Most companies talk of placing customers at the heart of their business, yet very few actually do. Corporate consultant Cindy Barnes explores why this happens.
I was with a customer last week working on their global customer account process. We were discussing the ethnographic customer experience research that my company, Futurecurve, had completed for them. My customer was delighted with what we had uncovered but was lamenting their own incompetence at conducting any type of deep customer listening or understanding for themselves. I reassured them that their company was not alone: most find this extremely difficult to do. And then I asked myself:
Why is it so difficult for businesses to listen to and understand their customers?
This customer of mine is one the largest companies in the world. I mention this purely to illustrate that even the most successful companies find deep customer listening and customer exploration hard to do. But although it is hard, they have now realised it is vital to understand their customers in order to maintain their position in a changing world. Sales falter as customers’ needs change; they become more demanding and increasingly look for the exact product to fit their needs, rather than buy a product which has been pushed on them by an unempathetic and inflexible company.
The Big Issue
There is an overriding reason why companies find it so difficult to listen to and understand their customers. It stems from the way business is viewed as a largely rational endeavour, and is also linked to the way businesses have been run for the last 100 years. Let me explain. Every business has an internal part and an external part. The internal part, the operations and staffing, is under the control of the business, and operational planning is done by finance staff using detailed planning and forecasting spreadsheets and tools. The internal part is mainly about managing people and costs.
Contrast this with the external, revenue-generating side of the business. This is about customers, and customers can’t be controlled in the way that internal resources can. Yet so many companies still base their revenue forecasts and their sales and marketing strategies on the same type of financial planning and forecasting as they do on the internal cost side, through detailed spreadsheets and tools that forecast revenue for the next one, two, three, or even five years. While this is very comforting to finance people and gives an alluring sense of safety, it’s actually unreal.
In an attempt to de-risk the demand side even further, companies who want to play safe opt to focus on broad markets. In this world, their marketers use the classic ‘push’ approach to marketing, using segmentation, targeting and positioning. They divide the appropriate market for their products into sectors, then into segments, and then target groups, and then position their marketing campaigns to those target groups. They assume many things, including that the sectors and segments are correct (based on their market research), and that the target groups are homogeneous and will all receive the message and act upon it in a similar way.
This idea of broad homogeneity fits neatly with finance departments’ comfortable world view that demand can be neatly forecasted in the same way that internal costs can. When the market is broad and companies think customers are homogeneous, complacency creeps in. The belief here is that it’s a huge market and anyone in their broad target group is a potential customer, so they can just go and sell stuff.
This is why sales are faltering in many long-established companies. They haven’t kept up with the changing world of their customers. Customers are not homogeneous. They are becoming more and more demanding as the ease of sharing information makes even the most technical B2B markets almost transparent.
I meet many companies who are like this, who are still doing business the same way they were 20 years ago. They always tell me their issue is solely about price, i.e. that customers are just looking for a better deal. My answer is always that price is only an issue when they haven’t demonstrated their value.
A huge part of value comes from truly and deeply understanding what their customers’ needs are and how they are going to satisfy those needs. This can’t be done with standard quantitative market research or by analysing big data. It can only be done through deep listening and observation of how customers use their products and services in action. Deep listening and observation will uncover why customers behave and think as they do, and it is critical to know this in order to really understand them.
The Top 7 Culprits
I’ve looked at the broader issue, and now I’ll explore in more detail some of the symptoms you are likely to see manifest in your workplace. Here are my top 7 reasons why companies find deep listening and understanding their customers so hard to do….read more