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Stay relevant by getting to know your customers

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Downturn or not, the growth of any business relies on how well you know your customer and what you do with that information. As the owner/CEO of a business, you have the responsibility to ensure your customers understand what your business offers, and to do that you must understand what it is your customers need – and anticipate that their needs change regularly.

Many consumers are reviewing the ‘value’ they derive from current suppliers. More than ever, to ensure you don’t lose business as a result of a cost cutting exercise, you need to micro-manage existing customer relationships, review how well you are servicing customer needs and reinforce the value you provide to counteract any competitive activity. You must ensure that your customers do not see your product or service as a commodity.

Who has the responsibility?

Are you clear on who has responsibility for identifying ‘customer needs’ in your organisation? And do they know it is their responsibility?

Customer management is often shared between the sales and marketing teams. Each of these functions play a necessary role in understanding and meeting customer needs – but often the delivery of this is reduced to ensuring that you’ve sold everything you possibly can to your customer base. Up-selling and cross-selling falls short of what we are talking about here – really “knowing your customer”. Knowing your customer enables your business to:

  1. refine the product strategy driving the products or service range you offer
  2. reinforce the marketing and sales messages you promote
  3. know whether to respond to competitor activity.

Ask your management team for a read of your customer base and gauge whether they are taking the necessary time to understand what is currently motivating and driving your customers. Ultimately, accountability for the customer sits with the business owner/CEO – if you are not placing an emphasis on customer needs, you can’t assume your employees are either.

Start with your existing customer base.

What would be the impact to your revenue if your number one customer left tomorrow?

Simply analysing and categorising your customers by the current ‘potential’ revenue and margin they can generate will help you develop a picture of which customers are the most important customer type for your business.

Once you identify the customer type with the highest contribution, get on with the business of getting to know them intimately -not just what you’re selling them but to really understand what motivates them to buy your product or service and, most importantly of all, how valuable/important your product or service is to their business. This is the inherent ‘value’ you provide them.

Now get ‘intimate’ with your customers and prospects

Once you have unlocked this ‘value’, it’s time to get intimate:

  1. What opportunities do I have to ‘enhance’ this ‘value?
  2. Does this enable me to charge more?
  3. How many customers are ‘conscious’ that this is the value proposition we offer?
  4. How many ‘ideal’ customers are there in my market place?
  5. How can you reach them?
  6. What are the trends in that industry – how will that industry change in the next 12mths-5 years and what impact will that have on the value perception of my product?

This is not an exercise that is completed once every three-year planning cycle. This is a ‘process’ that needs to be ’embedded’ into your organisation and ‘owned’ by the CEO.

So how do you do it?

Here are some easy to implement options:

1. Keep in touch. Visit your key customer regularly with the specific objective of understanding the drivers of their business. Get to ‘understand’ what your product or service does for them. And don’t just ask the senior management – ask frontline operational staff that actually use your product or service.

2. Find your value driver. If you believe you are selling a ‘commodity’ item, you need to change that attitude. Find out what your clients like about your delivery -customer service -how easy they find you to deal with and see if that gives you something to work with.

3. Keep up to date. Ensure that your organisation has access to general information about the industries within which your clients operate.

4. Put processes in place to support you. CEO involvement can be supported by a range of automated or regular feedback mechanisms including:

  • Conduct regular feedback surveys – in person or via your website – and provide incentives for your customers to participate. Ideally, these should be completed every 6 months at least, but rotate the customers you survey.
  • Conduct ad-hoc focus groups to review the pros and cons of a particular product or service.
  • Develop a customer board – hold a regular meeting with customers you have a solid partnership with and who are prepared to give you feedback, warts and all.

5. Build profile. Now is no time to hide your light under a bushel. Get out there and be seen to be ‘experts’ in your field. This type of activity goes a long way to reinforce why a customer values your product or service.

Why do some owners and CEOs find talking to clients so difficult?

It is easy to lose sight of the customer while you are busy dealing with the internal machinations of running a business – watching the cashflow and managing operations while staff are all screaming for attention.

Lots of businesses lose their way because they spend an enormous amount of management time refining their product/service or delivery mechanism but lose sight of their customers’ interests. In the most extreme cases, the best-oiled engines have nowhere to go because their customers have moved on while they were getting their house in order!

Remember, it can be five to seven times more expensive to acquire a new customer than to retain an existing one. So ensure you stay relevant by taking the time to get to know your customers and not losing touch once you do.

Anthony Moss is Director of Incite Management Group, where he works with business owners and their management teams to significantly improve the performance of their business. He has 24-years experience managing a variety of businesses in Australia, the US and the UK.

Photo: “Drawing hands” – M.C. Escher (1948)

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