Why Companies Can't Afford to Have a Myopic View of Their Customers
Companies invest a lot to understand their customers. They conduct research, analyze complaint data, and review and analyze social media feeds. And, they are particularly interested in how their customers view the competition within their industry.
After all, if customers aren’t buying from them, surely they must be shopping with the competition, right? As a result, companies go to great lengths to evaluate their competitors’ offerings, analyze their strengths and weaknesses, and deconstruct their marketing plans.
Unfortunately, businesses that limit their focus to competitors within their own industry may be missing the whole story. Companies need to reframe the competitive discussion and consider that they’re not just contending with industry rivals. Instead, they’re vying for a piece of their customer’s overall wallet. And that means the real competition is everyone that customer buys from, across every industry.
Thus the grocer competes with the sporting goods store, and the travel agent with the banker. As the customer decides how to spend their money, everyone contends for a piece of that spend.
But it goes beyond wallet share. The experiences customers have with all those other suppliers (from within and outside your industry) form the basis of what they expect from you. You’re not only competing for wallet share but mindshare as well. If another, unrelated company does something spectacular or innovative, that becomes the new bar you must strive to reach.
That’s why it’s critical to reach outside of your industry to understand your customer’s interactions with all suppliers and be prepared to uncover and adopt the best practices or even preferred practices you find.
This is not a new idea. Robert Camp, a 23-year Xerox veteran, introduced this concept in Benchmarking: The Search for Industry Best Practices that Lead to Superior Performance, published in 1989. Camp’s benchmarking methodology was widely credited with helping turn around a struggling Xerox as they competed with emerging Japanese competitors.
Benchmarking quickly hit the mainstream. In 1992 — the same year Bill Clinton declared, “It’s the economy stupid” — Fortune Magazine published HOW TO STEAL THE BEST IDEAS AROUND: Benchmarking is a perfectly legal way of copying the smartest business practices.
Today the emergence of digital transformation has led to a benchmarking renaissance. The threat of technology disruption is prompting many companies to look outside their segments for innovations that may provide them with a competitive advantage.
A whole new view of your customer
What can you learn by examining your customers’ experiences with suppliers outside your industry? A lot, it turns out. The more you know about your customers, the easier it will be to create better products, craft better messaging, and capturing their attention.
Who are they buying from, and how are they shopping? Are they researching online, then purchasing in-store, or is the entire shopping cycle completed online? What channels do they prefer?
How do they engage with technology? What software platforms are they using? What is their adoption of mobile devices? To what extent do they rely on technology to formulate their purchase behavior?
Who influences their buying decisions? Is it online reviews? Social media? Friends and family?
The need to understand and appeal to this broader customer view has had an unexpected side effect: companies are entering into unconventional partnerships and even teaming up with competitors.
Consider tech giants Cisco and Apple, who are partnering with risk evaluator Aon and insurer Allianz to offer discounts on cyber insurance. Or BMW and Louis Vuitton, who together created a co-branding campaign called ‘The Art of Travel.’ And what do ‘Star Wars’ and make-up have in common? Ask LucasFilm and CoverGirl, whose 2015 Light Side/Dark Side campaign drew many CoverGirl shoppers (mostly young women) to the latest ‘Star Wars’ movie.
Don’t be afraid to ask
Building this level of customer understanding means going beyond traditional means of information gathering and concentrating on qualitative research. It involves real dialogue with customers, and not just in focus groups. You need to be in the store, observing customers and watching how they use your products.
Follow where they’re going and what they’re shopping for. Ask them what else they’re buying and where they’re buying it. Don’t be afraid to inquire about their lifestyles and preferences.
If all this sounds a little intrusive (or even creepy!), it’s not. Customers want you to get to know them better — especially if it helps you provide them with a truly memorable customer experience.
Paula Courtney is a WisePlum contributor.