Started business

It doesn’t matter how well you know the whats if what you really need is to know the whys. And the gap between knowledge and comprehension is never greater than in business when you need to be able to answer the really important questions – those that test your fundamental empathy with your customers. Knowing who they are and where you’ll find them is one thing, but will you really be able to serve them successfully - and therefore profitably – if you don’t truly know what makes them tick, what they really need, and why.

It’s an issue that’s been highlighted countless times since the Investor in Customers (IIC) standard was introduced in 2006, because we’ve been asking customers exactly what they think of the businesses we’ve assessed. In fact ‘countless’ is probably the wrong word, because we have been counting – and now we have been able to conduct a study into the results of 25 corporate assessments, involving more than 6,000 customer and staff feedback questionnaires. It’s a rich seam of knowledge, and while confidentiality rules preclude the use of specific names or identifiable details, it’s knowledge that is powerful in its generic similarities.

The assessments cover businesses across a number of sectors, namely financial services, marketing, PR, IT, recruitment, outsourcing, FMCG and supply chain. Different as those businesses are, they are all assessed under the four guiding principles of the IIC:

o       Understand customer needs

o       Meet customer needs

o       Delight customers

o       Engender loyalty

Under those four headings there are further, more detailed sets of questions – and it’s from within those levels that two remarkable facts have arisen.

First, the highest scores are generated by the questions about knowing the customer, and second, the lowest scores are against those questions that ask how well the assessed companies truly understand the customer. Of course, one of the key benefits of this sort of assessment is that it gives each organisation the opportunity to change things that don’t work, so those that undergo the process at least have the chance to see that things aren’t as they should be. That way, they can do something about it. But it’s such a clear cut response that we can only deduce that it affects businesses, and customers, everywhere – regardless of whether or not any formal assessment process is involved.

A 10-year research study in the USA, by Frederick F. Reichheld, showed that companies committed to customer loyalty outperform their competitors in terms of profitability. And the underlying philosophy of that study was that the world's best companies develop long term, profitable customer relationships by making sure that their staff are well motivated and customer focused. It’s also true that successful and forward-thinking companies see their workforce as customers of a sort, in that keeping their employees satisfied leads to the sort of commitment and loyalty that can only really result in Good Things for the company as a whole.

That’s why it’s important to ask employees for their views at the same time as you ask your external customers. When a customer says ‘you don’t understand some of the problems I face’, it’s time for warning bells to ring. When an employee says ‘I don’t think we’ve really got to grips with this customer’s marketplace,’ those warning bells should become a cacophony of klaxons, sirens and flashing lights. Because unless you act on those comments that customer is soon going to be saying goodbye.

Reading this, you’d be forgiven for limiting yourself to a mental image of smaller businesses setting their sights too high as they aim to catch the biggest fish they can. And that does happen, clearly. But looking through the wrong end of the telescope can be equally damaging. Imagine a big multinational with a service product aimed at the home SME market. The big company has a workforce of thousands and offices all over the UK and Europe. It has departments that deal with different departments, that deal with other departments before the product even goes out. It’s never been a small startup. The managing director is settled comfortably in his beautifully appointed office. The director of sales and marketing is unlikely to have to carry boxes of the new company brochure in from the printer’s van outside. And the chief financial officer has probably at the very least forgotten how it feels to know that the late payment of a client’s invoice could mean that it’s him that goes without a salary this month.

They might know that their ideal customer is a small business, but they don’t understand what it means actually to be that small business. They don’t know the structures or processes of a small business, they don’t have the voice, they probably don’t even have the language. They’re just not geared up to their customers. So it’s unlikely that the product will be exactly right – at least without a lengthy period of trial and error – so there is little customer satisfaction and even less chance of profitability in the long run. It’s situations like this, and of course at the smaller end of the market - part of being a start-up is that you learn as you make mistakes – that lead to the low scores when it comes to understanding customers.

Any assessment process needs to be robust or it’s not worth having. Reicheld’s research forms the basis of the process we use, with the continuing addition of years of experience and the input from thought-leaders across numerous business sectors. The four guiding principles mentioned above underpin more detailed areas of examination, including product quality, treating customers fairly and repeat purchase. These all encompass a range of other aspects of customer service and care: anticipating needs, communication, customer is always right, post sales care, and the quality of the relationship. And of course feedback and willingness to recommend are vital pieces of the circle.

Customers, staff and senior management alike are questioned in detail, and in terms of inanimate input there’s an objective review of key business data as well as how a company presents itself through its website, marketing materials, and customer literature. The process results in a huge amount of information, but because it’s so precisely structured – with the facility to include a small number of open, free format questions to add a bit of personality and colour – it provides a tangible picture of a company’s position in all its customers’ eyes. And as I said earlier, those customers include employees, who are key to creating profitable relationships; well-motivated employees continually look for better ways of delivering quality service to customers in more cost effective ways. And they know that one of the best ways of doing that is to understand the customer.

Fundamentally, understanding needs empathy. Think of the growing number of successful businesses where like sells to like. Busy working mums developing products for other busy working mums. Overworked and overstressed executive women developing exquisitely luxurious bath products because that’s what they want at the end of the day. Keen amateur sportsmen developing the perfect bit of kit that’s snapped up by similarly keen amateur sportsmen (it can’t ALL be women, after all!). They may start as cottage industries but they grow quickly and profitably. And they do that by knowing, by understanding, and by regularly assessing – whether it’s a natural internal procedure or a big independent project.

About the Author:

Neil has worked extensively in the financial services sector for major UK pensions and investment companies. His first 10 years were in technical roles before he escaped into marketing. After fruitlessly trying to find customers for the products he'd designed, he realised it might be easier to design products that customers wanted, a novel concept in financial services at the time. In May 2006, he set up Investor in Customers Ltd, an organisation that helps businesses understand their customers better and offers Awards to those that achieve high standards in customer relationships. The company operates in all sectors.
He was born in Twickenham, Middlesex and supports Leicester Tigers.

Article Source: ArticlesBase.com - Customers, Nothing Else Matters