Sales people love to sell what their best customers want. However, most often what customers want are trivial tweaks on your standard product … with little or no price premium for the tweaks. You’re stuck in neutral, unable to shift into growing revenue with improved margins.
The “tyranny of the served market”1
Customer-led business units see the world only through the lens of satisfying the expressed needs of their current customers. One result is aggressive price competition as competitors also respond to the expressed needs. A second result is myopic R&D programs, short-term in focus and reactive.
Shifting out of neutral by eliciting latent needs
Market-oriented business units see the world through a lens that goes beyond satisfying current customers’ expressed needs. These business units elicit and understand both the expressed needs and the latent needs of customers in the target market. Unique insights gathered by elicitation can be used to outpace competitive offerings in the served market in both revenue growth and improved margins.
Eliciting latent needs from lead users in the target market sometimes provides unique information about advanced needs in markets that are alongside the target market. When followed by strong financial and managerial commitment, satisfying latent needs in these alongside markets also helps escape the tyranny of the served market.
1. (1998) S. F. Slater, J. C. Narver “Customer-Led and Market-Oriented: Let’s Not Confuse the Two” Strategic Management Journal 19 1001-1006