In business, we often focus on the bottom line, assuming that we already know everything about our customers, but customers can change. According to Inc. magazine, two of the most common mistakes entrepreneurs make are:
- Not connecting with customers by providing a product they love
- Building too many features into a product instead of offering something that solves customer needs in the most simplified way
So how do busy owners and managers understand their customers better? It starts with developing a customer intelligence system. A simple but strong system includes four components:
- Mechanisms for customer-facing staff to obtain feedback
- Ongoing evaluation of customer data
- Customer insight activities
- Periodic evaluation of customers’ needs and satisfaction
This can be as basic or sophisticated as your resources allow, but leaders of successful organizations will tell you put something in place.
Step 1: Front-line feedback
To obtain front-line customer feedback, have employees ask key questions. For example, a retailer’s cashiers can ask every fifth customer which aspect of their store experience they enjoyed most. If you provide a service like financial planning or remodeling, ask each client what could have been improved. Keep it brief and most people will share.
If your business sells to other businesses, ask your sales representatives, customer service staff, dealers or agents to collect regular customer feedback and include it in their reports. If you are mostly an online business, make sure your website is gathering feedback after transactions and other site activities.
Step 2: Back-end data
Businesses typically collect data on customer behaviors. Examples include sales, service calls, merchandise returns, contract renewals, complaints, website traffic and more. It’s not enough to simply collect data, however. You need a method for analyzing it and applying the findings to help you create better products, improve your service and refine your marketing.
Analyzing back-end data (data analytics) is most helpful if you can link customer characteristics to the activity data. If you have good business software, it might create automated reports. If you have someone on staff who has an analytics background, you can go beyond standard reports for real insights. Or you may want to hire a professional to assist you.
Step 3: Gathering customer insights
Truly knowing customers requires a deep understanding of their preferences, needs and motivations. This research is usually time-intensive and best conducted a few times a year. Begin by using your staff and bring in outside resources when needed. Here are some ideas to try yourself:
- Set up 10 customer interviews and invest 30-45 minutes with each person. Dive into their needs in relation to your product/service. What is essential? What is nice but add-on? What isn’t needed? What else would they like? Consider a small gift or purchase credit for their time.
- If it’s affordable, buy the product/service you sell from a competitor and evaluate the offering and customer experience. You can also browse competitors’ stores or websites to understand other choices your customers have available.
- Develop a key customer advisory board, hold semi-annual meetings where you explore their needs, listen to how they feel about using your product/service, and gather their ideas for improvements.
A research firm can help you conduct more extensive interviews, customer intercepts, online discussion boards or focus groups.
Step 4: Evaluating satisfaction
It’s wise to gauge customer satisfaction levels annually or bi-annually, doing so at the same time of year for reliable trending of results. Avoid surveys during your customers’ busiest months; it will ensure better participation.
If your budget is limited, start by asking these three questions:
- Overall satisfaction
- Likelihood to recommend your business
- Is your business on the way up, maintaining or on the way down?
Learn everything you can about your customers. Companies that invest in a strategic, ongoing customer intelligence system will always have the information they need to innovate, excel and grow.
Linda Kuster is director of research strategy at Vernon Research Group. She can be reached at lkuster@vernonresearch.com.
