View Change Differently and Get A Competitive Edge
OnTarget Strategy's business consulting work is essentially driven by change. No one really needs help with the status quo. Our clients are either starting, improving, or expanding a business.
Business itself is not static and continues to change. In fact, it sometimes changes with 'lightning speed'; therefore, businesses must be ready to accept this phenomenon. It's much better to embrace change than to resist it. Often the question for a business is what to change and how. The answer should not necessarily come from the business owner, managers, or employees exclusively. Make sure your markets and customers weigh-in on the decision.
Get to Know Your Customers and Markets
Since markets and customers make or break a business, it stands to reason that businesses should understand them both. Who decides what products and services should be offered and what qualities, benefits, options, etc. the products and services should have? Should the owner decide or should the market decide?
Business owners and managers, obviously, have complete control over their businesses. They hire who they want, decide on marketing strategies, and offer products and services for sale that they think their customers want to buy. It’s a great feeling of independence and empowerment for owners. There’s only one problem. If customers don’t see what they want…they simply go elsewhere.
So, how do business owners know what markets want and what customers will purchase? An easy answer is just to understand the customer base. Talk to customers, seek their input, understand market evolution, uncover usage trends, and make product and service changes accordingly. Also, make sure you talk with your 'Market' and not just the 3-4 zealous advocates that love the product. Understand why different customer groups are buying your product and talk to ALL of them.
In a competitive environment, businesses must understand customers and the related markets. If not, someone else will.
Truly understanding a customer base or market segment requires a dedicated and thoughtful implementation. A business owner or manager needs to understand the "why" behind an answer. A business leader who's in-touch with the customer base will be the most successful in connecting the dots. It goes well beyond a multiple choice questionnaire or cohort. Customer surveys can provide a great data set to assist with market exploration but a single survey will never provide a complete understanding of the market segment. Also, customers provide answers based on the questions asked...not the data correlation hopes of the business owner or marketer. In other words, make assumptions at your own peril if you don't truly understand the customer.
For example, a client of ours invested in a new product line based on surveys with key opinion leaders. The data indicated the customer base would be willing to purchase the product. Unfortunately, the sales results did not follow the survey results. Two things happened here:
1. The survey didn't consider the assumed purchase preconditions. The customer answers came with an asterisk.
2. The customer group was a collection of long-time supporters. The survey response were biased towards what the customer thought the business wanted to hear rather than a honest answer.
The North American hybrid car market is a great example. Initial survey responses seemed to decouple from actual purchasing actions. As the customer became more educated during the buying process, their buying decisions changed. This week Chevy announced it was ending production of the Chevy Volt (Hybrid) in favor of the Chevy Bolt (EV.)
This is not to say that customer communication isn't useful and critical to business decisions...it's very much needed. Just don't confuse survey data with customer understanding.
Gather Data and Validate
The data gathering process does not start and stop with a single customer conversation. It consists of constant communication and validation.
(1) Communication Round One - The entire communication and testing process begins with finding out customer thoughts and desires through continuous client communication. Questions must be purposeful and not random. Leverage usage data mining and analytics to hone in on areas of opportunity.
What do customers desire in the way of products and services sold by the business? Why?
What do customers dislike about current offerings, what would they like to see changed? Why? What are the improvements worth?
What additional products and services would customers purchase if offered for sale? Under what conditions would they buy the new offerings?
The owner must now contemplate what the customers had to say about the business...both the good and the bad…but what great feedback! This information is priceless in finding out what customers like and dislike about the business, and their future desires.
(2) Testing Round One - Communicating with customers is the first step in the communication process, but a validation process must follow.
"Trust, but validate," is a dependable strategy.
After the initial feedback, conclusions must be confirmed. Maybe, the business made changes that they assumed customers wanted, but the changes did not turn out to be exactly what customers desired. Perhaps, customers thought they wanted certain changes but were not willing to purchase the products and services once the changes were made. Customers can be indecisive and inconsistent when telling owners what changes they would like to see. Mockups, Wireframes, and prototypes are useful at this stage. Fail early...fail fast...it the goal at this stage.
(3) Testing Round Two - Outcome confirmation. Final changes must have the desired positive effect on customer purchases; otherwise, the changes serve no business purpose. Are sales increasing, decreasing, or remaining stagnant? Are loyal customers returning and new customers being acquired? Are customers still requesting changes or offering suggestions?
Is this enough information to address the evolving market need? Well, only you can answer that question. Regardless of the amount of time that an owner spends understanding the marketplace and making product changes, the time is well spent. Businesses must understand their markets for long-term success.