Why what you don’t know about your customer could cost you a fortune
Have you ever tried to buy a wedding gift for an acquaintance? Tricky, isn’t it?
You may have an idea of what they might like, but you’re not sure and you want to buy them something they’ll appreciate and use. What about someone a bit closer to you? Maybe a cousin or someone you work alongside every day? Even then, it’s a gamble. What if they don’t like the colour you choose or the gift just doesn’t suit their lifestyle? The only way you can really know for sure is to ask them (or at least pick something that’s on their registry list).
So, what do you do when you want to offer something to your customers? How do you find out what they want so much that they’re willing to choose your product above others and pay for it? Again, there are really only 2 ways to find out. Guess or ask them.
The pros and cons of guessing
Guessing is not all bad. We can learn a lot from observing customer behaviour, informally or formally, over time and analysing it to predict trends. For example, experienced store managers can build up a good picture of what their customers like based on past orders. Market analysis helps to find general patterns as does observing similar organisations.
Within our own organisations, there is a lot of statistical data we can gather through sales patterns, feedback from our sales staff and website analytics. With information like this, we can get fairly close to knowing what our customers are looking for. So, how is it that we can still end up investing in products or services that nobody wants? Or, we get the right products but get the timing or marketing wrong?
According to marketing and consumer behaviour expert, Professor Joe Urbany, the answer lies in our own underlying assumptions and biases. Very often, we end up assuming that what we think we would want if we were in our customer’s shoes is actually what they want – and we’d be wrong. In his presentation Disruptive customer insights that drive competitive advantage and financial results, part of Florence Guild’s speaker series, ’The Art of Focus’, Urbany pointed out:
“People are horrible at trying to predict someone else’s preferences. However, we often have a lot of confidence in our predictions … Also, we tend to be very biased in what we think customers value. This is a human, hard-wired trait.”
Under-utilising available data
Urbany stated that, although most organisations have lots of valuable data available, they are often terrible at integrating sound research results into their decision making. This is because we tend to ignore consumer feedback if it doesn’t match what we think we want to do or if it is critical of what we are currently doing.
There is also a big difference between the way the insights folks value research and the way decision makers value research. As Urbany noted, a lot of the time, these sorts of insights don’t even make the meeting or they get buried in the 70-page report that nobody reads anyway.
The authors of the McKinsey & Company article Capturing value from your customer data agree.
“Most companies (only use) a fraction of the data in their possession. Sprawling legacy systems, siloed databases, and sporadic automation are common obstacles. Models and dashboards may be forced to rely on stale data, and core processes may require considerable manual intervention. Often, too, organizations may not have a clear understanding of the specific outcomes they’re looking to achieve through data optimization. All that is leaving significant value on the table … When it comes to generating measurable value from their data, most organizations have plenty of low-hanging fruit they have yet to harvest.”
How to ask (nicely)
If you simply went out and asked your customers what they want from you, the chances are that they probably couldn’t tell you. It’s too vague a question. Instead, you need to help them by narrowing the focus. Before approaching them, you need to clearly define your customer and your offering. Then estimate what you think they are likely to say. Then go out and ask them specific questions such as:
- Why they made their choice?
- What they value in that choice?
- Why would they choose your business over another (or vice versa)?
The feedback that surprises you is the most valuable as it could disrupt your strategies and lead to increased revenue. After all, if enough customers vocalise a need that is not being met and that you hadn’t anticipated, there’s a golden opportunity right there. That’s the product or service that will help you stand out from your opposition. Providing you ACT ON IT and get it right, of course.
This episode forms part of our 2018 series narrative, ‘The Art of Focus’ which is based on the premise that, in an information-dense society, our attention resources have become depleted. The series’ speakers will help us identify and explore the areas in our lives where we may need to regain focus, increase our self-awareness and improve how we interact with those around us.
If you’d like to hear more of Professor Urbany’s recorded conversation, Disruptive customer insights that drive competitive advantage and financial results, and learn how you can make changes like this in your life, tune in to episode 29 of our podcast series ‘The Art of Focus’. You can also keep up to date with conversations with other thought leaders by subscribing to our podcast on iTunes and Stitcher Radio.