ILLUSTRATION BY RUTH MACAPAGAL
In my career as a global expert in management and strategy and as the group chair of the Tom Oliver Group, I see one major mistake that companies keep repeating that is responsible for countless corporate failures.
This mistake is to develop products, services and solutions based on something other than customer needs. Most people think of external customers only when they think of customer needs. But customer service starts already within an organization. My team and I have witnessed many software developments and internal projects that did not consider what the various departments needed. The root cause? Not listening to internal customer needs.
The superpower of icons like Jeff Bezos and Steve Jobs
Their superpower is keeping their ears close to the ground—intimately in touch with customer needs. I recall a board meeting of one of our clients, a retail giant that has even breached world records in its industry, where the last time the board members visited one of their stores was years ago. Maintaining intimate touch and sight with your customers should be a regular practice. Forget market studies—you must know your clients better than any Nielsen study.
Understanding the needs-based approach
The needs-based approach centers around placing customer needs at the heart of product and service development. This entails actively listening to customers, empathizing with their challenges and tailoring solutions that directly address these pain points. Traditional product development often relies on internally-driven ideas or incremental improvements, whereas a needs-based approach flips this paradigm by prioritizing external perspectives and market insights.
1. Customer-centric innovation: In today’s dynamic business environment, innovation is critical to survival. However, innovation without a clear focus can lead to wasted resources and missed opportunities. The needs-based approach ensures that innovation is purposeful and guided by real-world demands. By understanding customer needs deeply, CEOs and business owners can identify white spaces in the market where no existing solution adequately addresses a specific problem. This allows companies to create breakthrough products and services that meet and exceed customer expectations.
2. Building lasting relationships: In the age of social media and instant communication, customer loyalty is harder to earn but more valuable than ever. Businesses can establish solid and lasting relationships by demonstrating a commitment to meeting customer needs. When customers feel heard and understood, they are more likely to remain loyal and become advocates for the brand. This can result in reduced customer churn, increased repeat business and positive word-of-mouth marketing that money can’t buy.
3. Risk mitigation: Investing resources in product and service development carries inherent risks, from financial investments to time and effort. A needs-based approach can significantly mitigate these risks. Companies can avoid costly missteps and wasted efforts by validating ideas and concepts against real customer needs before full-scale development. This approach ensures that the end product aligns with market demands, increasing the likelihood of success in the marketplace.
4. Market relevance: The business landscape is characterized by rapid technological advancements, shifting consumer behaviors and competitive pressures. A needs-based approach allows businesses to stay agile and relevant. Regularly seeking customer feedback and adapting offerings accordingly ensures that products and services remain aligned with the market’s evolving needs. This adaptability is a critical advantage, enabling companies to pivot swiftly and maintain their competitive edge.
Implementing the needs-based approach
Adopting a needs-based approach requires a shift in mindset, processes and organizational culture. Here’s a road map for CEOs and business owners looking to integrate this approach into their operations:
1. Deep customer understanding: Invest time and resources in understanding your target audience. Utilize techniques such as surveys, focus groups and ethnographic research to uncover their pain points, aspirations and preferences. Create buyer personas to humanize your customers and make their needs tangible for your teams.
If you are a business leader, CEO or business owner, you must also put yourself out there to experience your customers’ pain points regularly and repeatedly. There is no substitute for that. The more you and your top people sit in an ivory tower, the more your doomsday looms.
This could lead to another bad phenomenon: a company and its leadership fall in love with new products and services they develop just because they like them—without ensuring customers do. This was, by the way, one of the main reasons why Nokia missed the smartphone trend years ago. Do you want to join them in becoming another famous failure? I don’t think so.
2. Cross-functional collaboration: Break down silos within your organization to encourage collaboration across departments. A multidisciplinary approach fosters diverse perspectives that can lead to more holistic solutions. Encourage regular communication and knowledge sharing among teams to ensure everyone is aligned with customer needs.
3. Iterative development—the magic of the minimum viable product (MVP): We always recommend the following principles to our clients: Dream very big but have tight feedback loops and then iterate. The quality of the output is almost always a function of the iterations.
Move away from linear development processes and embrace an iterative approach. Build prototypes or MVPs to gather early feedback from customers. This allows you to make informed refinements based on real-world insights, minimizing the risk of investing heavily in a concept that doesn’t resonate with the market.
Imagine you’re a chef working on a brand-new recipe for a dish. The idea of an MVP in the business world is similar.
An MVP is like a basic version of a product or service that has just the essential features needed to work and be helpful. It’s like serving a simplified version of your dish to see if people like the taste before you spend much time making it fancier.
Just as you would only cook an elaborate meal if you’re sure people will enjoy the primary flavors, businesses create an MVP to test if their idea is something customers want. This way, they can spend less time and money on something that might not be well-received.
4. Embrace technology: Leverage technology to gain deeper insights into customer behavior and preferences. Data analytics, social listening tools and artificial intelligence-driven sentiment analysis can provide valuable real-time information about customer sentiments and emerging trends. This data-driven approach can enhance your ability to respond swiftly to changing needs. INQ
Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email Tom.Oliver@inquirer.com.ph.