“I am always amazed to learn who our customers are and why they choose to buy from us”
-a CEO of a DAX 30 company commented over an informal glass of wine together.
The comment is interesting- if you don’t know who your customers are, your competitors very well may learn to do so.
How and why can you get to know your customers?
Savvy competitors today are learning what it is that the customer wants and needs and are fulfilling this vacuum with new product and market offerings that deliver the services and products at a sales price that is acceptable to the customer and profitable to the producer. While much emphasis is put on the end user in the B2C market, in the B2B market this is critical to winning. I have followed both American and European companies in separate industries as B2B suppliers that have rocketed to the top of their segments in both market share and more importantly profitability, and they win by delivering the service and products that customers are prepared to paid for- to the segments that are most attractive for the future.
Whether you are currently quoted on a stock exchange, are considering a private equity investment, or are for example family controlled, investors and shareholders reward and retain the companies that are able to focus on particular segments of customers and serve them at a higher return than competitors. The deep understanding of who the customers are and why they buy is critical to achieving this goal. There are a series of steps you can follow together with your board to achieve the insight and the implication.
3 often overlooked considerations to developing meaningful customer insights to be used by the board:
1- Mentality Shift: Customer insight is not a role only of marketing or customer service; it needs to be looked at in the boardroom and discussed openly with senior management. Customer insight is not about solely customer satisfaction scores or rankings- it is about what customers want in the future and the where and the how of buying. The mandate needs to come from the board to have objective data collected on what the future of customers will look like and this data analyzed for key findings to be drilled into by the decision makers at all company levels.
2- Ask the right questions to the right people: The questions you want to be asking are not only about the industry and the company as it is today- focus around what will be the future and how the challenges of today will become opportunities. Targeting various people to talk with throughout the organizations as well as potential customers, lost customers, competitor customers, and possible new market entrants will give your board a starting point to consider the future and the current state. International is also key here- do not focus only on one country and instead look around the world to where future customers may be coming from.
3- The “So What” discussion: Some boards like to talk about shifts in business models- some like to consider investing in new start ups rather than using the current companies- what is important is to have the discussion centered around data revealing the future state of the industry and how suppliers can meet their needs. Far too often there is a jump from very interesting insights to small operational to do lists- that won’t work if you are to change the nature and direction of one or more of your business units- you need instead to consider the wide-spread implications and what they will mean so that your organization does not become the next Kodak. I suggest the use of outside facilitators with structured processes as opposed to keeping this only internal.
Taking decisions about the future and leveraging customer insights is not an easy task- the resistance within the organization is strong and the temptation to remain in the current state proposes a lower risk factor. The rewards however in looking around, gaining the insights needed for effective decision making, and investing in focused areas pays off to your shareholders and challenges your management teams to perform at the next level which is far more rewarding in the longer term.