The customer: Whom the crown fits

 

All hail the king.
Every right thinking organisation in the 21st century know better to treat its customer well. Never has there being a time when the customer’s claim to the throne has become a mainstay. Experts in the field of customer experience have never been busy. There are hundreds of literature on the subject of building bridges to the customers’ heart. Today, customer’s have become ‘prosumers‘ (a term that exalts the role of consumers beyond the traditional to now mean so much more such as being active to help personally improve or design the goods and services of the marketplace, transforming it). Looking back to the early days of consumerism and beyond into the future of enterprise, one can say without any shadow of doubt that the customer is and will be king. 80% of new products fail to succeed. In this piece, through the lens of a classic case study and business model principles, we will consider how businesses in this post modern era can successfully bring products to market by crowing the king. The customer is at the center of it all.

Why 80% of new products fail.
The success rate of new products akin to that of new companies is very disheartening. One wonders why this is so. There are many reasons why companies and products fail. Such reasons may range from poor product design, failure to properly define customer segment, poor relationship management, channel failures, poor pricing and poor positioning. Other factors that may affect the outcome of a product includes inadequate/lack of resources cum partnerships along the critical value chain as well as failure of execution. The threat of substitutes and other external factors rank as very high factors too. However, in very broad terms, product or enterprise failure often manifests as either a DROP or GO error. The sum total of decisions and choices along the journey adds up to whether or not a product or company will fail or succeed. The objective of this piece is to help provide insights on how to reduce the odds against product and enterprise success.

This ‘Value Proposition’ thing.
All of the named factors jointly and severally determine whether or not a product or a company fails. There isn’t a crystal ball through which one could determine this outcome. I am not aware of such but, I know a couple of tools and methodologies by which one could properly dimension or at least reduce the odds against success. One of such is the ‘Business Model Canvas’ (BMC) which I have written about in the past. There are many others. What makes the BMC unique is the way it brings all the critical pieces together in a very brilliant way. As it turns out, this tool is not only useful for new companies but can be applied to several of processes in established company. At the center of the BMC is the concept of ‘Value Proposition’ which itself has a separate canvas just to show how important it is. In the latter part of the piece, we shall return to this concept and elucidate more on why it is the most important

Before I get too much ahead of myself, let me be very quick to say that the definition of the Value Proposition concept is not exactly the same as the highly basterdized version out there. While there is certainly nothing mystical about the BMC perspective, the objective of Value Proposition narrative within the context of customer service is albeit the most profound I have yet to come across. There are two central questions here. The first is (1) What pains are you solving? The second is (2) What gains are you adding? I wouldn’t be surprised if a typical marketing expert  discount these  two golden questions because of their seeming over simplicity. The wisdom nevertheless is that these questions addresses the very heart of every customer service adventure. It is the center of the Business Model Canvas and its is the heart of what every customer service or product launch strategy should address. By the way, the greatest factor or cause of product or enterprise failure can be simply articulated as: WRONG ASSUMPTIONS.

Wrong assumptions.
You’d be certain I wouldn’t just make that type of controversial statement without providing a firm argument to back it up. Experience has shown that for the majority 80% of products and/or company that fail, wrong assumptions rank as a top reason for failure. For the less established entities involving founders with a relatively nimble team, wrong assumptions play out as a fundamental flaw. What most of these inherently idealistic human species do is to venture out to solve a problem that they are quite passionate about. Even when they go out to conduct what is universally known as a ‘feasibility study’ or a ‘business case’, they often miss the mark. There is nothing wrong with having a passion. In most cases, the dichotomy between product development and marketing is a wide chasm which allows for untested hypothesis to creep into the business model. This is not very different from what is obtainable from more established entities. The gap between the design and marketing teams causes massive dissonance. The solution to this is to ‘get outside the building’. This term was coined by  Steve Blank (Author, Startup Owners’ Manual) who is a Silicon Valley veteran and serial entrepreneur. To get outside the building is to embrace the timeless wisdom that the customer is really the king.

Why and How Apple went into music.
This is an attempt at re-creating how and why Apple managed its entrance into the music industry. The iPod is by far the world’s most successful digital music player and it was launched by a company whose business until the launch of the iconic iPod was largely making computers. This background is very essential. Those who know the insider account of this story know that Apple was very careful in extending it brand into music. Every company should carefully consider such decision. When  Apple decided under the leadership of the late Steve Jobs to play in the music space, it met with very stiff competition. The entire music value chain of production, distribution and marketing segments of the music business was closely controlled by the ‘big guns’-  Sony, BMG, Columbia. The biggest metric of performance as at that time and even much of today was the platinum award that Artists got by selling enough albums. It was on this singular fundamental that the whole industry was organised. As long as they got a share of the royalties and made money selling albums, they were fine. So, the status quo remained but, not for long.

What is the most important customer need?
This was the question that Apple seemed to have asked when it decided play in the music space. The entire industry as dominated by the ‘big guns’ (Sony. Columbia, BMG e.t.c) favoured the sales of album. What they did not realize was a fundamental consumer insight that would drive the future of  how music would be consumed. It was the wake of the digital revolution and Apple happened to be one of the very few companies with the capability and scale to play in this arena. Apple or shall we say Steve Jobs knew very well that the consumers were looking for new experiences and sought for more control. Indeed, Apple believed that if given choices, consumers would prefer to buy single tracks other than entire albums. This key insight was the fundamental factor that would drive the future music market. Apple wasted no time in organising itself. It executed with such gusto. Apple created an online music jukebox (iTunes) and designed a digital music player for which it didn’t even have the proprietary technology for (Ipod).

It was later that Apple acknowledged Kane Kramer; the original inventor of the technology. To succeed, Apple overtime had to romance the music labels for content. This was a difficult thing to do but Steve Jobs perhaps by his reality distortion field, did get the critical mass necessary to succeed. Today, Apple is a Grammy award winning entity. It didn’t get there my mere luck but by the instrumentality of truly understanding what the customer needed. Its value offering was enough for iPod to become the most successful digital music player of all time. The decision to venture into music also fit perfectly into Apple’s digital hub strategy. It was on this success that future products (iPhone & iPad) were built.

The moral of this story is this: market place success begins with and ends with the customer. If you must achieve commercial success, don’t just pay lip service to the customer. Whether its acquisition, retention or development, the job is never quite over. It is a continuous cycle. Just like marketing is about making things that people want and making people want things, the customer service mandate is a continuous affair. The excellence part of it comes from constantly oiling the wheel of relationship with the customer. Everything must revolve around the customer and don’t forget to do all you must to unearth the fundamentals. Begin with this in sight. Herein lies the secret of success. Look unto the customer- a king for all season.

Image credit: Google

Femi Oni

Femi’s overarching purpose is to inspire brands (individuals, organisations and nations) to unlock potentials to achieve sustainable growth and impact. His mission is to mentor 1000 brands in Africa and beyond by 2025.

Specialties and Interests: Business Model Design & Innovation, Visioning, Strategy Design & Execution, Project Management, Change Management, Strategic Branding, Operations Excellence, Process Modelling, Product Management, Productivity Management, Entrepreneurial Leadership (Startups), , Social Evangelism, Education, Sustainability, Cybernetics, Risk & Compliance.