Understanding your customers

Remember the saying “the customer is king?” Well even history shows us the reality that not all kings were the good guys! Yet when it comes to business many companies seem to forget that they have an all important choice to make as to which type of customers they want – which are most suited and most profitable for their products and services?

Do you understand who your customers are? Can you easily identify which are your most important and most profitable customers? Do you know exactly which products and services they have a requirement for – and which of these they are currently purchasing from you – and which are they obtaining from the competition, and why?

If you don’t already have the information, undertake some simple sales analysis to help build a clearer understanding of your existing customers including their purchasing habits. Who buys, is it individuals or are a number of people able to influence the final purchase decision, if so are we in contact with each of the decision making unit (DMU)?

Take time to stay close to your customers, monitor their needs? Have needs changed? More and more businesses are realizing the importance of segmentation – the process of subdividing customers and prospects according to common attributes and characteristics relevant to the product or service.

Consider obtaining feedback from your customers, find out if they are happy with your performance. Are they receiving what they want and how does your service compare with your competitors? Profile existing customers and identify potential prospects with a similar profile that you can target.

Cross selling

The ongoing monitoring of the purchasing requirements and behaviour of your existing customers provides you with a clear picture of opportunities to introduce them to related products and services. Often customers may only know about the products they are already buying from you. Letting your customers know the extent of the full range of the products and services relevant to their needs, which is available from your company can create new opportunities for additional business.

Look at what customers have already bought and then inform them about relevant related products and services (businesses like Amazon do this regularly – customers who purchased this also purchased these items). A word of warning, relevance is key, avoid bombarding customers with information, which is not relevant to their needs.

Develop clear specific communications, which provide customers with information on products and services, which is focused on their requirements ensuring that they know the benefits of buying from you. Maximise the potential for cross selling by bundling products or services, and group related items together on your web site or in brochures.

Incentives are another good way of encouraging customers to purchase bundled items and to increase the potential for cross selling. Avoid discounts where possible and make use of the power of recommendations and word of mouth with incentives for referral business.

Ironically the growth of businesses do not relate to a better business. We can probably all comment on experiences where clearly large organisations have got it wrong. Can the loss of personal contact and the wonderful telephone menu queuing systems for example really be said to have improved customer service?

The paradox is that as businesses grow, if they want to be great, they need to think and behave small. Many businesses have managed to combine this successfully so that as they grow they still manage to maintain the qualities of smallness.

Paradox it may be, but achievable it most certainly is for businesses to grow by thinking and behaving smaller.

Be the best at what you do, not the biggest

Focus and what you can do best. Instead of trying to be all things to all, sometimes the key is the simple approach to identify what one thing you can claim to do better than the competition and then concentrate on doing this better than anyone else. Use your marketing to identify this for your business and focus your communication on getting this message across.

Become recognised by your customers and your industry not for your size and power but for providing the best products, the best services, the best after care, or the best customer experience. This is more than creating a strap line, which claims “simply the best”. Spend time to understand in which area you can genuinely claim to be better than anyone else.

Stay close to your customers

When considering marketing many organisations look to lead generation and new business development, but the successful ones have a strategy for building long term relationships with existing customers as well as constantly seeking to developing new ones.

Small businesses often treat existing customers like gold. As businesses continue to grow it is crucial that they adopt a policy to stay close to their customers. You’ve invested a lot of time and cost in acquiring your customers. Not only do you miss out on ongoing revenue when you ignore them but you flush away all of your return on investment from acquiring them in the first place. Most businesses lose between 15-20% of their customers each year. In retail, this figure can be much higher.

Depending on your type of business, a large proportion of customers will lie dormant, having only purchased once or twice. The remaining customers will be those, which are loyal to you and from whom your future business and profits can be significant. This is where the old 80/20 rule applies with 80% of revenue coming from just 20% of customers. The question is, do you know who they are? If you do not monitor your customers and invest in your customer database, it’s highly probable that you’ll never know.

Investing in and maintaining your customer database can bring invaluable benefits to your company, such as:

Customers can feel valued by being informed of new products, services and offers.

Responses to marketing efforts and campaigns can be more effective because you are dealing with a more responsive customer base.

You can improve segmentation of customers and build a profile of ideal target customers leading to improved more effective new business acquisition.

Reduced marketing costs because you don’t have to take a scattergun approach and can develop clearer targeted marketing campaigns.

Redefine the meaning of success

In small businesses, relationships are key. Whether this is in relationships with employees, customers, and suppliers or in networking with potential customers each relationship is important. If businesses measure success purely by the bottom line or by turnover it is likely that relationships will suffer.

Where an organisation takes a more holistic approach and measures success in terms not only of its own financial performance but by the impact it is able to have on its employees, customers and suppliers then success in turn breeds success.

This is clearly a cultural approach which needs to be adopted throughout the company and which can be supported by communication with customers and suppliers through newsletters. Involvement of employees through team consultation meetings and internal communication can all work to support this approach.

In the new world of globalisation the hunger and drive for growth continues to be fed and encouraged. However, if companies want to be great it is worth noting that as businesses grow they can often best achieve this by thinking and acting small.

In Business we tend to define quality in a producer-consumer context, for example: ISO 9000: “Degree to which a set of inherent characteristic fulfills requirements.” The standard defines requirement as need or expectation.

Management guru Peter Drucker: “Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for.”

As defined by good old Wikipedia, in the vernacular, quality can mean a high degree of excellence (“a quality product”), a degree of excellence or the lack of it (“work of average quality”). That’s quite a range of possibilities from excellence through to down right nothing.

Money for nothing – (no match)

Whilst BS and EN standards may always drive us to ensure that our products comply with legislation and therefore meet the expected requirement, the temptation to introduce cheaper products with limited or no marketing support behind them should only be pursued with the greatest of care. Customers may be looking to make their pound stretch further than in previous years however, we should remember than no one has disengaged their selectivity and ability to discern between products and services that give them what they want and those that don’t. The success of marketing is not is persuading customers to buy what they don’t want, but in understanding what they want and providing an offering to match and communicating it.

Money for nothing – (no future)

Another temptation when business is tough is to drive through promotion after promotion to move that all-important stock out of the warehouse. The short term result may make for a healthy looking monthly sales turnover figure, only to find that when the dust settles, as settle it will, the bad news is the dust will continue to mount as in subsequent months the products don’t move and distributors and retailers alike become less trusting and willing to commit to our products.

Money for nothing – (no investment)

In times of need all areas of the business come under scrutiny for cost savings, not only marketing or sales support, but often staffing resource. Departments may be downsized putting extra pressure on those that remain, with more responsibility on those with less experience and seniority. On paper this may present a happier financial picture but in reality, as was the case with many of the sewer pipes in the UK which had no attention since Victorian times, these were under extreme pressure, ready to crack and more worryingly, the **** was ready to hit the fan.

We often joked and used the phrase, “ if you pay peanuts yet get monkeys” but don’t underestimate the true value of your business, your staff. Invest in your team; motivate them through training programmes to help them be successful. Your sales team are those who build the customer relationships, which will lead to your success or failure. Use this time to enhance and develop techniques and knowledge of the products and services benefits relevant to your target market.

Within marketing, the call is towards ongoing training and development to ensure that staff is able to deliver effectively. Most professional bodies recognize the importance of Continuing Professional Development (CPD), not only for those with senior responsibility, but also for all levels. The Chartered Institute of Marketing is no exception and encourages its members to actively pursue a programme of 35 hours of CPD a year. Those who maintain this for a minimum of 2 years, and ongoing, are able to achieve the status of a Chartered Marketer, recognition of being at the forefront of knowledge and learning within their profession. The vision for the future is a time where those who practice marketing will need the assurance of the Chartered Marketer status.

When recruiting staff or employing the services of an external company would you allow someone to come into your business without the relevant qualifications or accreditation and manage your finances? Can we imagine commissioning an architect without the relevant accreditation to design a building? Yet when it comes to marketing our business, perhaps one of the critical factors determining success and failure, we often don’t actively seek recognized qualifications, nor encourage ongoing learning. It is any wonder then that businesses find themselves in Dire Straits, after all no one will give Money for Nothing will they?

In the current climate where we have seen many major brand names and businesses faced with the need to cut back and in some cases translate this into redundancies we may well be justified in asking how can we survive? The same question
however, can be turned from a negative into a positive if this becomes the drive to re-assess how our business operates and how can we adapt to the changes we encounter in the market environment around us.

So where does marketing fit in? Well for some, this is the time to tighten our belts and one of the first areas often looked at is cutting the marketing budget. Whether you have a dedicated in house marketing team, whether it is just one or two people, or whether you bring in marketing resource, as and when you need, it using an external expert, you should see marketing as a way through all the clutter to refine your business strategy.

At a time where many may look for short term cost savings by reducing marketing activity others will see this as an
opportunity to move in where others withdraw and capture more market share.

Using the analogy of “survival of the fittest”, the fittest companies are those whose marketing ensures that its products or services best fit the market or customer needs. The fittest is not necessarily the largest, with large sales and marketing teams and large budgets to spend. Success in a tough market is all about being more effective at what we do, not stopping doing what we need to!

Fit for our customers

The basic premise of marketing, of understanding our customers wants and needs and thereby providing products and services which meet these requirements, is no more essential than when there is less of the business cake to go around. Staying close to customers through effective and legally compliant database management, profiling and understanding our customers
buying needs, processes and motivators is an invaluable part of any businesses armoury.

Fit for our target market

New business development is key at most times and identifying new markets may appear to be a life saver but ensuring the right fit is absolutely crucial. I often come across businesses where there is a serious lack of belief in the value of research and a profound optimism that a good brochure, direct mail, advert or website will attract those all-important new customers who, if only they realised what we offer, would we beating a path to our door. Whilst research does not have to always involve a major investment, it should be seen as the foundation to what our business is about.

Fit to survive

Whilst those businesses that continue to adopt marketing may be tempted to see it for it’s power of communication and

influence, and less of a process of understanding our business, customers, competitors and markets, this can be likened unto the desire to ‘Advance to Go’ and simply bypassing all else along the way. After all, many of us know our businesses so well and some may have been established for years so what do we need to learn?

Markets and customer needs don’t change that much, do they? Sadly, in many cases even in the natural world around us, we perhaps start to understand a little more the impact that globalisation and climate change can have which may lead to the extinction of some species of animals and indeed become a threat to our own selves, unless we change the way we live. In the business world, the environment is changing and those who learn to adapt through the effective use of marketing will ensure the survival of the fittest.

It’s all about sales promotion:

a) The selling concept (inside-out)

Many organisations approach to marketing: the selling concept suggesting customers will not buy the company’s products or services unless it undertakes major selling and promotion. The aim is to sell what the company offers rather than what the market wants. Here the focus is on short term sales rather than long term relationships.

Inside-out = starts with company’s products/services and sales promotion required to obtain profitable sales.

Driven by front end communications such as brochures, direct mail, advertising, PR, exhibitions and websites.

Can be very expensive and costly if you get it wrong. The familiar cries of “we spent a fortune on advertising in the trade but with very poor responses”.

b) The marketing concept (outside-in)

This is the marketing concept which holds that achieving the business goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively than the competition. By understanding your markets, customers and prospects a much clearer message can be developed which is of relevance to the target audience. In contrast to the selling concept, the marketing concept takes an outside-in view, which starts with the focus on the market and customers wants and needs, developing appropriate marketing communications with the aim of creating long term relationships with customers.

2) It’s the remit of large organisations:

a) Size doesn’t matter!

Contrary to Renault’s strap line for the Clio: when it comes to marketing: size doesn’t matter.

Whether your business is large or small you cannot afford to ignore marketing or relegate it to the back of the queue.

Marketing is not just for the large organisation with big budgets to spend. Effective marketing is just as important for the small business and does not need a large budget.

How is this possible?

b) In-house vs. outsourcing

If yours is a business with a dedicated marketing team it is crucial to your business that the resources are in place in order for marketing to be able to understand existing and new markets and customers effectively and lead management in developing strategies which enable products and services to be developed and supplied profitably.

Failure to do so can lead to poor marketing – Most of us would accept that poor marketing leads to poor use of finance and resources – leading to poor results?

NO! In fact, poor marketing leads to poor use of resources which leads to NO RESULTS!

Having worked in senior management roles within various sizes of businesses I understand how the time, resources, expertise and budget that you require may not always be available to you. More companies are now recognizing the benefit of bringing in expertise and experience as an extension to their marketing resource when and where they need it most.

It’s not only small business who can benefit from this support.

In my role as a consultant I have worked successfully with Managing Directors in businesses where no in-house team exists and can offer them the flexibility of marketing when and where they need it most. I have also worked with Marketing Managers on specific projects to enable them to consider projects which otherwise would simply not be achievable within the time frame required and therefore potential market or product development opportunities would have been lost.

It’s a kind of magic!

a) All smoke and mirrors!

It’s at this point that I lead us all to that great entertainer: Freddie Mercury.

Like him, his music or not, you can’t deny he was a great entertainer. Great because of his presence, his performances, how he dressed and not least how he sang.

There are some that may feel marketing is in the business of entertainment. It’s a kind of magic – all smoke and mirrors. Making products and services look better than the reality. The spin doctor of the modern day company!

If this is really all marketing is for your business then you run the risk of disappointing a lot of customers. Dissatisfied customers do not buy again. Worse yet, the dissatisfied customer tells others about their bad experiences.

The good news is that Marketing isn’t a kind of magic and whilst you might need Harry Potter or Dumbledore or Gandalf to turn a poorly positioned or developed product into a good one, marketing’s key role is in identifying market opportunities and helping to develop products and services which are positioned to satisfy customer needs profitably.

Clearly, whatever your business, marketing has a vital role to play. Today’s successful companies share a strong focus and commitment to marketing.

Businesses also look to marketing to constantly prove itself in terms of value to the organisation and return on investment. The shrinking of resources within agencies and internal marketing departments often intensifies this further. The challenge facing marketers is how to keep up with the rapid pace of change and still deliver the objectives of the business whilst juggling with limited time, resources, expertise and budget.

The task of coping with the changing expectations and demands of customers and shareholders, the ever-changing technological and economic environments or the requirements of an increasingly sophisticated and knowledgeable consumer base is daunting to say the least. The requirement is now greater than ever before for marketers to develop their marketing skills in order to continue to produce the successful business brands of the future.

If businesses want to stay ahead of the competition and be successful in a tough changing and challenging environment it is absolutely key that marketing stays ahead of the game. To continue to be successful companies need to invest in marketing. In many organisations this will be interpreted as investing in promotional activity, but this short-sighted approach will inevitably lead to gaps in the future and an erosion of market share. The requirement is clearly for ongoing investment in marketing training and development.

Within the construction sector the Government has recognised a significant skills shortage and is driving this forward with a major campaign to encourage investment in training. It is estimated that some 75% of the industry is not doing so. This 75% is largely made up of SMEs for many of whom training has so far not been seen as a priority.

Training and development needs

Within businesses of all sizes it is vital to invest in the training and development of its marketing team and to recognise the benefits that this can bring to the success of the business as a whole.

One solution is to work closely with the Chartered Institute of Marketing towards achieving accreditation for marketers, whilst also providing training and development in key areas relevant to your business. A programme of continuing professional development (CPD) is vital to ensure that marketers continue to develop skill sets appropriate to the ever-changing environment. The value of the CIM has often been seen as valuable to students whilst working towards qualification but less so to marketers once qualified and fully absorbed with their business roles. In today’s fast paced changing world the value of the ongoing training and development, as well as access to industry relevant knowledge, seminars and experts provided by the CIM is invaluable.

Another way is to bring in expertise and experience to enhance and supplement your business with a clear focus on a particular area of weakness or to support the development of a specific project such as new product development, the launch of a new product or service or to identify and target new market opportunities. For some businesses this offers a practical and fast track route to help achieving their objectives.

In some cases a shortage of experienced managers may exist because of down sizing or the current uncertain economic landscape. The result is often that junior managers and staff are called upon in areas for which they have little or no significant experience. One approach is to provide support in the way of on the job training or mentoring programmes tailored to suit your business needs.

Businesses that choose to ignore investment in its marketing people and resource may continue to perform in the short term but as with the effects of climate change whether we wish to accept it or not the times they are a changin’.