"From the start, our entire business, from design to manufacturing and sales ... was oriented around listening to the customer, responding to the customer and delivering what the customer wanted." Michael Dell
Every lost customer is an opportunity to learn more about how your company handles its customers' need.
Some businesses have been punished at one time or the other for neglecting core needs of the consumer while focusing on other distracting factors like profitability, quality of product, competitors activities etc. As a business grows, often, there is a tendency to change from dealing with customers' needs to reducing cost of operation and making profit.
While it is important to ensure that you operate your business at the most profitable level, keep the competitors from your market, its also necessary not to sacrifice customers need for that. Every customer has a reason for choosing to go with your product, and that choice should always be considered as a favour, and must be respected.
Companies like Dell were successful because of the direct customer contact business model they operated. They gained information through regular interaction with customers and designed their products to match each customers need and expectation. As long as it maintained this philosophy, there was no problem however, the moment Micheal Dell stepped down, and Dell changed its focused to profitability, customers complaint increased and the company lost its market leadership. It took the coming back of Micheal Dell to put the business in the right perspective.
In the case of IBM, they were too confident that their customers will definitely remain with them irrespective of what the competitors are doing. When Gerstner took over as IBM's CEO in 1993, he identified that IBM's focus had shifted from customers to other activities aimed at increasing efficiency of the product, and reducing cost of operation. At the same time customer tastes were shifting from big mainframes toward networks of smaller desktops.
It is good to be confident of your product or service, and even improve on it, but only the customer defines what quality product or service is. Needs change with time, and consumers will not continue to stick to a product that doesn't meet their current need. Imagine that IBM detected the need from Mainframe computers to desktop computers, they may still continue to lead the market.
How about Coca Cola and Pepsi, sometimes focusing on the activities of the competitors can be very detrimental to your business. Coke wanted to change the taste of its flagship product because they felt that Pepsi was taking the market from them. But the outcry from the consumers showed that the original taste was still preferable.
No matter how big or small your business is, if customers need is not the driving force, you are heading for a crash.