The difference between a customer-focused and a customer-centric organisation is the extent to which it shapes its operating model and strategy around the customer instead of the product or any other criteria.
Customer-Focused vs Customer-Centric
- A customer-focused organisation pays attention to customer needs, feedback, and satisfaction and ensures its products and services meet customer expectations.
- A customer-centric organisation organises its people, processes, and systems around the customer.
For example, a customer-focused organisation may still organise its teams and systems around its different products. Each product team is responsible for ensuring that the product meets the specific expectations and needs of its target customers.
- It does not just listen to customers; it changes its entire way of working to serve them better.
- A customer-focused organisation can still be product-centric, meaning it focuses on making each product sale work well for the customer. However, it may not track which customers buy different products from different product lines. For example, a financial company may not know if a customer who buys a pension also has life insurance with them. Because of this, it cannot be called customer-centric.
- An organisation can be both customer-focused and product-focused, but it can only be either product-centric or customer-centric.
Customer-Focused Organisation
A customer-focused organisation works to meet customer needs by providing good products, services, and experiences. It listens to feedback and improves satisfaction.
However, this is usually transactional—it wants customers to stay happy so they keep buying.
Common ways organisations do this include:
- Conducting customer research to identify and serve their needs
- Offering excellent customer service
- Providing high-quality products or services
- Offering competitive pricing
- Offering loyalty programmes
- Building a company culture that values customers
However, a customer-focused organisation does not always change itself based on customer needs. It might still organise itself - its divisions and teams - around product lines.
It might still store customer information in product-centric silos. It might not have a single view of the customer which spans across all the interactions a customer has for all the products and services it provides.
Customer-Centric Organisation
A customer-centric organisation does more than focus on customers—it structures itself around them. Every part of the business, from product design to marketing to operations, is built around the customer. This is a proactive, long-term approach rather than just reacting to problems.
Key traits of a customer-centric business:
- Organised around customer segments rather than product lines.
- Provides a single view of the customer.
- Offers personalised experiences which encompass all the customers' interactions with the organisation.
- Measures success with Organisation Customer Lifetime Value (OCLV)
Product-Focused vs Product-Centric
- A product-focused organisation works on developing high-quality, innovative products, assuming customers will see their value. It focuses on features, efficiency, and standing out from competitors.
- A product-centric organisation structures its whole organisation around its products. It aims to lead the market in innovation and excellence.
Product-Centric Organisation
A product-centric organisation mainly focuses on improving its products, often through innovation, quality, and efficiency. These companies believe that great products will attract the right customers. Their success depends on:
- Investment in research and development (R&D)
- Cutting-edge technology
- Unique and well-differentiated products
- A strong brand reputation
A product-centric organisation may still be customer-focused, ensuring customers are satisfied. However, it does not always change its strategy based on customer feedback. Instead, it believes demand will come from offering outstanding products.
Key Differences
- A customer-focused business ensures customers are happy with what it sells.
- A customer-centric business redesigns itself to put customers at the core of its operations.
- A product-focused business creates high-quality products but does not change its structure for them.
- A product-centric business builds its whole structure and strategy around making and selling great products.
For example:
- A customer-focused retail store trains staff to give excellent service.
- A customer-centric business (like Amazon) changes its whole way of working to make shopping easy and personalised.
- A product-focused company makes great products but follows a standard business model.
- A product-centric company (like Apple) shapes its entire strategy around product innovation and design.
A litmus test
The easiest way to determine if an organisation is customer-centric or product-centric is to ask:
- Does the organisation have a unified view of each customer across all products and services?
- Does the organisation present a unified/joined-up view across all its products and processes to the customer?
Summary
An organisation can be both customer-focused and product-focused, but it can only be customer-centric or product-centric.
An organisation may be customer-centric at one level and product-centric at another. For example, Amazon is product-centric, organised between its cloud computing and retail product lines. Amazon Retail is customer-centric with strong customer management across all its diverse product lines.
Frequently Asked Questions (FAQs)
What is the difference between a customer-focused and a customer-centric organisation?
A customer-focused organisation pays attention to customer needs, feedback, and satisfaction, ensuring its products and services meet customer expectations. In contrast, a customer-centric organisation structures its people, processes, and systems around the customer, organising itself to serve them better.
Can an organisation be both customer-focused and product-centric?
Yes, an organisation can be both customer-focused and product-centric. It can focus on making each product sale work well for the customer without necessarily organising its entire structure around the customer. However, it can only be either product-centric or customer-centric, not both.
What are common ways organisations demonstrate customer focus?
Organisations demonstrate customer focus by conducting customer research to identify and serve their needs, offering excellent customer service, providing high-quality products or services, offering competitive pricing, implementing loyalty programmes, and building a company culture that values customers.
What are key traits of a customer-centric business?
Key traits of a customer-centric business include being organised around customer segments rather than product lines, providing a single view of the customer, offering personalised experiences encompassing all customer interactions with the organisation, and measuring success with Organisation Customer Lifetime Value (OCLV).