The Evolution of Customer Centricity and Why Needs Matter More Than Solutions

In Romania of the 90s, the STP framework (Segmentation, Targeting, Positioning) was considered the cornerstone of strategic marketing and was hotter than a stolen copy of Pink Floyd's 'The Dark Side of the Moon' in a communist country.

Back then, being "customer-centric" meant knowing which age bracket to target with your latest product. However, at the beginning of marketing in these lands, segmentation had a dominant demographic perspective.

Later on, I grew up and made segmentations based on behaviors such as purchase, usage, benefits sought, then psychographic factors such as attitudes, beliefs, and lifestyle, and eventually motivational needs. The ultimate goal was always the same: understanding and serving the customer better.

But times have changed, and so have customers' expectations. Fast forward to today, and customer centricity has evolved to encompass more than just understanding customer behavior, lifestyles or preferences.

In today's cut-throat business environment, companies need to be more agile than a circus acrobat on a unicycle. Delivering exceptional customer experiences is the most effective way to stand out from the crowd and grow your business. And what better way than a loyal customer base that keeps coming back for more? It's the key to ‘long-term’ sustainable competitive advantage.

But here's the catch: the edges erode very fast in today's market. What worked yesterday may not work tomorrow. So, companies must innovate and evolve to stay ahead of the game. How? By being even more…customer centric;-)

But why is customer centricity so important in the first place?

As the Nokia case demonstrates, companies that fail to adapt to changing customer needs and preferences risk being left behind. In the early 2000s, Nokia was the market leader in mobile phones, with over 40% market share. However, the company failed to recognize the shift towards smartphones, the importance of software and user experience. Instead, Nokia was stuck in what it believed to be an endless competitive advantage: high-quality, low-cost mobile phones, and relied on a product-centric approach rather than a customer-centric one. The company failed to realize that its competitive advantage was short-lived, and it failed to make use of transient advantages.

Nokia's missteps were particularly evident when it opened a factory in Jucu, Romania, in 2008 (iPhone release year), only to close it in 2011. The company's product-centric approach, coupled with its failure to adapt to the changing market, led to its downfall.

Was Nokia really customer-centric?

At a first glance, I would say yes. Nokia chose to target a segment known as “Floaters”

“This segment values traditional gender roles, with men as breadwinners and women as stay-at-home moms who enjoy spending time in the kitchen. Floaters are family-oriented and smart with their money, always looking for discounts and special offers. They typically purchase down-market brands. Floaters enjoy a peaceful life centered around home, spending free time there and taking daily walks for exercise. They prefer familiar places and being around nature and enjoy watching local TV shows for news and entertainment. However, they are not into sports, social events, or using the internet or computers.” (source: the socialgrabber.com).

While this approach involves psychographic and behavioral segmentation, the question remains: is it truly customer-centric?

I leave it to you to find possible answers…

So, what other options might we have?

One solution might be to adopt a Jobs-to-be-Done approach, which focuses on understanding customers' underlying motivations and desired outcomes, rather than just segmenting around their lifestyles, preferences or behaviors. By doing so, companies can develop products and services that truly meet the needs of their customers and avoid being stuck in a product-centric approach that may lead to obsolescence.

The lesson here is that being customer-centric is paramount, but it should be focused on the realm of needs rather than solutions. To stay ahead of the competition and meet the ‘ever-changing’ needs of their customers, companies must be agile, willing to discover and experiment. However, can we afford to “fail fast” and keep pivoting in today's world?

No, I don't believe so.

Instead, companies must embrace reframing and be willing to constantly innovate and evolve in a predictable, efficient, and effective way.

How?

By challenging the ‘ever-changing’ needs paradigm.

So, are needs really changing?

Clayton Christensen, Tony Ulwick and Bob Moesta, the most prominent proponents of Jobs-to-be-Done, say no. By adopting new frameworks and processes like JTBD, we can uncover customers' true motivations and desired outcomes, and develop products and services that meet those needs. It's like giving your customers a tailored suit instead of a one-size-fits-all outfit from the bargain bin.

As these experts have demonstrated through their work on Jobs-to-be-Done methodology, needs are knowable, discoverable, stable over time, and solution-agnostic. By understanding and addressing these stable underlying needs, companies can innovate seamlessly and draw a competitive advantage roadmap without exhausting themselves. Otherwise, they may end up like the "frog in boiling water".

Do you know the customer needs in your market?

Are you aware of the customers' unmet desired outcomes, including those that are either over or underserved?