Traditionally, the exchange between the firm and the customer has been at the core of business activities. In so doing, firms have focused on their own offerings and capabilities and centered their strategies on attracting the market – both existing and potential customers –to buy their offerings. Exemplifying this through a metaphor of a musical orchestra, this strategy means employing great musicians to play a spectacular musical piece and attracting an audience to listen and experience. In other words, customers as members of the audience of perceive the musical orchestra, and the firm with its musicians perform the musical piece. The whole piece is directed by the conductor representing the management of the firm. Customers are thereby assigned the role as passive recipients of the musical piece, and the firm performs its activities to the best of its knowledge, based on insight of customer satisfaction and service quality. From a theoretical standpoint, this business logic is characterized by the exchange, and how customers fit into the activities of the firm. This perspective is provider-oriented, meaning that firms are attempting to find such customers that fit into their pre-defined capabilities and resources.
|Source: Wikipedia/MITO Settembre Musica (Creative Commons lisenssi)|
However, let for a moment forget all about what firms can and can’t do, and instead focus on the customer perspective. Consider going into the customers’ world in an attempt to understand what customers really want. Not only measuring the responses and reactions to the offerings, but understanding their logic of living their lives. In today’s world, it is possible to get anything, anytime and anywhere, and the customers have all the options. What customers want does not necessarily involve a specific firm, rather customers probably will choose a firm that at that specific time will perform according to their specific requirements. From this perspective, it is the customer who dominates the marketplace. Customers have the possibility to actively seek the best offers, compare different providers, even perform many of the activities themselves. So rather than being in the audience of the metaphorical orchestra, or even alongside the employees on the stage co-performing the musical piece, it is the customers who are orchestrating the whole orchestra. Essentially, what I am saying is that customers are in the center, the conductor, leading the performance. It is a customer dominant marketplace.
But most firms don’t realize this yet. They don’t see the customer as playing the lead role in the musical piece. Instead, firms believe that they can control the customers, and don’t experience this customer dominance. They continue to see their superior role and believe that they can invite customers into their processes. Firms don’t realize that they should try to get invited into the customer’s world.
So what does such a customer dominant perspective means for businesses? What should firms do differently, if they incorporate such an approach? Customer dominant business logic means two things. Firms should be aware of their subordinate role in customers’ lives and should strive for getting invited in the customers’ lives, activities, experiences, and practices. And firm activities should be driven by an understanding of customers’ logic, and this logic should permeate the whole firm at every level. In other words, customer orientation, which leads firm strategies to creating superior quality and satisfaction, should be substituted with customer dominance which leads firm strategies to supporting customers’ lives. Therefore, firms need to have a mental mindset towards listening to customers in their own context. In other words, instead of customer orientation firms need a customer dominant mindset.
Heinonen, K., Strandvik, T., and Voima, P. (2013). Customer dominant value formation in service, European Business Review, 25 (2), 104-123
Heinonen, K., Strandvik, T., Mickelsson, K-J., Edvardsson, B., Sundström, E., and Andersson, P. (2010): A Customer Dominant Logic of Service, Journal of Service Management, 21 (4) 531-548