While achieving a healthy revenue stream in an organisation where profit isn’t the primary driver may seem counterintuitive, a customer-first approach is intrinsically aligned not only with the happiness of your customers but also with the future success of your business. Putting the customer first is a long-term investment, one that creates value for your business by increasing customer retention and loyalty. If you foster long-term lasting customers, your business will last… positioned perfectly to succeed and withstand the test of time.
Embracing a customer-first strategy provides an essential key to sustaining profitability for your business.
When reviewing your pricing structure where do you start?
Do you review your competitive set to compare pricing and get an idea of what the market will bear? Do you analyse the cost of producing your product or service and delivering it to market? Do you look at how your current customers are reacting to your pricing?
…or do you look beyond to your ideal customers and target markets?
Analysing your target market and scrutinising their wants and needs, in addition to their core demographics, is rarely taken into account when looking at price, yet should be one of the most influential metrics that you consider. Your optimal target market should be derived by analysing your value to your customers and developing a considered Value Proposition, that revolves around the needs of that ideal customer base.
Understanding your target market’s core drivers, their Jobs to be Done, brings insight into why they choose products and services, and ultimately why they choose yours. It gives you key indicators on what they value, based on the problems that they are trying to solve… and one thing that is exceedingly clear is that customers are willing to pay more for the things that they find valuable… those that improve their lives.
There is a common misconception that the most important factor driving a customer’s decision to purchase is price, followed by convenience. However, Jobs to be Done theory suggests that customers may actually have other more compelling motives… motives that even they may not consciously recognise.
67% of consumers and 74% of business buyers say they’ll pay more for a great experience.
For example, take a look at how customers fulfil their need for food and day-to-day necessities. Customers that are truly driven by price will choose products and services that reflect this and tend towards inexpensive low-quality goods without all of the bells and whistles… others, even though they say that price matters, may choose a supermarket that is conveniently close to their home even though it is more expensive… and others choose to shop at an organic whole foods market, driven by a desire to be environmentally conscious, or to be seen that way, which overcomes their reticence to spend more money.
If your product is well developed to fill a need that falls higher in Maslow’s Hierarchy of Needs , or addresses needs on multiple levels, your customers are likely willing to pay a higher price in order to satisfy that need. Conversely, if your product just fulfils a basic need and doesn’t offer a unique value it will fall lower in the Hierarchy, creating more sensitivity to increases in cost.
By understanding what your customers value, you can then determine where you fall and price your products or services based not on what they are, but according to the value they provide. Otherwise, if you disregard the needs of your ideal customers and what drives them to purchase and instead price your goods and services based on competition, or worse yet on the lowest common denominator, then you are destined to sell yourself short, leaving money on the table.
It is important to remember that customers are often the strongest evolutionary force that bears on price, as they direct the perception of value in the market and this value, in turn, drives price. By focusing on your ideal customers first and aligning your core offerings with their core values and needs, you are inherently increasing the worth of your product or service in the minds of your customer.
…and therefore, in the market.
Finding your core Value Proposition drives you to find points of difference in order to deliver value to your customers. By its very nature, building your strategy around this core value launches you into a unique position in the marketplace.
In today’s fast-paced and increasingly digital world, consumers are endlessly bombarded with more and more choices. More choices tend to contribute to more dissatisfaction and more uncertainty, impeding the decision-making process.
But even when faced with only a limited number of choices a perceived lack of differentiation, where the options appear equally valuable, can lead to decision fatigue and discourage buyers, putting them off and negatively affecting their decision to purchase.
Taking a customer-first strategic approach and leveraging your core value proposition allows you to position your products and services in a simple concise way, ensuring that your points of difference are not only clear but valuable, thus cutting through the noise and capturing the attention of your ideal customers.
Not only that but pursuing a customer-first strategy aligns your entire business with the needs of your customers, enabling you to provide value and generate trust through transformative customer experiences.
By 2020 customer experience will overtake price and product as the key brand differentiator.
— Walker Information
By setting yourself apart from your competition through the communication of your core value to your customers you will stand apart from the crowd, gaining their hard-earned attention and business, and carve out a unique position in a competitive market where the distractions and demands on customers’ attention continually increase.
As we have discussed recently, you can’t be everything to everyone… and attempting to try is often a recipe for failure.
Implementing a customer-first strategic approach aligns all aspects of your business and creates a roadmap that helps you navigate and provide value to your customers, driving you to focus on your core offerings and points of difference.
Businesses commonly fall into the trap of sinking large amounts of their funding into developing products that don’t sell, or into adding features that aren’t wanted. They travel in too many directions at once, splitting their focus and leading to a loss of efficiency and lack of direction. This can stifle creativity and generate a revenue-sink as they attempt to cover too much ground and move in too many directions simultaneously… all in a misguided attempt to make everyone happy, instead of focussing on those customers that are their core market… those that drive their business.
As the old axiom suggests:
80% of a business’s sales come from 20% of its customers
Simplify. Don’t be afraid to make trade-offs. Concentrate your effort and focus on that all-important twenty per cent.
Instead of allotting funds to products or features that confuse your offerings and don’t deliver value, customer-first encourages you to make decisions based on your intimate knowledge of your target market. This dedication to serving your customers’ needs ensures that you funnel your expenditure into things that provide value to your customers, helping them achieve their goals
“The way to create something great is to create something simple.”
— Richard Koch, The 80/20 Principle: The Secret to Achieving More with Less
At its heart, customer-first pushes you to focus on your core offerings and core customers, reducing expenditure by streamlining processes, harnessing your efforts, and directing revenue into the most profitable channels… the ones that benefit your customers.
Many businesses struggle with building and maintaining customer loyalty and it has been shown that negative experiences have far greater impact on customer attitudes than positive ones, so it is important to build trust and pursue loyalty from the very first interaction a customer has with your brand.
Providing your ideal customers with products and services that provide value, that are not only desirable but that actually help them solve their problems or improve their lives, is destined to induce far-flung impact on customer loyalty.
Over 50% of customers feel more loyal towards brands that show a deeper understanding of their priorities and preferences.
Infusing your business with a customer-first mindset, from the executive level through to design and development to sales, customer service, and operations, will ensure that your entire organisation is aligned with a customer first strategy focussed on driving value for your customers. When it is evident that all decisions made are primed to provide great customer experiences, you build trust and an ongoing commitment to your brand.
Not only does customer loyalty drive repeat business, but your dedicated customers are also among your organisation’s most valuable assets… advocates for your brand.
Loyal customers are 7 times as likely to test an offering, 5 times as likely to buy again, and 4 times as likely to refer.
— Qualtrics, ROI of Customer Experience
Every satisfied loyal customer becomes a precious promoter of your products and services. Whether they are recommending your brand to close friends and family, championing you on social media or their wider networks, sharing their thoughts on your products and services online, or posting videos or other content reviewing your offerings, they are opening you up to new audiences and extending your reach. Ultimately, retaining customer loyalty is much more time and cost effective than acquiring a new customer.
People talk, share, and promote the things they love.
Customer-first is your matchmaker, which like that magical first kiss, helps you establish a personal bond and connect with your customers. It opens the door to creating a relationship built on trust and mutual respect and nurtures an enduring rapport with your customers, both old and new.
When focussing on making your business profitable and achieving your annual financial goals, it is easy to lose sight of the big picture… of long-term growth, sustainability, and future goals.
This kind of short-term focus, Marketing Myopia, is the antithesis of a customer-first strategic approach. It focusses on fulfilling the immediate needs of the company and the bottom line without taking the customers’ view into account and seeking to fulfil their needs, converting them to a high-value ideal customer in the process. Businesses that prioritise business-first metrics are concentrating on the wrong side of success. They overlook delivering value, potentially leading to the troubled waters of intense competition and a race to the bottom on price.
Conversely, customer-first pushes you to look at every aspect of your business, from all angles, and align everything in the pursuit of solving problems and providing ongoing value to your customers through the short, mid, and long-term.
This ongoing cycle of analysis and alignment drives you to constantly assess all aspects of your business, leaving no stone unturned… often uncovering some unpleasant truths in the process. This is one of the gifts of customer-first, illuminating obstacles so that they can be objectively examined, addressed, and ultimately overcome.
“Sustained success is largely a matter of focusing regularly on the right things and making a lot of uncelebrated little improvements every day.”
— Theodore Levitt
This critical self-assessment and forward-thinking also encourages you to continually improve and focus on your vision, not just your short-term goals, and to look to the future. It looks at your business in the context of its relationship to your customers and the marketplace, what value you offer and where you are positioned.
Your customers’ needs are always evolving and you must keep iterating and innovating with customer-driven purpose in order to continue solving for those needs. The honest analysis, clarity of focus, and forward-thinking of customer-first strategy keeps your business on track and gives it the resilience to adapt to unforeseen changes and gain success through evolution by design.