the competitors.�?

It seems that somehow along the way we lost site of the true purpose of our business, which is to provide value to customers, and became too product or operationally focused instead. Now the pendulum is swinging back the other way.

There is no denying that today’s fastest growing brands are differentiating themselves on excellent customer experiences. But customer-centricity alone will only get you so far. You don’t win by serving customers well. You win by serving customers better than your competition.

Al Ries, in Being Customer Oriented Isn’t the Best Marketing Strategy, recently published in Ad Age, points out that the vast majority of companies are trying fervently to develop better products and market them better to customers. When this doesn’t work, they settle for being the cheaper option.

He says, “Marketing is like warfare. In marketing, you compete with competitors for customers. In warfare, you compete with enemies for territory.�?

Focusing on your customers is like focusing on territory – it’s expected and predictable. Instead, he recommends focusing on the path of “least expectation.�? Be different, because that is what builds strong brands.

Almost a decade ago, Vennli’s three circle model was conceived, like many great ideas, on the back of a napkin. Our co-founder, Professor Joe Urbany, was trying to explain competitive differentiation to a student. He started with two circles, one to show the value your company provides and another to show the value customers are looking for:
two circles
This thinking is customer-centric. It’s the foundation for creating products that customers want and love.

But it’s not enough. Customers make choices in a competitive context. They have options. Therefore, you need to provide UNIQUE value in order to win their choice.

So, Joe added the third circle to represent the value the competitor offers customers:
three circles
This creates an intuitive three circle Venn diagram that visualizes how customers make choices in a competitive context:
vLens Description
And each area has significance for both understanding customer choice and taking actions to build competitive advantage:
three circles w explanation
When we visualize customer data in this way for our clients, we usually uncover a few things. To start with, the customer has a variety of needs of varying importance – some surprising. Your company may meet a number of those needs effectively, but the competitor might also meet many of those same needs AND provide some unique value that you don’t. (There goes your competitive advantage! Better lower your price, right?)

And, usually, the consumer has at least one need that neither offering meets that falls in the Yellow Zone. These are excellent opportunities for innovation.

These insights are often a big help in understanding why sales have stalled or are declining. If you want to win the customer’s choice more often, you’ve got to move the factors that drive customer choice into your Green Zone (i.e. your competitive advantage).

Our mantra at Vennli is just nine words: Be different from competitors in ways important to customers.�?

This sounds simple, but it’s not easy. The reality is there is a lot of complexity in applying this nine-word prescription. You’ve got to create value that matters deeply to customers, is different from competitors, and is based upon unique company resources and skills. The goal is to win the customer’s choice.

So, to go back to Jack Welch’s quote, not just any customer data will do. Specifically, you need to understand how your customers choose before your competitor does. If you place all your focus on your customer and lose sight of what is going on in your market, you’re left with a huge blind spot.

Yes, leading brands have to understand their customer and provide amazing customer experiences, but, to win market share, they also have to be different. This is what will build a strong, long-lasting brand.

Topics: General

Written by Vennli

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