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Business Survival

What Do Your Customers Really Want?

In turbulent times such as these, only those companies that can prove they have real value to offer will survive.

Graeme Codrington

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The key is to see the world through your customer’s eyes and to do this you have to ask a simple question. “What do our customers do with what they buy from us?” Dr Graeme Codrington looks at a process that will give answers to the question.

In tough times, most companies tend to focus more on their internal systems and processes than on what their customers are looking for. Seeing the world through your customer’s eyes is essential for success, especially during a downturn. As simple and obvious as it sounds, many companies forget this basic truth. Entrepreneurs are particularly prone to shifting their attention from customers to internal systems as they grow bigger and become more established. A searching question and some simple activities can get your company correctly focused again.

What Your Customers Really Want

The key to seeing the world through your customer’s eyes is to ask: “What do our customers do with what they buy from us?”

It might seem simple, but this question’s implications can be profound for your business. Take a moment to think about it before reading further. It’s not, “what do your customers want from you?” It’s not, “what do your customers ask you for?” It’s a question about the ultimate value your customers are looking for in your product or service. The answers might surprise you, and could change your business.

The classic case study of this is Caterpillar. As makers of large earth moving equipment, the answer to this question is obvious. Very few of their customers actually want earth moving equipment. What they want is the earth moved. Caterpillar has been able to adjust its value proposition to take advantage of this understanding of its client’s ultimate need. Caterpillar offers service contracts to dig holes, move earth and do whatever else its client really needs. Guaranteeing the delivery of an end product means you can sell at higher margins, and become indispensable to your clients.

Innovation

Sometimes understanding what your customers do with what they buy from you can lead you to develop an entirely new range of products or services. For example, if a company that manufactures power drills does this exercise, it will realise that almost none of its customers actually want a power tool. What they really want is a hole. It probably isn’t feasible to sell the service of drilling holes on demand (although local hardware stores might successfully offer this service), but it is possible to think about what the best technology is to make holes these days. And that happens to be a laser. Of course, that would take a significant shift for a company used to employing engineers who build better drills. Maybe the company doesn’t want to make this shift in focus. But if it did, it could dominate its marketplace for years.

This question might also provide some amazing insights into how you package and promote your products and services, even if it doesn’t change what you sell. When Parker Pen asked itself this question, it made a fascinating discovery. “What do customers do with the Parker Pens they buy?” It might seem obvious that they write with their pens, and it is difficult to imagine how a company can offer the service of writing for people. But actually, when it asked its customers, it was amazed to discover that the vast majority of Parker Pens are actually given away as gifts (if you own a Parker Pen, did you buy it for yourself or were you given it as a gift?). Next time you’re in a store, have a look at how Parker Pens are packaged and marketed. They are almost all pre-packaged as gifts. And they’re still best sellers. So, what do your customers do with what they buy from you?

A Task for the Boss

This exercise can be done in your company boardroom as a brainstorm exercise, and that’s probably a good place to start. But you also need to get out and actually speak to your customers. In fact, more than that, you need to understand your customers’ businesses, so that you can work out how you can add the most value to what they do.

This might all sound obvious, but it is amazing how few businesses actually do focus on their customers in this way, especially during tough times. How much time do you and your company’s senior leaders actually spend with clients? Jack Welch, the legendary CEO of General Electric, one of the world’s largest companies, spent nearly half of his time with his customers. He literally walked around their premises and met the people who not only bought but also used the products they bought from his company. His primary focus as leader of his company was on his company’s customers. Understanding them should not be outsourced to the marketing department. It is the boss’s job.

In difficult times such as we now find ourselves in, the danger is that companies will focus mainly on their internal systems and processes, and that senior leaders will get sucked into programmes and projects. Even worse, many companies will strip costs by reducing staff, thereby reducing their capacity to service their customers. They might cut corners on the quality or consistency of their products and services, trying to cut input costs. Many will reduce the incentives they pay to their people, negatively impacting staff morale and service delivery. These strategies may appear essential for short-term survival, but they most often lead to long-term damage to the company. And they can drive customers away.

The CEO and senior leaders need to keep the focus on customers, and ensure that their staff are both incentivised and inspired to provide the type of service that will keep customers coming back again and again. This is a job that is best done from the top down.

A Task for Different People

Having said that, it is also an issue that should involve everyone at all levels of the organisation. You need to ensure that the entire company is focused on the customer. Get as many people as possible involved in thinking about the question posed. And make sure the answers reflect diverse views.

There’s a lot of talk about diversity these days, but many entrepreneurs focus simply on filling quotas to show their diversity credentials. The real value diversity brings, though, is having multiple world views dealing with your company’s issues.

Diversity is not just about outward appearances. It’s actually quite easy to create a team of people of different genders, skin colours or ages. The danger is that you inadvertently encourage them to all think the same. This is one of the most common problems I encounter when working with senior leadership teams. Very quickly, a company’s employees learn “how things are done around here”. Even the way they dress seems to conform to unwritten rules. Be careful of this type of group think.

Most companies customers represent much greater diversity than their staff do. Make sure you include as many diverse world views as you can when trying to work out how to add real value to your customers. Especially consider different cultures, genders, generations, religions, life stages, economic circumstance and ages. Also include different levels of experience within your company, making sure you have the “been there, done that” experience interacting with “brand new eyes” – your longest serving staff member and your newest employee should definitely be involved in helping you see the world through your customer’s eyes.

Brainstorming with a Difference

To unlock the diverse insights of your team, you might need to use slightly different brainstorming techniques. Why not try reverse brainstorming? Change the wording of the issue you’re brainstorming from how to solve it to how to cause it. For example, when looking at a customer satisfaction problem, ask: “How can we cause customers to be dissatisfied?” This might sound simple, but it often unlocks some amazing insights. It works because many people find it easier to be judgmental or analytical, particularly as these methods are widely taught within our education systems.

The act of reversing the position also provides a new perspective and helps with thinking differently about a problem. You should also try open brainstorming. The problem with brainstorming solutions is that we allocate an hour on a particular day and hope that our best ideas will somehow emerge at that specific moment in time. As your team focuses on seeing the world through your customer’s eyes, you should have a brainstorming session that is not focused on any particular outcome or issue. Simply ask people to brainstorm about what they should be brainstorming about. Don’t worry if they all sit around staring at you for a few minutes trying to work out what to say. Trust the process, and wait for the good ideas to start flowing. The outcome of an open brainstorming session is to list ideas that should be unpacked, discussed and brainstormed in the future.

In fact, once you have a whole lot of good issues to deal with, you should also put up ideas boards in your office. Put an idea, a question or an issue on a piece of paper and stick it up on a wall, with pens handy. Encourage people to think about the issues over the period of a week or so, and to write up any ideas they have. Encourage – and incentivise – people to spend time each day reading what has been written by others, and adding further thoughts and ideas. This works because we cannot script when a flash of insight will happen, and we need to give some people more time than others to come up with creative ideas.

No doubt, you have many other techniques available to generate ideas and ensure your whole team is involved. However you do it, you need to ensure that your whole team is focused on trying to understand the value you add to your customers. And don’t be scared to adjust and adapt what you do in order to respond to turbulent times and changing customers. This is key to remaining successful over time.

Dr Graeme Codrington is a presenter, author and future trends analyst at TomorrowToday, a global strategy consultancy. He helps companies make the most of their multi-generational workforces. He speaks internationally to over 100 000 people every year and was recently voted 'Speaker of the Year' by the Academy for Chief Executives.

Business Survival

Stop Surviving And Start Thriving In Business

It will inform your operations, which will inform your human and asset capital and lastly, the financial investments you make.

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To thrive – and not just survive – in business you need three basic building blocks: 1) attract more customers and clients; 2) who spend more; and 3) buy more often. But how do we make this happen in the tight, recessionary environment we find ourselves in South Africa?

Despite the tough economic conditions, businesses can still thrive. In fact, many small businesses have been found to thrive in difficult economic conditions and are known as counter-cyclical businesses.

So how do you turn the tide from surviving, to thriving? You need to start thinking creatively, making informed decisions and being agile in the business environment. Always start with your marketing strategy. It will inform your operations, which will inform your human and asset capital and lastly, the financial investments you make.

Related: Business Basics: The Four M’s Of A Successful Start-Up

Ansoff Growth Matrix

Business leaders continuously explore various growth strategies to retain and grow market share. One of most respected and often used is the Ansoff Growth Matrix. It was first published in the Harvard Business Review in 1957, written by strategist Igor Ansoff to help management focus on the options for business growth. Ansoff suggested that an effective strategy considers four growth areas, varying in risk. This strategic planning tool guides us to understand our current situation, contemplate strategic options and consider the associated risks.

  1. Market Penetration: Market penetration has the least risk of the four options. Here you are selling more of the same things to the same market. You know your product and market well. The question is, how can you defend your market share and sell more to your existing customer? You may consider special promotions or introduce a loyalty scheme.
  1. Product/ Service Development: Product and service development is slightly riskier as you introduce a new component into your existing market. The advantage is that you sell to a customer/ client that you know, and they trust you. Ask yourself how to grow your product and service portfolio? You may consider adding new services and products or modifying your existing offering.
  1. Market Development: With market development you target new customers and clients with your existing products and services. You sell more of the same things to a different market. You can consider new sales channels, online or direct sales. Do a proper market dissection to target different groups of people, considering different age groups, gender and demographics.
  1. Diversification: Diversification is very risky. Here you consider introducing a new, unproven product or service into an entirely new market that you may not fully understand. You may need new expertise, acquiring another business or venturing into another sector. The main benefit of diversification is that during difficult times only one component or element of the business may suffer.

Related: My Business Is Growing… What Now?

The fifth element: Passion 

In addition, I would add one more element critical to business growth: Passion. It is the single component most critical to business success and, combined with any one or combination of the four areas of the Ansoff Growth Matric, it can equip small business owners with all they need to thrive in their business environment. Passion determines your business success, so make sure you have it in heaps to reap the rewards of your hard work.

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Business Survival

6 Common Decision-Making Blunders That Could Kill Your Business

Among the logical errors nearly everybody makes is thinking only everybody else makes logical errors.

John Rampton

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Humans are often very irrational. If you’ve ever explored behavioural economics or psychology, you may have found a host of examples demonstrating situations when we make objectively bad decisions.

Below are six of the largest decision-making blunders we all make. Avoiding them will dramatically improve your decision-making, your quality of life and success.

1. Sunk-cost fallacy

Of all the ones on this list, the sunk-cost fallacy is the most common. Many of the decisions we make are final or difficult to change. For example, let’s say you invest R1 000 in Facebook, and the price of the stock goes down to R600 the following day. The fact that you put in R1 000 initially is irrelevant to the situation at hand; you now have R600 worth of Facebook shares.

What this means is that once the decision is made and our cost is incurred, there’s no point thinking back. You already put in the time, money or other form of investment. Considering that in any future decision is illogical, despite how tempting it is. Instead, present yourself with the new options at hand — without considering the sunk cost.

Related: The 3 Dumbest Business Mistakes New Entrepreneurs Make Most Often

2. Narrow framing

Would you take this bet? You pay me R1 000 if a flipped coin lands on heads and I pay you R1 200 if it lands on tails. Most people would say no. We tend to be risk-averse, unwilling to risk something like R1 000, despite the reward being a bit greater.

Now, what if I offered you that bet, but I promised we would flip 100 coins? Each time, the loser pays up. Would you take it then?

Almost certainly, right? The chances that you lose money, overall, are extremely slim. This idea can be applied throughout life. When we’re in situations that will repeat themselves over time, we should take a step back and play a game of averages.

3. Confirmation bias

Another common one in the worlds of psychological and behavioural economy is confirmation bias. It hurts our ability to keep an open mind and shift our opinion. When we have a held belief, we typically look for information that confirms our opinion while ignoring data points that tell the opposite story.

For example, if I’m really excited about a new software product that I just integrated into my business, with ten of my employees as users, I might have made up my mind about the quality of the service before we put it to use. I would then be more likely to listen to the three employees who enjoy it, not the seven who don’t.

There’s almost always information that will validate our opinions, no matter how wrong they might be. That means we need to always look for conflicting evidence and, from there, make judgements based on more well-rounded information.

Related: 6 Rookie Investor Mistakes You Must Avoid For Profitable Investing

4. Emotionally driven decisions

When we’re angry or upset, we’re much worse decision-makers. When you have to make an important decision and happen to be in a bad mood, you should hold off. Instead, wait until you cool down and can think more clearly. It will remove the outside influences and let you think more rationally.

5. Ego depletion

This one makes intuitive sense, but it’s one of the most common ways to make bad decisions. The idea of ego depletion is that when we’re drained, physically or mentally, we’re less likely to think critically. Think about the times you’ve been exhausted after a long day of work. In those moments, you don’t want to have to think hard about anything. Instead, you want your brain to work automatically.

What that means is that when you’re tired and faced with challenging choices, you’ll rely more on your instinct or automatic processes as opposed to analysis and thought. That can be extremely problematic in situations that require effort.

6. Halo effect

The halo effect says that once we like somebody, we’re more likely to look for his or her positive characteristics and avoid the negative ones. This is similar to confirmation bias, but it’s oriented around people.

Related: 10 Stupid Mistakes Smart People Make

For example, let’s say I just hired someone named John, who was great during his interviews. Through his first few weeks, John does a few things well at work, but he also does many things poorly. The halo effect — brought on by his wonderful interview persona — could cause me to ignore his poor attributes and emphasise his good traits.

This can be detrimental to our ability to make judgements about others. We have to realise our biases toward certain people and eliminate them.

These are a handful of the many decision-making errors we’re all prone to. Although it’s challenging to scrutinise your preconceived notions, doing so is worthwhile. It gets easier over time and will, ultimately, make you a more effective decision-maker — personally and as a business owner.

This article was originally posted here on Entrepreneur.com.

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Business Survival

8 Reasons Why Failure And Focus Are Essential To Business Success

There are two Fs that define the long-term and sustainable success of your business – Failure and Focus.

Nicholas Bell

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There is an event that runs globally across countries such as the United States, Spain, France, Brazil and Israel. It is a conference that is aimed at the entrepreneur, the investor, the developer and the designer. It also caters exclusively for failure – FailCon asks the entrepreneur, specifically within the technology space, to embrace failure. However, this focus on failure isn’t about leaping blindly into the ball pit of collapsed dreams and wallowing in its sorrow as you shout ‘Bazinga!’. It’s about being comfortable with the idea that failure can happen and using it to drive your business focus and long-term success. These eight steps define exactly how…

1. Not big, iterative

Giving someone advice to fail big isn’t practical. It isn’t the kind of attitude that investors will be drawn to either. Instead, embracing failure is about being open to the fact that it may very well happen to you and some of your ideas. It isn’t necessarily going to be a gigantic failure on a scale of company-wide collapse. It could just be that you had an idea, and it wasn’t a very good idea so it failed.

Related: Beauty Of Failure: The Art Of Embracing Rejection

2. Focus on your agenda

If you’re not focused on your end game and business agenda, don’t expect your staff to be. This level of focus is critical as it gives people direction. They then understand exactly where the business is going, what it hopes to achieve, and the role that they play in taking it there.

If you don’t have this level of focus, your staff don’t have anything to latch onto.

3. Learn

learningThis is where your ability to fail is of value. You need to test your assumptions and ideas and then use their failures to learn more about how they could potentially succeed in the future. You have to learn from your mistakes. Don’t drown in self-doubt, take the mistakes and move them towards enhancing your business.

4. Success isn’t easy

Look, if being a hugely successful entrepreneur was easy, everybody would do it. You need to keep the focus and intensity you brought on your first day all the way through to today. Create short term goals and objectives that give you endless purpose and a sense of achievement and use their success to drive you onwards towards your final destination.

Related: Flourishing Through Failure And Finding Fortune

5. Build in plenty of goalposts

Justify every decision and long-term goal through relentless measurement to ensure they are the right decisions. The last thing you want is to hit your goal in 10 years and discover that it wasn’t the right one, your business hasn’t gone anywhere and you’ve worked incredibly hard for nothing. The effectiveness of your time, decision making and execution is critical.

6. Define failure

What does failure mean to you? Understand how you define it and then use this as a barometer to define your idea of success. As long as you have clear objectives for both, you can assess your business, its effectiveness and your results. As mentioned in above, always set goals and objectives so you give your company and people a sense of purpose.

7. Your ideas aren’t always that good

Some of your ideas are not going to fly. They’re going to collapse with an embarrassed sigh. The lesson is that you should be constantly questioning yourself so when you are in a situation where your ideas don’t work, you can objectively examine why they failed and use these learnings to change and adapt.

There needs to be a healthy tension between learning through theory and practice. The latter is learning to win and to handle defeat in real time with real results.

Related: Your Business Failure is Your Fault

8. Get over it

It’s quite easy to wallow in your failure misery and lose years to personalised anguish. It’s harder to just get over it and move on. The thing is, it’s moving on that counts. Those who get up, dust themselves off and start again are those who end up thriving. The ability to compartmentalise and learn is invaluable as you take your business from your first idea through to a sustainable, epic enterprise.

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