Eddielogic

– Thoughts on Strategy and Management

Your customer

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One of the basics to be successful in competition is to give the customer what he or she wants. Since this aspect is a basic it is very likely that your competitor will do the same. So what’s next? The answer is a little bit more complex and needs to stress factors like learning, training and leading the “right” people.

Giving your customers the things they want…But who is actually your customer? And who is or will be your potential customer? In most cases the first question organizations tend to start data base analysis and to respond: NN years old, average income of MMMM Euro per Year, has a family and so on and so forth. Well, that is the right answer, but only one point of view. More interesting and for more important are customer’s needs and wants which motivated him to buy your product and service. There are different approaches to identify and to organize those needs and wants. Each approach should consider the typical features of your industry. To highlight this aspect I will put an emphasis on the retail banking industry. Here most banks did set up a phase of life approach to organize product offers and to support sales staff. For example: In the case that the customer has ended his first professional training and starts his professional life (and has a regular income) it is very likely that a personal loan might be an appropriate offer to buy certain goods to start a family.

But how about the potential customer who is not in your database? Here your company has to put an emphasis on learning and understanding of trends (e.g. of trends that drive your today’s customers forward). Your organization has to have analytical skills, an open mind, curiosity and the ability to test assumptions. Furthermore it will take a lot of effort. For example: One company I know (retail market) combined trend analysis and competitor observation. The new customer segment has not been served before, so that organization could only assume how the customers would respond. During the product development some departments within the organization argued that customer would never buy product ZY. Three months after starting the organization was able to gain a large number of new customers, product ZY counted for 20 % of turnover.

Lessons learned:

  • Trend analysis and competitor observation are essential. Sometimes it is also crucial to identify customers on unusual places or to consider changes (e.g. changes in tax system) in the environment of potential target segments.
  • Top management has to support this process in general and the test stage in particular.
  • Careful selection and training of people that run the new venture are important.
  • Simply listening to existing customers is not enough. Your organizations (or at least some members of the management) need to understand the structure and economics of both the market and the customer business to develop a stream of ideas.
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