HOW
TO KNOW YOUR CUSTOMERS ' INSIDE OUT ' ?
By
Marie - Claire Ross
It
is common knowledge that customers are the lifeblood of businesses. Let's face
it, if you don't have customers, you don't have a business.
Yet,
while most businesses say that the customer is an important part of their business,
their actions do not support their words.
Many
companies spend most of their marketing dollars trying to attract new customers,
leaving their existing, loyal customers fending for themselves. Did you know
it is five times more expensive to obtain a
new customer than it is to satisfy your existing
customer?
Worse
still, some do not treat their customer complaints seriously enough.
To
run a successful business, you must have in-depth knowledge of who your core
customers are and their evolving wants and needs.
There
are several key areas that need to be evaluated, in order to understand your
customers.
What
Benefits are your Customers Buying?
Customers
do not purchase features or products, they purchase benefits. Consumers don't
buy laundry powder, they purchase goods that make their whites brighter, save
them time in the laundry and remove stains. Likewise, they don't purchase televisions,
but home entertainment boxes for family unity.
Similarly,
people rarely make purchases based on rational, logical thought. Instead, they
purchase products and services based on emotional reasons. Then, they rationalise
their emotional desires with logic.
Interpreting
buying behaviour can be complex due to the myriad of emotional and rational
factors that are used in the purchase decision process. It is important to unravel
this complexity in order to profit from it. You need to find out, from the customer's
point of view, what exactly it is they are buying. This will enable you to sell
the emotional benefits to your current and potential customers and produce innovative
products desired by your customers.
What
Types of People are Buying your Products/Service?
Some
crucial factors that affect purchasing behaviour are the personal characteristics
of the consumer. These are demographics (eg: age, gender, occupational status)
and psychographics (eg: preferred recreational activities, level of spending
on clothes).
By
combining both your demographics and psychographics, you will be able to accurately
define your target market. This can save you money on advertising in the long
run, as you will be able to precisely match the media audience characteristics
with your core customers
For
example, instead of just targeting females aged 25-39 years, you will need to
find the right promotional vehicle that matches your market of professional
females, 25-39 years of age, fashion-conscious, with a high disposable income.
When
do Your Customers Buy?
Buying
patterns are often closely related to a customer's lifecycle stage. Important
'rites of passage' occasions are moving out of the parental home, marriage or
change in employment.
By
understanding the different lifestyle factors that may affect your customer's
buying patterns, you will be able to target your customers through more appropriate
advertising (eg: Back to School).
How
Satisfied are your Customers after Purchase?
Research
has found that repeat and referral business typically account for 60-90% of
revenues. The value of loyal customers and word-of-mouth endorsements should
never be underestimated.
For
a customer to recommend your product and use you again, it is crucial that every
contact you have with your customer is satisfactory.
The
best way to find out your level of customer satisfaction is to ask them. If
you have a small client base, this is a relatively easy procedure, but if you
have a large customer base and different staff attending to their needs, a market
research study will need to be implemented.
How
do you conduct Customer Satisfaction Research?
There
are two ways - you can conduct the research in-house or you could commission
a market research agency.
Conducting
the research yourself is advisable if you have lots of time, you feel knowledgeable
and confident about questionnaire/research design and data analysis. Remember,
conducting market research is a lot harder than it looks. Therefore, you will
need to invest time and money reading books on how to conduct research.
If
you choose to commission a market research agency, there are several things
you can do to cut costs. Write a draft of your questionnaire and/or use a freelance
market research consultant or small agency who charge a more competitive fee.
All
in all, communication is the foundation of customer service. It is only through
listening to your customers that you can meet their needs and ensure your success.
About the Author
Marie-Claire Ross is the Principal Consultant of Astute Research, a market research
consultancy dedicated to providing strategic, cost effective, quality and innovative
market research services. She also provides an ezine "Astute Business Ideas".
Subscribe at her site: www.astuteresearch.com.au,
or by sending a blank email to mc@astuteresearch.com.au.