Customer focus refers to an organization’s orientation toward satisfying actual and prospective customers’ needs. It involves developing a deep knowledge of:
Who the business’s customers are
What those customers want
When and how they want it
What they’re willing to pay for the value they receive
Today’s customers are increasingly well informed about the products and services they can choose from. At the same time, they have the ability to share their experiences immediately and widely. For these reasons, customer focus—taking actions to understand and satisfy your customers—is important not only for your organization's profitability, but also for its reputation.
Customer focus can help you:*
Acquire customers. By developing deep knowledge of your current customers, you gain clues to where you should look for new ones. And you learn how to boost the number and quality of referrals through existing customers.
Retain and develop customers. When you identify your best customers, you can create a steady stream of revenue by encouraging them to continue to buy products. You can also sell them a variety of items from your different product or service lines. And as their relationship with you grows, you can personalize offers or even create new offerings that serve their changing needs.
Reduce costs. As you build relationships with customers and they learn more about your company, its product lines, and its processes, the cost of serving them may decline.
Why customers defect
From product focus to customer focus
Many managers see their organization’s offerings as the core of the company’s business. They assume that introducing a new product model or lowering prices will persuade people to buy from them and not from a competitor.
But in today's business climate, a number of forces are eroding this product-centric view:*
Technology. Technological advancements and knowledge are spreading faster than ever. That rapid diffusion makes it easy for rivals to quickly copy product and service innovations.
Globalization. Many businesses now operate around the world. That global presence wipes out geographic advantages—such as lower labor costs—that some companies previously enjoyed.
Consumer power. Consumers have access to vast amounts of information about companies, their offerings and prices, and their competitors. To remain viable in this environment, many businesses end up offering steep discounts, only to be undercut by someone offering lower prices—or even free products or services.
Intangibles. Customers often base their purchase decisions on intangible qualities, including a company’s trustworthiness, values, service quality, reputation, and reliability.*
Given these factors, businesses can no longer try to compete on product innovation or price alone. Instead, they must understand and cater to customers’ needs—sometimes before customers even know what they want.
Rather than asking, “How can we get customers to buy more from us?” managers today need to ask very different questions—such as:
“Who are our target customers?”
“What problems do our target customers have?”
“Why do our customers buy from us and not from someone else?”
“What else do they need from us?”
Only by putting customers front and center can companies pull ahead—and stay ahead—of their rivals.*
