Understanding your customers is the universal rule for entrepreneurs. Successful businesses understand their customers' characteristics, demographics, and buying habits. Exceptional businesses gain additional insight into what their customers see, hear, think, and feel.
Knowing your customers so well that you can anticipate their needs and exceed their expectations is the key to securing customer loyalty and beating your competition. There are three key steps to achieving deeper insights into your customer base:
How well are you leveraging the customer data you currently collect? This data--which may be stored in multiple databases across your business--holds valuable information around customer characteristics and buying habits, as well as your ability to serve them. Analyze the data to understand when and where customers make purchases. Identify customer segments that are most profitable and what characteristics set this group apart. Analyze your customer service performance, including response times, profitability on contracts, and overall customer satisfaction. This information can help you to identify your customers' needs more effectively. Keep in mind, however, that this analysis will only address existing customers who are using existing product or service offerings.
To better meet evolving needs and improve the customer experience, you must shift away from an organizational or product view to a customer-focused view. A few questions to ask yourself:
Answering these questions requires customer analytics informed through data, understanding your business through the customer's eyes, and process improvements that focus on the customer.
The ability to view your business through your customer's eyes can lead to the discovery of new opportunities. As automaker Henry Ford said, "If I had asked people what they wanted, they would have said 'faster horses.'" While "the customer is always right," they may not always be asking for the right solution. This is where innovation comes in. Innovators are able to see what their customers actually want, rather than what they are asking for--which usually reflects what your competitors are already offering.
A better approach is to anticipate your customer's challenges, by identifying patterns in customer behavior and paying attention to the differences in local, regional and global customer needs and desires. As you identify these patterns, take action to develop a solution that will meet unmet needs and deliver it to the customer. The key takeaway here is that customers often don't understand the value of a new offering until they see it.
Developing a better understanding of your customers will help you identify areas for improvement in your business model and give customers what they really want at the price they are willing to pay. That's the best way to get a leg up on your competitors.
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Associate Lindsay Comstock contributed to this article.