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Ditch the Product-Centric Mindset in Three Steps

By Published on .

Nike's $720 self-tying sneaker.
Nike's $720 self-tying sneaker. Credit: Nike
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The marker of success for any product launch seems obvious: "How much did we spend to promote this thing, and how many units did we sell?"

Nike, which has poured millions into the launch of its newly-unveiled $720 self-tying sneaker, is waiting with bated breath to see whether it was a hit or a miss with consumers. So is Apple, which continues to flex its advertising muscles to promote its latest, greatest Macbook Pro.

And if a product or service line fails to deliver? Out the door it goes. Just last month, for example, Target showed signs of finally scrapping its struggling grocery business.

To all of you product-centric nail-biters: Stop viewing your products as standalone profit centers. Instead, try viewing every product -- from your blockbuster breakthroughs to your everyday wares -- as a means to an end as opposed to an end unto itself.

The end goal, of course, is this: A portfolio of products intentionally designed to attract and retain the kinds of high-value customers who will continue to spend money with you for a long time.

To get there, you'll have to ditch your company's product-centric marketing mindset and replace it with a customer-centric marketing mindset.

Here are three ways to start:

1. Organize around the customer, not the product

Imagine if Starbucks HQ had a Pumpkin Spice Latte department. Sounds ridiculous, but the reality is that this is exactly how most companies are organized. They're sliced and diced into a "house of brands," each with its own organizational structure and profitability goals.

It's a mindset that's not only grossly inefficient, but it may very well hurt your bottom line. If your organization is essentially a bunch of brands competing for the same customers, what do you stand to gain?

The key is to focus on customer profitability. Start by asking yourself tough questions, like: What kinds of customers are the most valuable to us? How can we enhance this particular customer segment's financial value to us? How do we find more customers like them?

If you've never done this analysis, you may be sitting on a goldmine and not realize it.

Take Home Depot, for example. Forget generic segments like "millennial dads." The company might recognize that "People Gearing Up for a Move" represents a much more highly-valuable customer segment. To enhance this group's financial value, they might deploy customer segment managers to better guide these customers through the store, bundle up moving-related products for easy curb-side pickup, or check in with them three months before their lease was up.

The point is this: When you line up customers on the basis of their potential lifetime value across your entire product portfolio, profitability margins on individual products no longer matters. In Home Depot's case: If inexpensive (i.e., low profit-margin) moving boxes turned out to be the "glue" that holds their highest-valuable customers in place, then so be it.

2. Judge every product launch on the 'future value' it creates

If your marketing team judges a product launch on press buzz, social media chatter and sales numbers, you're missing a big piece of the puzzle. Why not also measure the future value that was created (or enhanced) as a result?

Consider Pokémon Go. Despite surpassing 500 million downloads this summer, it's looking like its creator, Niantic Labs, is right back where it started: in search of its next big blockbuster.

Had they launched the kind of game that served as an onramp to other products in the Niantic portfolio, then that game would be worth its weight in gold.

Again, a successful product launch isn't just about how much product you move. If your highest-value customers didn't buy the new product -- or your newly-acquired customers will likely never buy from you again -- I'd deem it a failure.

3. Ignore the critics

In the 90s, Electronic Arts made a radical decision. After years of encouraging its "rockstar game developers" to create anything they wanted, the company shifted its focus to figure out what a valuable EA customer really looked like.

What they found was eye-opening: An entire customer segment that would, indeed, buy sequel after sequel across EA's sports game franchises, from Madden NFL to FIFA.

And while this customer-centric franchise mentality has spurred critics to chide EA for having "lost its soul," the company is enjoying one of its most profitable eras in its entire history.

It's high time CMOs opened their eyes to the value of a customer-centric playbook: One that hinges less on how much product you move, and more on the relative value of each customer. It's too important not to.

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