Do Not Obsess Over Your Customer. Obsess Over Your Community.

As companies continue to look for new revenue strategies, one of the most popular axioms has become that of customer obsession. But is the customer really who you should be focused on?

At first, it seems rather paradoxical. Customers are, of course, the lifeblood of any business. By focusing on their needs, businesses can focus on developing products that resonate and, therefore, are more likely to be purchased. Moreover, when customers are happy with a product, they are more likely to become loyal customers, providing a steady stream of revenue over time. This strategy, on the surface, seems to be perfect — businesses can not only increase revenue, but also build long-lasting relationships with their customers, and thus create a virtuous cycle of growth and success.

But customer obsession can be both a blessing and a curse for a company. While it is essential to listen to customer feedback to improve products and services, sometimes the obsession with satisfying every single customer demand can lead to negative consequences. When companies continue to coddle and give in to customer demands, it can cause short-term stress to employees in trying to keep up. And, when left unchecked, this approach may lead to long-run significant strategy changes just because of demands from “whale” or large revenue customers. So, striking a balance is necessary.

One way customer-obsessed firms try to achieve this balance is to identify the most demanding customers and cut them out of the equation purposely. But we hit up against the same issue — oftentimes the most demanding customers are the ones with the largest wallets. If you cut them out, revenue might drop significantly. So, is there a better way?

One potential solution to the customer-obsession paradox is to shift to a community obsession. Creating a community around a product can foster a sense of belonging and shared values, leading to a (positive) groupthink outcome. This can involve engaging with customers on social media, creating user groups or forums, and hosting events that bring customers together to share their experiences and ideas. By building a strong community, companies can not only improve customer loyalty but also gain valuable insights into their needs and preferences.

There’s two key benefits this strategy has over customer obsession. One of the benefits is that it can help to even out your “revenue risk”. By focusing on building a strong community, no single customer is given any more attention or priority than any other, and customers are generally comfortable with this approach under a community model. This can lead to a more stable and reliable source of revenue, as the success of the business is not dependent on the whims of a few key customers.

In addition to the benefit of reduced revenue risk, community obsession also creates increased customer retention, or “stickiness.” When customers are part of a community that shares a passion for a product, they are more likely to stay loyal to the brand, even if they experience minor issues with pricing or company strategy. This is because other customers who are still satisfied with the product become more visible, and if enough passionate customers are in the ecosystem then one customer will be more willing to forego whatever issues they have with the product.

That all being said, the community obsession model is not without its risks. If you make a move that could potentially upset the entire community, it can hit you much harder than if you upset one of your “whale” customers in the traditional customer-obsessed model. This is, of course, because shocks to the group cause the previous two benefits to become meaningless!

In terms of adoption, the community obsession strategy that has been proven successful in B2C markets, and has become widely adopted as the new standard. While its success in B2B markets has been a subject of more debate, some startups have started to challenge that notion. In my opinion, this strategy can be just as effective in the B2B space. After all, corporations are still made up of people, and if employees feel a sense of community and collaboration with other businesses, it can generate the same benefits I already described.

So, while customer obsession may have been the standard in the past, it’s clear that the future of marketing belongs to those who prioritize building strong, engaged communities around their brands. By doing so, you can unlock a whole new level of success and growth for your business.

Outlined and edited by Jacob Robinson, written by ChatGPT.

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