The key to success in today’s small business can be summed up in three simple words. “Know your customer.”
It is a perfect adage for today’s environment in which longstanding practices and realities are melting away to reveal a transformed landscape where opportunities are abundant, but often more obscured. In this new environment, customer insight is not only important, but also imperative.
It is no secret. Small business profitability is deeply connected to customer insight.
But what is customer insight?
Customer insight means having knowledge about customers and markets that helps structure thinking and decision making. It’s about having the whole picture, visible to the whole organization, from executive to customer service.
Customers expect you to know who they are, what they want, and how they want to be addressed. They want to converse with you. They want to be listened to.
Consider these recent consumer survey findings from the analyst firm Digital Clarity Group:
- Only one percent felt their customer expectations were always met.
- Around 89 percent had switched providers due to poor experiences.
- A full 82 percent said that the company they abandoned could have taken steps to keep their business.
What does this tell us? It means gaining customer insight is one of the most important things in business.
The source of insight
The next question we should be asking is, where can we obtain customer insight data? Customer insight comes from combining data from a number of sources. It is about using all data sources and applying the correct weight to them.
Insight comes from compiling and combining evidence, from data, to paint a picture. Merging the market research and database marketing teams is a step in the right direction, but it’s only part of what is required to create insight.
Part of this process is to know your customer’s touch point data. The following are sources of important customer insight data:
These sets of data can be generated from the following channels:
- Social media data
- Enterprise data
- In store talks
- Email communication
- Website logs
- Phone communication
- News media
- Syndicated research data
- Forums and review sites
The challenge most business owners face is leveraging the data they collect in order to create the right marketing mix. They struggle to aggregate the data to form the right customer insights and disseminate the right actions.
Customer insight requires that small business owners address the following points.
- Who are your most valuable customers (MVCs)
- What do they want to purchase?
- What motivates them to purchase?
- Beyond transaction, how can you interact with your MVCs in a relevant and profitable manner?
- How can you customize aspects of your product or service in order to meet the individual needs of your MVCs
Indeed, having the answers to the above questions is no longer a luxury. Small business owners must not only find answers but also act on those solutions in order to drive growth and profitability of their businesses.
The ability of firms to understand customers one at a time across multiple channels will mean the difference between success and failure because customer-based strategies are the key to competitive differentiation in today’s business world.
Knowing how, when and what to offer a customer can mean the difference between a profitable versus an unprofitable business.
According to Data Mine, you know you are on the right path and have the right customer insight in place when you have adequately answered the following critical questions.
- What is the aim of this organization?
Why was the organization formed? It is important to have the big picture even as you go about your daily duties. Unfortunately, many small business owners get consumed with daily tasks that they forget the mission statement of the company.
What is the organization’s customer acquisition strategy?
Every organization must have a marketing strategy. Doing business without a marketing strategy is like driving in the dark without the headlights. You risk not only getting involved in a fatal accident, but you also risk moving in the wrong direction.
What do we already know (not think we know)?
Obviously, you already know a few things about your customers. It is important to be aware of what you already know so that you can have a starting place.
- What do we need to know?
Now that you know what you know, it is time to know what you need to know. Identify the knowledge gaps and get the right information. Find out what data you need to collect and what tools you need to collect the data and collect it.
· How are we going to priorities what is needed?
Bearing in mind the constraints of time resources, identify the most urgent needs.
How will we ensure insight is retained in the business?
After gathering the customer insight, you need to ensure that it is retained in the business.
In short, insight is provided when the right questions are asked and solutions provided. The following illustration illustrates this very well.
The building blocks of customer insight are:
· Clearly defined company aim and objectives
· Customer driven marketing
· Organized and accessible data
· The right people in the insight team
· Knowledge management
In order to achieve customer insight, people must work collaboratively in the organization and have a clear data strategy.
Customer insight is not employing an analyst, or even a team of analysts. It requires organizational commitment to change. If it was easy, every organization would have customer insight sorted.
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