To Whom Do You Listen? The Customer or the Market?

Many businesses throughout the years have been using an array of processes to capture customers' explicit requirements and as well as their unstated "wants" -- these techniques strive to hear "the voice of the customer." Recently, expanded, more robust versions of these processes have been developed and applied with the intent of capturing the "voice of the market" instead of just the voice of the customer. I asked Eric Reidenbach, author of a recent book on the topic, to explain the differences between the two. He replied:

"'Best in Market' is the accolade bestowed upon the market share leader. Look at John Deere in agriculture and Caterpillar in construction and you will find the two leaders who have built their leadership on the basis of superior value. Customer value is the best leading indicator of market share and top line revenues and comes from a deep understanding of how markets define value. Note that I said markets and not customers.

Many companies slavishly monitor the voice of the customer (VOC) but ignore the more powerful voice of the market (VOM). Market share derives from three sources:
1. Retaining current customers
2. Upgrading current customers to buy more, buy more frequently, etc.
3. Acquiring new customers.

The VOC is important in achieving the first two components of market share but cannot address the third component. It is the VOM that provides the information platform for acquiring new customers by being able to provide information on the competitive dynamics that drives share gains. Your value proposition is relative to that of your competitors and requires constant management. After all, if you are not managing your value proposition, who is? Answer: your competitors."

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