In the nineteenth century, retail entrepreneurs such as Henry Gordon Selfridge popularised the mantra, ‘The customer is always right’.
As a trading standards professional with over twenty years experience in dealing with consumer complaints this is a statement I can categorically state is not true. Customers are often badly in the wrong.
I prefer a variation of the mantra which states, ‘The customer is king’. This amendment puts the customer in their true position. Customers are the most important stakeholder in any business.
In business, the customer is the name of the game. They are the source of your income and profits. They are the reason that your business exists and survives.
To survive in business, you need to know what your customers want and who they are. But customer needs change, as do their expectations and habits. Market segments are in a constant state of flux.
To thrive and succeed in business you need to know more than what your customers want. You need to internalise customers needs and wants and you need to commoditise them.
What you must not do is:
- assume you know better about what customers want than they do.
- think you know what they ‘ought to want’.
- hope that customers will want what you have decided to make.
- fail to care what consumers want because you have sales targets and you’ll be able to find someone to offload products to.
So you need to know exactly what customers want. Except that is an impossible task. Often customers don’t know what they really want. This is a position clearly exposed by the current Brexit debate where supporters of the UK leaving the EU have vacillated between various different definitions of Brexit from a fictitious ‘world trade deal’ under WTO rules, to a ‘Canada Plus Plus Plus’ super-duper trade deal, to having the rights of EU membership without the costs. Ask three Brexiteers as to their chosen Brexit ‘product’ and you will get three different answers.
However, even if it is impossible to know exactly what consumers want, you can reduce risk of customer indecision by carrying out market research. You ask customers what they want, you don’t guess. Again Brexit is a case in point. If a market researcher surveyed consumers over two variants of a product and the result of that survey was 52%/48%, the research would likely be treated as inconclusive and in need of repetition.
Market research is not marketing research. Market research is examining the composition of markets, customer needs and wants, etc. Marketing research is the examination of a firm’s marketing activities and its ability to access markets.
Market research is not easy and you’d be amazed what some senior managers in business have said about it:
- “We’ve never done it”
- “Qualitative research is too touchy-feely”
- “How do you find out what customers themselves do not know”
- “This organisation works on numbers; not loose concepts of ideas”
- “The market research agencies we use don’t do that type of stuff”
- “Sorry, the finance people won’t buy it”
- “”Product managers hold the research budget and they have sales targets”
- “Spending money on that hits our profit centre”.
Market research done properly informs management decision-making. It is not a substitute for creative or professional decision-making. Again there is a parallel with Brexit. Many members of parliament say they personally oppose Brexit but that, because the majority in their constituency was to leave, they must obey the instruction of that majority. But such an attitude is not the role of MPs. Members of Parliament are representatives, not delegates. Their role is not to obey instructions, it is to use their own good judgement and to make decisions on the basis of the facts placed before them. That role, to paraphrase Burke, is based on three duties; first, to do what is good for the country; second, to do what is good for constituents and third, party organisation: In that order and where the first duty predominates over the other two.
Similarly management decision-makers have a duty to do what is good for those who hold shares in the business. That duty may conflict with the results of market research.
Like scientific and pseudo-scientific methodologies, market research has limits of error and when making decisions these limits of error must be carefully explained.
Market research is not an end in itself. It is simply a method of reducing risk.
So who are your customers?
Customer knowledge is the biggest asset your organisation has. Like any asset, you need to know it, maintain it and maximise the returns from it. To do this you need to develop a robust Marketing Information System which can be used to;
- analyse data for trends and changes
- gives understanding behind the reasons for changes in customer behaviour
- and which supports the marketing skills of your organisation and which allows you to do something about the changes in consumer behaviour you have identified.
- Identifies what consumers buy from you and from your competitors.
It must be remembered that customers do not buy product features; they buy benefits or solutions to their problems.
- A product is what a product does;
- Customers just need to get things done;
- They need products to do those things;
- People don’t want a washing powder, they want clean clothes.
So don’t just measure sales data, measure the needs and problems of consumers which leads to those sales and which motivate purchases. Does your firm measure more than basic sales data?
What benefits do customers seek?
Good marketing is not doing what you are good at but doing what your customers want you to do.
To meet that challenge, you need to find out:
- What your customers wants and needs are. The problems they need to solve and the jobs they need to do. You need to find out where consumers ‘hurt’
- What your customers need and want from you. What they believe you can do for them, what they believe you are capable of offering; compared to what you actually can offer; and what they believe you are incapable of delivering.
- What will your customers need in three months time, a year’s time and in five years’ time.
These are deceptively easy questions which are incredibly difficult to answer. However, you need to know the answers to those questions in order to know:
- Where to put the money for maximum return
- Which customers do you want to invest time and money in.
- What products and services you need to develop.
- What products do you need to divest from or put on hold.
The really pertinent questions you need to ask consumers are:
- What will the purchase and use of our products do for them and how will it affect a consumer’s status amongst their peers?
- What will other people think of the consumer by their use of your products and services?
- What will the consumer enjoy about their use of the product or service; or the result of such use?
- Will consumers enjoy the relationship created with the producer through their purchase of the product? And will they want to maintain that relationship through repeat purchases?