Rapid technological advancements over the past 30 years have led to an ever-changing marketplace in which consumer demand can be as unpredictable as the flavor-of-the-week. In order to operate a financially successful business AND adhere to consumer demands, modern companies must focus on two things; developing an agile business model and listening to customer feedback.
Industry legends like Henry Ford and Steve Jobs brought their respective companies to new heights by NOT listening to consumers. One of Ford’s famous quotes was, “If I had asked people what they wanted they would have said faster horses.” Along those same lines Jobs stated, “A lot of times, people don’t know what they want until you show it to them.”
This bold, and risky, approach to product development resulted in great success for Apple and Ford however it conveyed a dangerous message to executives moving forward; innovation can be achieved by giving customers something they aren’t asking for. Whether directly or indirectly influenced by this approach, some industry leaders stopped listening to (and even worse, stopped asking for) customer feedback when attempting to grow market share. This can be a fatal mistake, making Ford and Jobs the exception rather than the rule.
A few examples:
Blockbuster failed to make necessary adjustments to stay relevant in a tech-trending marketplace; in 2010 the company filed for bankruptcy.
Kodak became complacent, leaning on high profit margins of developing color-print photos and was averse to exploring the digital trend; in 2013 the company filed for bankruptcy.
Yellow Cab Co-op, based in San Francisco, had long benefited from being the main player in the pay-per-ride game and failed to address changing rider demands; in 2016 the company filed for bankruptcy.
By muting the voice of the customer, companies are essentially putting an expiration date on their business model. Once a company is forced to react to lost market share, it is often already too late. No amount of financial restructuring can compensate for a stagnant or irrelevant value proposition, a fact which some industry leaders had to learn the hard way.
One glowing example of success through agility and customer-driven innovation is CarMax.
Operating in an industry historically known for lacking integrity and consumer confidence, CarMax reinvented the way cars are bought and sold. By listening to consumers, identifying pain points throughout the car-buying experience and leveraging online accessibility, CarMax positioned itself as an unconventional option thus creating its own industry niche.
Consumer dissatisfaction with the standard car-buying experience is no secret. The issue was not awareness; rather it was inaction on the part of auto dealerships and retailers. Everything from research and shopping to buying and receiving, the auto industry was not providing a pleasant consumer experience.
CarMax recognized an opportunity and invested heavily in tech development to provide consumers with an alternative to the traditional on-site auto seller. It removed the hassle of price negotiation, offered cost and trade-in transparency, and provided an inventory of options far beyond the average dealership. Not only did CarMax listen to what consumers were saying, they were proactive in fulfilling such demands.
After using customer feedback to establish their business model, CarMax continues to listen to its customers in an effort to improve its service offerings. While some of the resulting ideas don’t appear to be profitable on paper, by closely tracking process benefits and drawbacks while employing an agile business approach these seemingly cost-ineffective ideas can evolve into competitive advantages.
For example, CarMax has an ongoing effort to offer a seamless car-buying experience that allows a consumer to avoid ever having to step foot on a car lot. One specific consumer demand, home delivery of a purchased car, did not make sense from a cost-benefit standpoint. Small scale tests of at-home delivery confirmed this was not a realistic offering. However by quickly updating and retesting the process, adequate solutions began to surface allowing this feature to make sense financially and boosted already high satisfaction levels among CarMax customers.
CarMax sought to enter a highly saturated market by offering something industry competitors were unwilling, or unable, to offer. In order to address relevant, meaningful pain points it first had to fully understand exactly what car-buyers were demanding. After the initial concept of a transparent, convenient car buying experience was well received the continued growth and success of CarMax occurred as a result of converting consumer research into action.
To read more about CarMax and its quest for an outstanding customer experience, click here.
To further grow your own market share by better understanding consumer demands, give us a shout. Helping businesses strengthen their value proposition by leveraging the value of customer feedback has been our passion for over 30 years; and we love what we do.