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Last week I asked whether it is employees or customers who are more important to an organisation. If you missed it read “Customers Care About a Product’s Value, Not How the Company Treats Employees” now and catch up.
I knew it would be a provocative question but I still didn’t expect quite so many comments! So this week I decided to be just as provocative and talk about the issues that challenge many businesses. And where the answer to whatever problem they have is actually quite simple. For me, customers are the answer! They can either answer or help you overcome any challenge or issue you may have. Read on and then let me know if you agree.
How can I innovate more successfully?
According to an excellent article by Harvard Professor Dr Srini Pillay “Humans have anatural aversionto innovation because it involves a healthy dose of uncertainty and risk.”
Unfortunately, we try to reduce this risk by referencing past events to help us to predict the probability of our future success. Dr Pillay concludes that possibilities rather than probabilities are more likely to lead to better results.
I would concur with this statement, as the world is changing too fast to rely on past events as a predictor of anything in the future. This is why I say that customers are the answer!
It is only by getting closer to our customers and being constantly curious, that we have any chance of increasing our success in satisfying them.
It therefore makes sense that we involve our customers in helping us innovate. Not as a judge of concepts, which is what many businesses do. This is wrong because we know that consumers don’t know what they want, at least not until they see it.
However, they do know what their pains are; what is wrong with a product or service and what they would rather have. Co-creation and in fact ongoing conversations with our customers is the only way to stay ahead of the game.
They conclude that it takes many skills and cultural changes for most organisations to become more innovative. These include:
Audacity and grit: The determination to continue despite failure. And I would add the acceptance of failure and the license for employees to fail too.
Strong leadership and true collaboration:An inspiring vision and the tenacity to make it happen – together.
Give employees autonomy. We all need meaningful work. The chance of helping an organisation grow is what motivates top employees. That and the freedom to make decisions based on clear goals but without directive processes on how to meet these objectives.
Build platforms, not products. This may be the hardest for many organisations to grasp. Giving your customers the opportunity to decide what and how they use what you produce, and how it should be changed is the route to success. Networks and co-creation are the future that is already here. And customers are the answer!
Think like engineers and customers.Everyone in an organisation should be encouraged to look at problems from the customer’s perspective. It always amazes me how we seem to “take off our consumer hat” when we arrive at our place of work!
Know that money only gets you so far. Innovation has a much shorter shelf-life than it used to. In fact, best-in-class organisations have a continuous process ingrained in their culture.
Get acquisitions right. Many companies are looking for acquisitions for a way to quick-start their innovation. But it is difficult to get the timing right. The current value is good but potential growth is better.
The article concludes with an interesting comment that it is “leadership in business model innovation that offers the deepest and most transformational insights.” I would add it’s our customers too!
You’re measuring your sales and hopefully the trend is upwards. You’re following your distribution and hopefully it’s expanding. You’re calculating your profits and hopefully those are also rising. What else are you doing to follow your brand?
You would be amazed at just how many brand managers stop there! Even those in major CPG companies! It’s not enough. You know nothing about your customers! Your forecasts are based on outdated information from the past. (and if you didn’t skip to this point but read the previous one, you know why that’s insufficient)
The health of your brand and a good estimate of at least its short-term future comes from your work with customers. From brand image and equity, to co-creation and observation, your customers are the answer.
There is an additional bonus in following your brand image and that is that it acts as an early-warning signal. This is because it almost always starts to decline before your sales do!
The reason for this is that we are creatures of habit, retailers included. Change is difficult as a decision has to be made. So we tend to continue with the same products and services until something important happens. Important in the eye of the customer that is.
It may be a new brand introduction, a price promotion, bad publicity or negative comments on social media. If these are important enough to customers then they may decide to change brands. And if this impacts a lot of customers, the sales decline can be fast and significant.
Better therefore to follow your image as well as comments on social media.
Social media platforms can provide a wealth of information about your brand. Of course, different people adopt different platforms for different uses. Pew Research ran a useful analysis in their Social Media Update 2016 of the demographic similarities and differences of channels in the US. It is definitely worth a read to understand these differences, as well as to identify the best platforms for your own brands.
The sort of information that can be gathered from social media includes:
Natural vocabulary used by your customers.
Issues customers have with products and services, often in real time.
Trending topics of interest; use trend alerts rather than the keyword tool from Google, which is slower to update.
Regional or country differences from topic frequencies.
Observation and listening in person can provide extra benefits that social media can’t. The two information sources are thus complementary. In fact, I would consider them to be the best way to identify brand issues, long before running any market research surveys. For more on best practices in customer closeness sessions, check out “Five Rules of Observation and Why it’s Hard to Do Effectively.”
As you know there are basically only three ways to grow your business:
Get more customers to buy.
Get customers to buy more.
Get customers to buy more frequently
You will see that all three ways involve the customer; of course, they do! As you know, one of my favourite quotes says “There may be customers without brands, but there are no brands without customers.” If you still haven’t understood the message, your customers are the answer to everything!
Just think about that for a moment, please. A simple but profound statement, don’t you think? Therefore, your customer is the solution to your business growth and profitability.
Speaking of which, sometimes a business is growing but has done so by slashing prices and being on constant promotion. This doesn’t grow your brand, it demolishes it! Both its value and reputation! Read more about this and head the warning in “Are you on the Way to Brand Heaven or Hell?”
A far better way to grow more profitably is to understand the value that you offer to your customers. This is done through a PSM (price sensitivity measurement), a price trade-off study (BPTO) or similar survey. These will provide you with the information you need to understand your customers’ perception of your value. Whether your price is too high or too low, you’re leaving money on the table and could be more profitable.
Why is market research not enough to understand my customers?
There are so many reasons why running market research is insufficient to really know and understand your customers and your business. I don’t know where to start, but here are a few reasons I’ve come up with (please add your own in the comments box below):
Projects are sample based.
They are at best snapshots of current opinions and behaviours.
The information can quickly become outdated.
They ask questions.
They have limited focus.
People don’t tell the truth.
People don’t know why they do what they do.
Results are extrapolated.
Results are open to interpretation.
I could go on and on with this list – and again feel free to add further ideas in the comments below – but you get the idea.
Now don’t get me wrong; I’m a big fan of market research. BUT done by experts. Unfortunately, with the ease of connecting with people online and the simple survey platforms offered for free, it is easy for anyone to run a research project today.
It’s great that people see the benefit of surveys, but as this subtitle mentions, it’s not enough for truly knowing and understanding your customers. Also, if the reasons I gave above are not enough, there’s something else!
The biggest issue from my perspective is that understanding takes far more information than any single market research project can provide. Yes, it may deliver certain answers to a finite number of questions, but to understand your customer you need to get intimate.
There are many organisations that understand the importance of the customer and yet still hesitate to start walking the talk of customer centricity. If you’re one of them, then here are a few statistics that should convince you – and your bosses – of their importance:
Customer centric organisations are 60% more profitable. (Source)
The average revenue growth of Customer Experience Leaders is 14% points higher than that of the laggards. (Source)
64% of people think that customer experience is more important than price in their choice of brand. (Source)
I don’t think anyone can read those numbers and not be excited by the potential for growth. So what are you waiting for?
As you see, our customers can provide many if not all the answers to almost any question we may have about our businesses. After all, we are in business to make a difference to our customers lives in one way or another. So it is surprising that we still go looking for our answers elsewhere.
If I haven’t highlighted your main business challenge for 2017, then please add a comment below. I’m sure the customer will still be the answer – but prove me wrong!
If you’re ready to adopt a Customer First Strategy, book a free half-hour advisory session with me directly in my calendar, so we can go through your priorities and discuss solutions.