Why You Need to Get Really Close to Your Customers in a Recession

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In these difficult times it is particularly important to go back to business basics if you want to survive and to thrive. By that I mean go back to the fundamentals of successful business as practiced over the centuries. It starts with really understanding customers’ needs particularly their unmet needs. This understanding drives the creation of products, services and experiences (products) that exactly match customers' needs. Which in turn drives effective communication to the same customers whose needs you have understood so well in the first place. This big picture drives a virtuous growth cycle that underpins all successful companies.

As companies have grown in size, and managers' roles and responsibilities have shrunk, (so that they now only see a small part of the big picture), serious disconnects have developed. Those responsible for understanding customers rarely have much say in the design of new products. Product designers rarely have much say in how it will all be communicated to customers. Marketers end up communicating marketing messages about products they had no hand in designing to customers they don’t really know. And all three groups may have little day-to-day influence on how it is all delivered at those myriad of touchpoints along the end-to-end customer experience. Many of today's companies have simply lost touch with their customers. They have become what organisational developers call machine bureaucracracies, where keeping the machine going is just as, if not more important than going in the right direction. There is little wonder that satisfaction with the customer experience is falling and customer loyalty with it [1].

Perhaps the biggest disconnect of all is that companies no longer understand who their customers really are and what they really want. They have substituted the deep insights gained by talking directly to real customers with lightweight market research and shallow analytics. Even sophisticated analytics wrapped in high-tech buzzwords like 'real-time analytics' is still shallow at the end of the day. I should know, I have helped many companies develop analytics over the years. Sure, it served its purpose and resulted in additional sales, but you end up patting yourself on the back when 5% of those you target with company-centric marketing messages actually buy. Companies have got stuck in a law of low marketing averages game, rather than lifting themselves up to a high quality products game. Think about it another way. If a doctor only achieved a 5%, or even a 50% success rate in treating patients, he would not only be struck off the medical register, he would be prosecuted for professional incompetence. And deservedly. So why is it acceptable for marketers to be so ‘professionally incompetent’?

Especially when there is a better way.

Anyone who has ever worked for a truly customer-centric company like Toyota [2] will immediately point out how much time they spend talking to customers about their needs. Toyota has a term for this - Genchi Genbutsu - which means 'go and see for yourself', in this case, directly to customers. In the past most companies would have done this through Voice of the Customer (VOC) programmes to understand what customers purportedly want. But the VOC approach has serious methodological flaws that have often resulted in the wrong products being developed. Today we can really understand what customers want by going beyond VOC and asking them about the jobs they are trying to do and the outcomes they are trying to achieve [3], and by watching them trying to do them. This provides a much more fundamental and actionable approach to understanding what customers' true needs are, particularly the unmet needs that are the seed for the development of innovative new products.

Once you understand what jobs and outcomes customers are trying to achieve, you can easily segment customers around their needs. You can identify segments of customers with similar unmet needs and create innovative products to fulfil them. On the other hand, you can identify segments with needs that are currently overmet and create simpler, lower-cost products to disrupt the market. And you can identify segments who would benefit from being able to combine different sets of needs together in a single product. There are a number of different strategies that you can follow depending upon what you understand about customers’ needs and competitor products. This harks back to the basics of marketing that Ted Levitt described in the 70s in his influential paper on Marketing Myopia [4]. This is the basis of how you need to approach business if you want to survive and thrive in this recession.

Don't be fooled into thinking you can sit out the recession without changing your ways. All the evidence suggests you can't. And don't be fooled into thinking that just spending more on your current marketing will work either. It might for a while, but customer behaviour has already changed [5] and it is unlikely to revert back again in the future. Unless you really get close to your customers and to their new needs, particularly to their unmet needs, you will end up marketing the wrong products, to the wrong customers, at the wrong time. Now is the time to go back to basics in business. To really understand what customers want. To understand the jobs they are trying to do and the outcomes they are trying to achieve in these most difficult of times. And to create exactly the right products, services and experiences to drive future sales, loyalty and growth. Even in a recession!

What do you think? Are you returning to business basics to drive growth in te recessionb? Or are you hiding under the table till the recession blows over?

Post a comment or email me at graham(dot)hill(at)web(dot)de to get the conversation going.

Graham Hill
Customer-driven Innovator
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