Defining products based on your customer’s needs
Our Vision Navigation® strategic planning process includes asking leadership to define the products of their organization. We do this because often organizations see their products through their own eyes rather than through the eyes of their customer. Growing a business or fulfilling the purpose of a non-profit entails finding new and improved ways to solve problems for and add value to customers/stakeholders. Viewing your products/services in this way is vital to defining a successful future strategy.
The distinction we make is that the definition of products must come from the customer’s perspective and answer the question “What need are you meeting?” The example I give is that of a rental car company. The obvious product is a rental car. But what is the customer seeking? What need are you meeting? The product from this perspective is: convenient, affordable transportation when the customer is away from home or without their own vehicle.
“What’s the difference?”, you may be wondering. Frankly, if you don’t actually use the answer when making strategic decisions, then there really isn’t much. But if you use the answer to assess your competition, strategize on innovations and improve your customer service, then asking the broader question provides a much richer context to steer your decisions.
Let’s take our rental car example. If you ask the simpler question: “what is my product?”, you have the simple answer: a rental car. From this perspective, the competitors you must take into account are other rental car companies in your area. When you consider innovation in this context, you might look at different types of cars or types of rental plans to broaden your offerings. Better customer service can be addressed with improvements such as “no waiting at the counter”, “pick any car you want” – current advertisements from rental car companies today.
But now let’s examine the question from the broader point of view. What is the customer’s need that a rental car company addresses? If you answer “convenient, affordable transportation away from home”, your perspective broadens. Who are the competitors for “convenient and affordable transportation”? Not simply other rental car companies, but public transportation, taxi services, even telecommuting services could be considered competition. Can you change your marketing stance to show how you are not just better than other rental cars, but better than public transportation? Should you argue the case for the value of a face-to-face meeting rather than one via teleconference lines? Are there unique customer groups for each different type of competitor that you could market to?
Dig deeper. Is the customer need changing as technology or competition change? Are the priorities of need shifting? Defining products in this way forces the question, for example, how can we be more convenient or more affordable. Such questions are not necessarily addressed if you are simply asking about a “rental car”.
Defining products from the broader point of view also enables you to survey your customers as to whether you are fulfilling their specific needs. How could you improve customer service or innovate in terms of what needs are not being addressed or could be addressed more effectively? You have seen it already when a rental car company delivers a car to wherever you are instead of you going to them. What other benefits is the customer looking for as defined by “convenient, affordable transportation”, and how can you address those needs and wants?
When you shift your perspective in defining your product from simply what you sell/offer to the customer need you are satisfying, you open the door for better service, more innovation and a clearer picture of your competition. Try the bigger question and see if you don’t find some new ideas come up from your leadership team on how to best serve your customer, compete more effectively and build greater customer loyalty.