Businesses that have a product orientation face significant challenges to long-term success in the early 21st century. The mass appeal of the customer loyalty and database marketing program customer relationship management (CRM) has prompted many companies to shift from a product-centric to a customer-centric orientation. This means the customer is the primary focus of company leadership, as opposed to the product or service they make and sell.
Product Loses Value
One of the most significant disadvantages of taking a product orientation approach to business is that if your main project loses ground to competitors or becomes less relevant, your business may fail. Companies in this position spend so much time building and developing products that they sometimes fail to see what is going on in the market around them. If the product does not sell itself, a truly product-oriented company has a hard time selling it.
Limited Long-Term Relationship Potential
CRM is based on the basic marketing principle that building long-term relationships with existing customers is a much more efficient way to do business than to constantly pay to acquire new ones. With a product orientation, companies rely on their product to appeal to customers. However, competitors that have a more customer-centric approach may lure customers away even with a lesser-quality product. Customers often prefer working with a company that commits to the customer's needs as the top priority.
Companies that have a customer-centric orientation often find opportunities for add-on sales or cross-sales to existing customers. Satisfied customers often appreciate opportunities to upgrade or add on solutions with companies they know, like and trust. If your organisation is product-oriented, you may not even offer opportunities for add-on purchases or cross-selling. Additionally, a limited focus on the solution needs of the customer may prevent the development of effective selling systems and employees that make suggestion selling work.
Making CRM work with a product-oriented attitude is virtually impossible. A transition to a customer-centric organisation is often noted as a requirement for a product-centric company wanting to build a CRM program. CRM is not just about using database software to collect customer data and track sales. You have to have the total customer experience in focus and have a desire to constantly improve it. This is what keeps customers coming back and buying more. A product orientation completely undermines any attempt to get employee buy-in on delivering the necessary customer-first service that makes CRM work.