Product-Led vs Customer-Led? It's About Balance

 

By JANA PAULECH

It’s no secret that at Brainmates we see product management as the engine of growth in every organisation. This means that we see a ‘product-led’ direction as the path that modern organisations should follow to achieve sustainable and innovative growth.

We talk about product-led thinking, we have a Product-Led Program, and we even advocate to senior executives and boards across Australia and New Zealand that being product-led is the secret sauce of growth.

But, as many executives have in the past, you may ask yourself why product-led?

Don’t we want to be ‘customer-led’?

This gets to a fundamental misunderstanding. Product-led does put customers at the heart of decision-making, but customers are only half of the equation.

Product-Led Is About Balance

Product-led is about balancing customer and organisational value. Creating great outcomes for the customer and delivering great outcomes for the organisation.

-This balance avoids the pitfall of solving the wrong customer problems – ones that aren’t really valuable for the organisation to solve.

If you have ever asked the question “why are we building this”, and the only answer was “because XYZ customer wants it”, you would understand what happens if we don’t have balance when considering customer needs. It makes for products with no realisable market potential as they are built for one customer who yells the loudest.

Balancing both sides of this equation necessitates you knowing a LOT more about your customers than you may think.

Not only do we need to know their problem, but also how painful the problem is.

How many other similar customers (in our realisable target market) have this problem?

Is it sufficiently painful that they will exchange something of value with us to solve it for them?

How much would they exchange?

How often?

Being a product-led organisation means your whole organisation aligns around this balance of customer and organisational value. At a more tangible level for product leaders, it means your teams have the skillsets of customer research and commercial acumen in balance as they discover and communicate product opportunities.

Less than 50% of product teams actually engage with their customers.

Engaging with customers directly, continuously and meaningfully is still the best way to gain a shared understanding of their needs, and is essential to being truly product-led.

Product-Led Is About Customer Research

‘Know your customer’ – or some version of this – is the core tenant of many product practice theories, and most product teams think they do indeed know their customers.

 

In a recent study, over 50% of product teams believed they had a shared understanding of customer needs. However, 69% of them also said that the products and features they released were not consistently well received by customers.

 

This may have to do with the fact that less than half of product teams actually engage with their customers.

 

Engaging with customers directly, continuously and meaningfully is still the best way to gain a shared understanding of their needs and is essential to being truly product-led.

 

But how do we do this?

 

The three best ways are:

 

• Directly – Actually talk to them! Using product analytics, A/B & multivariate testing and other indirect, quantitative measures is important but not a substitute for actually talking to them. The old adage that numbers can tell you ‘what’ but not ‘why’ only scratches the surface of this – the colour and empathy you get from 5 minutes with an actual customer can never be expressed in numbers.

 

• Continuously – Make talking to customers a habit, and part of your weekly process. This ensures you are walking the talk and truly understanding the needs of customers. It also means you aren’t only talking to one or two customers, but many, to not skew research to the ‘best’ or ‘loudest’ customers.

 

• Meaningfully – being considerate of how you engage customers, and being planned and structured is essential to getting meaningful insight from customer research. Unstructured research is good, but a few minutes of effort to put together a research objective and a few questions will make it even more meaningful. Better yet consider an evergreen research plan that harnesses interactions all team members have with customers to gain meaningful insights for all.

Product-Led Is About Commercial Acumen

If ‘know your customer’ is a core tenant of product practice, ‘know your commercial models’ is the poorer sibling sitting in the corner.

It’s no good to generate customer insight without being able to translate that into a commercial model which the organisation can then benefit from.

Unfortunately in many organisations the commercial potential of a product-led approach is never leveraged or harnessed. This may be as simple as a lack of a baseline understanding across the organisation of the numbers that drive it (costs and benefits). It may be a lack of process for making commercial decisions using robust frameworks and commercial value models. Or it may be a fundamental lack of trust in product to make sound commercial decisions.

In a recent study by the Association of Product Professionals which interviewed over 50 non-product (CEO, CTO, VP, GM, EGM, COO) and product leaders, they found that senior executives “doubt the commercial skills of product managers [and therefore], define the scope and solution before handing over”.

Product-led organisations place an emphasis on all areas of the organisation, including product, being bi-lingual – speaking the language of customer value and organisational value.

They balance their assessment of investment opportunities on two fronts:

• Market Assessment – Focusing on who the target market is in detail and what compelling and painful problem we will solve for them.

• Commercial Assessment – Focusing on the value model for achieving organisational benefits, how we will achieve value for the organisation, how much value will be achieved (revenue & cost) as well as the business risks involved in securing those benefits.

Finally, product-led organisations gain alignment across the organisation more easily to sound opportunities (and see-through vainglorious ones) as they are all speaking the same two languages in balance.

https://brainmates.com.au/

Are You Really Ready for Customer Experience?

 

Ginger Conlon, Editor-in-Chief

Marketers can talk a good game about customer centricity, but actions speak louder than words.

“Putting customers at the center of your business is what it takes to create a competitive advantage.” This simple, yet bold, statement by Lars Birkholm Petersen launched a discussion around where most businesses are in terms of their customer experience maturity level.

During a presentation at Sitecore Symposium 2014, Petersen reviewed the marketing automation company's Customer Experience Maturity Model (see above). Its stages are initiate, radiate, align (the “attract” phase of the customer lifecycle); optimze, nurture (the “convert” phase); engage, lifetime customers (the “advocate” phase). “We've found that 85.4% of companies are in first two stages,” said Petersen, global director, business optimization services, at Sitecore. “Strategic value increases as you move further along the model. If you're in those first two stages, how do you get started?”

Ron Person, senior consultant, business optimization, for Sitecore, took the stage to answer Petersen's question. To move ahead to stage three, “align,” connect corporate objectives to marketing objectives, Person advised. There are six steps to doing so: determining strategic themes (e.g., customer intimacy, top quality), setting strategic objectives (what's needed to make the theme become a reality), defining marketing objectives (specifically to support the strategic objectives), setting digital goals, creating an engagement value scale, and then selecting key performance indicators. This process will help show the link between business objectives and customer actions.

“All marketing tactics, down to A/B testing, need to contribute toward reaching strategic objectives,” Person stated emphatically.

The fourth stage is “optimize,” which includes such activities as rules-based personalization, A/B and multivariate testing, and campaign attribution. Chris Nash, who joined the stage with Person, explained that optimization, such as in-the-moment personalization, is exceptionally powerful. “Use it in all phases of the customer lifecycle,” said Nash, senior consultant, business optimization, for Sitecore. “Use customer data [in real time] as it becomes available; use the data that makes the most sense to use for that personalization. Use different types of data in different combinations.” Doing so can be complex, he said, but its effectiveness is worth the effort.”

“Optimization is the low-hanging fruit of experience marketing,” Nash said. “Focus on the buyer journey.”

Get connected

After the presentation Petersen, Person, and Nash met with several anaylists and journalists (myself included), to dive deeper into the topic of customer experience maturity, which is a central theme of their new book Connect: How to use data and experience marketing to create lifetime customers.

Considering the complexity of the customer experience, and of marketing, I asked: Are companies at multiple stages of customer experience maturity with different aspects of their marketing? For example, is the email customer experience more mature than in other channels? If so, how can they better connect those stages?

“Companies are being forced by customers to create a connected experience,” Nash said. “It puts pressure on organizations to think about the quality of the overall customer experience. Email, for example, is an ‘advanced' silo, but it's often a disconnected experience from other channels.” Nash explained that this type of disparity creates “moments of disconnected frustration” for customers.

Eliminating the disconnect and creating a consistent customer experience is all about people, process, and technology, Peterson noted. Marketers need to focus on the customer across channels in a connected way; they should collect and use data create relevant, contextualize experiences. “This goes back to marketers needing to ensure that they align the customer experience with strategic objectives to get business value,” he said, referring to the Customer Experience Maturity Model. “Once they're doing that, they can optimize and nurture. Then can moved to engage and lifetime customers.” But tread purposefully: “It takes time, maybe years to move up the maturity model, espcially in a big organization,” Petersen said. 

The journey, however, is more necessary than ever before.

“Businesses that excel at customer experience,” Nash said, “make it so other companies need to do the same.”

4 A’s of Marketing – Definition, Types, Benefits & Examples

 

4Ps are one of the fundamental elements in marketing.  In fact, the marketing process revolves around the 4Ps (product, price, place, and promotion). Some marketers even stretch this list by 7 to 8Ps, including positioning, packaging, performance, and people.

However, there is a less discussed concept, which may be new to the marketing world, but it is equally important. We are talking about 4 A’s of marketing. 4 A’s are a marketing development from Dr. Rajendra Sisosdia and Professor Jagdish Sheth. But what exactly are the 4 A’s of marketing, and why are they important? Let’s find out.

What Are 4 A’s Of Marketing?

4 A’s of marketing is basically a customer-oriented marketing approach that focuses on four elements that are very important from the customer’s point of view. 4 A’s actually mean;

• Acceptability
• Affordability
• Accessibility
• Awareness

The core objective of 4 A’s is basically giving entrepreneurs, managers, and businesses better insight into customers’ perceptions.  It is eventually the customer who takes different roles such as user, payer, and selector.

The 4 A’s marketing concept states that these four elements are mandatory for the success of a product that can offer value to customers, society, as well as businesses. Let’s discuss every A of 4 A’s marketing framework in detail.

Components of 4 A Marketing Model

Acceptability

Acceptability means how much or to what extent does a product or service meets the expectations of the customers in a given market/niche. Are the customers satisfied? Did it fulfill their expectations or not? Sometimes, a product may even exceed the customers’ expectorations. Acceptability is further categorized into two dimensions.

Types Of Acceptability- 4 A’s of Marketing

Functional Acceptability

Functional acceptability addresses the objective traits of a given product or service. It may include the performance, features, or facts about the product. For example, were the customers expecting these features? Are they actually useful for them even if they were not expecting them? Most importantly, will these features make the product more distinctive and attractive?

If a company makes a bigger cereal box to give “more” in “less,” it seems a wonderful idea. However, if the box is too big to fit in the regular cupboard shelves, it will be placed somewhere else where it might be out of the customer’s sight, thus ignored.

Psychological acceptability

Psychological acceptability addresses the “subjective” traits of any product/service that are perceived differently by the customers. Psychological acceptability describes how a customer perceives a product or brand from a societal point of view.

Companies like Rolls Royce, Mercedes, and BMW are luxury cars brands. They are generally regarded as a symbol of “eliteness” because it is not easy to own and maintain luxury cars from these companies. People take pride in using products from these brands.

Affordability

Affordability means the willingness and ability of a customer to pay for a certain product or service. Again, affordability has two further dimensions psychological and economic.

Types Of Affordability In 4 A’s Of Marketing

Psychological Affordability

Psychological affordability refers to the willingness of a customer to pay for a particular product or service. That is, a customer is in a position to make the purchase but is he/she willing to do it? This depends on how the customer perceives that specific product. Will that product make him feel good? Or will it have any impact on his/her societal acceptance or even a source of appreciation or acceptance?

For example, oil field workers may prefer to drive Chevy Bolt or Nissan LEAF just because their peers drive tricked-out trucks.

Economical Affordability

Economic affordability refers to a customer’s financial ability to buy a specific product. Does the customer you are targeting have enough financial resources to buy your product? For example, a customer may want to buy a product of HSN or QVC but is unable to do that unless these brands start offering a six-easy-payments method.

Affordability is important because it is helpful for businesses to create a product or service that is not only valuable but is cost-effective as well. Besides, affordability is more important when you develop your marketing campaign on reliability and cost-effectiveness.

Accessibility

Accessibility in 4 A’s of marketing means the level of ease with which a product or service is accessible for the customers. Accessibility here basically addresses customer convenience and customer accessibility. Here are two further dimensions of accessibility

Types Of Accessibility In 4 A’s Of Marketing

Customer Convenience

Customer convenience means how easy it is for a customer to obtain or get a product or service. Human psychology is pretty simple; customers always prefer the most accessible options. “An arm’s length of desire” is exactly what Coca-Cola’s former chairman said while explaining the importance of making the product readily available to the potential customer.

7- Eleven is really a perfect example of customer convenience. The company has established thousands of stores just to make sure that they are easily recognized and available to the customers.

Customer Availability

Availability here means whether the specific company has enough stock of a product to meet customers/market demand. If a customer wants a product at any given time while the company is out of stock, it will lead to customer dissatisfaction and force them to look for alternatives.

Awareness

Awareness basically addresses both existing and potential customers of a product or service. It focuses on things like;

• Informing customers/ and potential customers about the benefits and features of a product
• Persuading potential customers to make the purchase, and
• Maintaining a trustable relation with the existing customers.

Types of Awareness in 4 A’s of Marketing

Product Knowledge

The customers must have sufficient knowledge about the product. The business must be able to inform its potential customers that they are selling this specific product or service. For example, Eliquis is a pharmaceutical drug that is used for the treatment of A-Fib. However, a massive number of patients only know about Warfarin or Xarelto because they don’t have enough knowledge about Eliquis.

Brand Awareness

Brand awareness is a simple marketing term that defines how much customers remember, recall, or recognize a brand. For example, PepsiCo offers multiple products such a Pepsi-Cola, Mountain Dew, Frito-Lays, etc. But a customer may remember all these products just by hearing the word “Pepsi.” Brand awareness is what actually differentiates a company from its competitors.

Benefits of 4 A’s of Marketing Framework

4 A’s of marketing must be an integral part of any marketing mix. Here are some worth mentioning benefits of 4 A’s of marketing framework.

Enables True Customer Centricity

4 A’s of marketing framework is more of a measurable approach. That is, it helps the businesses to develop a marketing mix that is more measurable rather than just a blind traditional marketing effort.

This framework does not focus on when and where you can sell your products. Instead, it helps businesses understand why people buy a certain product and what can affect the success of that product or service.

Besides, when a business focuses on developing customer-driven strategies, it doesn’t have to go for “hard selling” techniques.

It Improves Marketing Productivity and Accountability

The 4 A’s framework is also advantageous because it helps in determining the productivity of a marketing effort and keeps accountability; the results are highly measurable. That means, with the help of 4 A’s framework, a business can easily evaluate which marketing activity is productive and which isn’t. In fact, if a product fails to score well on the benchmarks of 4 A’s, then the product can be rejected.

Holistic View of Business Success

Another good thing about 4 A’s framework is that it includes or addresses every aspect of a firm from a marketing perspective. When a firm channelizes all its activities towards customer-driven and easily measurable objectives, it gives more freedom to its management and brings more productivity. Moreover, it urges the leadership to maximize their individual and collective efforts for the achievement of organizational goals.

Giving Vivid Managerial Prescriptions

4 A’s of marketing also offer a protective shield to businesses by helping them prevent marketing failures, ultimately conserving capital and human resources. Apart from that, this framework can be very effective in determining the problem areas in a product and turn a potential failure into a successful launch.

Better Allocation of Resources

Trusting the gut intuition or playing “hit and trial” methods do not work in marketing. This is why 4 A’s marketing framework is very effective because it assists businesses in more efficient allocation of resources. It enables the management to identify the weaknesses and strengths of a marketing campaign and then allocate resources accordingly.

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Customer-Centered Culture: Do This, Not That

Customer-centricity means so many things to different people, but to customers it means one thing: having their best interests as your top priority. Let’s face it: whatever your heart is centered on is where you’ll most likely excel. We see it again and again with marriages, children, hobbies, and bosses — when your efforts are centered around any of those interests, your outputs will probably be rewarded accordingly.

A customer-centered culture is not “driven” by customers to exclude the interests of employees or shareholders/investors. If you think about it, customers don’t want your employees or your company to be unsuccessful. But to maximize your success, you need to optimize (i.e. balance) everyone’s interests, with the lifeblood of everyone’s compensation as your guiding light. The lifeblood of paychecks, dividends, and budgets is not revenue per se — that’s a by-product — rather, the lifeblood is this: addressing customers’ needs better than anyone/anything else is addressing them.

To be clear about customers’ needs, it pays to keep in mind that customers buy from you in order to enable a capability they’re seeking: peace of mind, enjoyment, pain avoidance, growth, life itself, and/or to serve their stakeholders’ needs. These needs, from a customer-centered perspective, are called “customers’ jobs-to-be-done“.

Regardless of industry awards for best customer satisfaction, or managements’ conviction that customer-centered culture is already strong, it’s always best to check with your customers about their view: do they feel that you have their best interests as your top priority? Study after study shows a mis-match between customers’ and management’s perspective of customer-centered maturity. For example, the CMO Council found that 56% of managers felt their companies were highly customer-centric, while their customers viewed only 12% of these companies as highly-customer-centric.

This mis-match in perspectives is rooted in the definition of your business’ purpose (the lifeblood or its by-product), what you’re supposed to be doing to meet that purpose (as described above), and how you’re guiding executives and employees to achieve it. The mis-match is short-changing everyone: customers, employees, and shareholders/investors. To maximize your company’s lifeblood and its necessary by-product, it’s necessary to center your culture on customers.

Here are 3 keys to getting it right: set yourself up for success, nurture mindsets, and encourage behaviors for customer-centered excellence.

1) Setup for Success: “Culture” is an organization’s way of thinking and doing. Straightforward assessment of mindsets and behaviors is the essential starting point — and ongoing reality-check — for becoming what your customers need you to be.

DO THIS: Get objective assessments of executives’ and employees’ customer-centered thinking and doing, early and often. Not just customer-facing folks, but everyone behind the scenes and your alliance partners, suppliers, etc. Create ashared vision that’s based on customers’ views. Set expectations for broad engagement in actions and closing the loop with customers. Draft a roadmap that injects customer-centered decisions and actions into everything the company does.

NOT THAT: Expediting issues for top customers is not a good measure of being customer-centered. Neither is a feeling of being close to your customers because of physical proximity or frequency or intensity of interactions. Why? Because it’s typically too little, too late, and because everyone in your company has a ripple effect on customers’ jobs-to-be-done. Being reactive is costly. Being proactive is efficient. Being systemic and holistic is the key to being effective.

2) Nurture Customer-Centered Mindsets: It’s easy to assume that everyone knows what they need to about what’s important to customers. Perhaps your employees use your products and services in their households, or maybe your executives have worked in the industry for decades. In any case, your “sample size” of inputs about customers’ needs is likely too small, and/or your company-wide shared vision of what it means to be customer-centered is probably limited, fractured, or even outdated.

DO THIS: Share customers’ feedback, suggestions, and stories broadly and frequently. Use customer experience excellence characteristics as criteria for hiring, promoting, onboarding, and training employees at all levels and in all functional areas. Establish a commitment-making process and consequences (positive and negative). Coordinate managers of various customer experience efforts (e.g. CRM, VoC, references, retention, acquisition, service, design, messaging, etc.).

NOT THAT: While the attentiveness and friendliness of front-line employees and other customer touch-points are necessary, they’re insufficient. A chain is only as strong as its weakest link, and customer-facing employees and technologies are at the end of a long line of links that permeate everyone inside your company, as well as those you depend upon externally to enable customers’ jobs-to-be-done. The interdependence of people, processes, and technologies is real. The interdependence of layers within each of these 3 components is always in motion.

3) Encourage Customer-Centered Behaviors: To influence the outcomes ‘re seeking, start at what creates those outcomes: behaviors of employees at all levels and in all functional areas. Mindsets and behaviors are in a perpetual reinforcement loop that results in the reality your customers experience.

DO THIS: Reward teamwork that exemplifies your vision of what it means to be customer-centered. Keeping interdependence in mind, prevent silos of information and efforts, and use customer experience inputs to guide strategies, operating plans, policies, processes, and day-to-day work. Incent leaders and laggards across your company to learn collectively, moving your whole company to stronger maturity in being customer-centered as your customers define it.

NOT THAT: Recognition and bonus criteria that are focused on customers’ behavior, instead of employees’ behavior, is problematic. Recognition and financial incentives that focus on individual employees, instead of teams, also short-changes what it takes to be a customer-centered company.

A sensible approach to customer-centricity is what’ needed for sustained customer experience business results. In fact, companies that optimize (i.e. balance) the interests of investors, employees, and customers — keeping an eye on customers’ jobs-to-be-done as a guiding light — have proven superior financial health, growth, and raving fans, as described in the book Firms of Endearment. For long-lasting customer experience ROI, set yourself up for success, nurture mindsets, and encourage behaviors that build customer-centered excellence.

Notes:

1. Customer Centric Culture is one of the six domains in the body of knowledge advocated by the Customer Experience Professionals Association (CXPA).
2. The concept of “Do This, Not That” is borrowed from the popular book “Eat This, Not That“, where the weaknesses of common practices and myths are brought to light and sensible replacements are recommended.
3. Other articles in this series:
   • Customer Experience Strategy: Do This, Not That
   • Voice of the Customer: Do This, Not That
   • Customer Journey Maps: Do This, Not That