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Want Competitive Advantage? Find Out What Your Customers Really Want

Monday 31 October, 2011
Organisations that not only have a detailed understanding of what customers value, but can also effectively leverage those insights to respond to their requirements, will reap the benefits of improved competitive advantage, organisational performance and stronger customer relationships and loyalty. Discover how, who and what to ask to gather the information that your organisation needs to stay ahead of the game.

Want Competitive Advantage?To better compete in today's highly competitive markets, companies worldwide are focusing more on providing their customers with relevant and tailored products and services. In order to do so, companies are seeking feedback from customers as to their requirements. There is no doubt that understanding customer needs is critical to a company's ability to create product and services that customers will value and therefore purchase.

However, in order to understand customer needs, organisations cannot simply ask customers directly "What do you want?". Doing so is highly problematic for two reasons:

  1. Customers will say they want everything and give you their full "wish list" of the products, services and support offerings they desire - all of which at the lowest possible price. For most companies, it is simply not feasible nor profitable to do so.
  2. Directly asking "What do you want" often results in customers expressing their needs in an ambiguous manner. They will often say they require things such as "flexible products" or suppliers that are "easy to do business with". Such statements do not provide the level of detail required to enable companies to fully understand what would be required to meet these needs.

Therefore in order to obtain customer requirements that are clear, concise and actionable, a structured approach must be taken with regards to:

  • How to ask
  • Who to ask
  • What to ask, and
  • What to do with the information gathered

Each of these factors is discussed below:

How to ask

The best means to obtain a deep understanding of customer needs, is through structured dialogue with your customer that I refer to as strategic customer discussions. These can be conducted through a variety of methods including - but not limited to - in-depth interviews, customer visits or workshops. In a B2B context, such discussions can sometimes be easy to execute, given the close relationships that may exist between the organisation and their customers. The technique used is not as important as the information gathered.

If executed correctly, these discussions enable the organisation to understand the value customers receive from the products and services provided. In this situation, value refers to the monetary worth of the technical, economic, service and social benefits a company receives in exchange for the price it pays for a product or service offering.

Who to ask

To help ensure your company attains a deep understanding of customer needs, strategic discussions should be conducted with both the customers that are the largest revenue generators, as well as other "strategic" customers that are integral to an organisation meeting its critical business objectives.

There should also be cross-functional participation from your customer's organisation. Participants should be selected from a variety of functional departments - such as sales, marketing, products, operations and service.  It is important to have multiple participants, as no single department will have a complete view as to how value is created for their organisation.

Participants in these strategic discussions from both the organisation and the customer, should be a mix of senior level officials who have decision-making power, as well as mid-level personnel that will be involved in implementing solutions and should be aware of user related impacts. This is especially important in a B2B context where there are often several, if not hundreds of users and a very small number of decision-makers.

For the organisation conducting the discussion, it is critical that sales be involved in the process for several reasons:

  1. They often have the relationship directly with the customer. Hence, they are best suited to get the customer engaged in discussion
  2. Their intimate knowledge of the customer will assist in framing the questions and anticipating responses
  3. They should be involved in both capturing what the customer says, as well as following up with the customer to verify what has been captured, and advising afterwards as to what will and will not be done

What to ask

To maximise the usefulness of these strategic discussions, a great deal of preparation needs to be done in advance regarding the focus, which will determine the questions to be asked. Therefore, the first step in preparing for the discussions is to define the objectives. They should be based around specific issues and address the customer's strategic priorities such as:

  • Attracting customers
  • Selling more to existing customers
  • Maintaining customers

Once the discussion objectives have been established, a discussion guide containing the questions to be asked should be prepared. The questions to be asked should be developed with cross-functional input from departments - such as sales, marketing, product development and operations. This will help ensure feedback solicited can be understood and used by relevant functional areas to address customer requirements.

In addition, the questions asked should engage the customer, prompting them to provide a more in-depth explanation of their requirements.  These questions should serve solely as a starting point in the discussion with the customer.  As the discussion proceeds, new ideas, concerns and issues must be explored as they are raised. Hence, these discussions will need to be led by trained, seasoned personnel within the organisation that have a strong understanding of the customer's business, so that they can probe issues accordingly.

Types of information to gather

To generate the most useful and meaningful insights possible, companies should gather information pertaining to the following:

  • Jobs - Tasks or activities customers are seeking to get done
  • Outcomes - End results that are being sought after
  • Constraints - Factors and/or circumstances that prevent jobs being completed or outcomes achieved
  • Value - The monetary worth derived or sought afterwards from elements of a suppliers' offerings - such as product, service, account management, training and support

Gathering customer requirements in such a manner has a number of benefits:

  • Ensures that latent or unarticulated needs are captured, as customers are generally better at stating what it is they are trying to achieve
  • Ensures insights gathered are relevant among all customers - for example, most car manufacturers will have the same requirements
  • Helps organisations move from a transaction-based relationship to a deeper relationship, due to their increased understanding of customer's needs and perceptions of value

Some examples of the types of questions organisations can ask their customers to gather these requirements include:

  • What are the critical issues facing decision-makers as they evaluate our product or service?
  • What do you expect from us in a deeper, competitively differentiating relationship?
  • What are the areas you value about our company and where would you like to see us invest / focus more in the future?
  • What value attributes really set us apart from the competition?
  • What makes one company's offering better or worse than another and why?
  • What characteristics describe the ideal product or service offering?

What's next: Using the information

After the customer requirements have been captured, the information must be used within the organisation to determine which areas of value the organisation will address.

The learnings acquired through these discussions can be used to:

  • Tailor current product and service offerings
  • Develop new or improved offerings
  • Acquire new customers
  • Develop compelling messages which articulate how the company's offerings delivers value to its customers

Successfully delivering value to customers and maximising a company's bottom line is achieved through a series of steps comprised of:

  • Gather - Centrally store insights obtained from the discussion for use by key stakeholders and business units
  • Aggregate - "Roll up" data from all discussions to a meaningful level, such as by sales region or customer segment
  • Analyse - Identify key customer requirements and value drivers
  • Decide - Determine an agreed set of criteria to evaluate customer needs
  • Prioritise - Determine which needs will be addressed based on agreed criteria
  • Scope - Develop specific initiatives to deliver value sought after
  • Execute - Assign specific initiatives to specific business units
  • Manage - Monitor and report on initiatives being undertaken
  • Communicate - Advise customers as to which needs will be addressed, and those that will not, and progress on initiatives being undertaken

The ability of an organisation to successfully take action and profitably deliver the value sought after will require the following:

  • Senior management buy-in and championing

    This is critical, as the organisation must be committed and working towards delivering what customers value
  • Cross-functional participation

    To assess and prioritise needs, scope out and deliver initiatives
  • Capturing fair share of the value created

    By understanding how value is created for customers, organisations can pro-actively determine how it will capture its fair share of the value created (for example, by increasing its share of wallet, increasing pricing, acquiring more customers)
  • Ongoing dialogue with customers

    To enable organisations to understand changing customer requirements, manage expectations, and advise them of what will and will not be done as well as progress on initiatives

The financial impact of strategic customer engagement

Studies conducted by Gallup have found that organisations that have engaged their customers outperform their competitors by 26% in terms of gross margin and 85% in sales growth. Furthermore engaged customers have also been found to spend more and are more loyal, due to the customer offerings that are not easily replicated by the competition.

Market-leading companies in numerous industries - such as information technology, manufacturing, telecommunications and professional services - use strategic customer discussions as a primary component of their customer engagement strategies.

Author Credits

Michael Haynes, Director, 2Excell Consulting. 2Excell Consulting is an international consulting firm that assists organisations in business to business (B2B) markets to maximize their bottom line results by empowering them to systematically understand and respond to customers’ needs. Find out more about how your organisation can maximize its bottom line results through proven methods to understand and deliver what your customers value. Contact 2Excell on Email: michael@2excell.com or via their Website: www.2excell.com
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