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How to Gain a Competitive Advantage on Customer Insights

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12 months ago

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Companies spend billions of dollars every year to gain information about their customers, buying data from market research firms, running study after study, and using big data and sophisticated analytical models to make sense of it all. However, most of this data is likely available to your competitors and not living up to your aspiration of gaining meaningful behavioral understanding of your customers.

To truly differentiate and stay ahead on an ongoing basis, you need to implement a system of privileged insights — unique and relevant information you gain about your customers that only your company is privy to.

Unlike market research, privileged insights provide intel on your customers’ real needs, desires, and experiences. These insights can be gained in a variety of ways. Generally, it requires engaging with customers in ways that directly build trust and value. This might include offering services and solutions that go beyond products, creating a more robust and engaging customer service experience, integrating customers into product and service development, and observing and interacting with customers while they use your products.

For our recent book Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future, we’ve researched more than a dozen companies that have undertaken significant transformation to position themselves for success in the digital age, including Adobe, Cleveland Clinic, Citigroup, Eli Lilly, Hitachi, Honeywell, Inditex, Komatsu, Microsoft, Philips, STC Pay, and Titan. It isn’t that these companies necessarily use technology better or were first to build a consumer data lake — it’s that they’re incredibly focused on wiring a deep understanding of customers into the heart of their business models, their operations, and how they make day-to-day decisions. They passionately focus on increasing value for their customers, all while absorbing and leveraging a wealth of information that their competitors don’t have. By doing so, they’re able to further differentiate themselves and remain relevant.

How can you go about building such a privileged insights system that fuels your company’s success? Here are some lessons learned from the companies we studied and more that we have worked with.

Establish a foundation of trust and value

Be clear about how you earn customers’ trust to engage with you, and the benefit they gain from doing so. This goes to the heart of how customers trust you to consistently deliver outcomes they value. Customers that see their lives or businesses intrinsically linked and improved because of what you offer are much more likely to engage with you and more willing to exchange unique information and insight into their core needs and challenges.

Building a foundation of trust also includes having impeccable clarity on your values, principles, and governance around how you will treat customers’ data. Will you use the data to only advance your own commercial position, or to improve the customer experience and benefits? Will you take responsibility to not misuse the data? Will you have strict enforcement if an issue happens? Leaders must ensure that people across the organization understand that it’s not about extracting data from people and making people the product — it’s about making customers an integral partner in the value chain.

Ashley Still, senior vice president and general manager for Digital Media at Adobe, is absolutely clear about the company’s guiding principle for how it uses customer data: “We are committed to data privacy and sensitive to how we use data. Responsible use of customer data can create greater experiences, but the second we start using it to gain tactical advantage, we’ve missed the mark.”

Together with the trust and value that is embedded in their users’ experience and the value proposition Adobe offers, these practices lay the foundation on which the privileged insights system is built.

Integrate how you collect privileged insights into your day-to-day actions

Make the collection of insights a byproduct of your engagement and relationship with customers, not a separate process. This will allow you to gain customer insights while you create value for them, be it through your physical or digital interactions.

This should start with all your existing customer touch points (e.g., customer service, warranty support, product delivery, etc.) and extend to many new opportunities to engage and improve your value proposition. The ultimate question you will need to answer is whether customers feel positively impacted by the information you are collecting.

Consider fast fashion company Inditex, owner of the Zara brand. Its retail employees are trained to serve as its frontline eyes and ears, tracking data, observing customers, and gathering informal impressions — all while helping customers find the styles that suit them best. The stores compile information about the choices customers make, their inquiries about missing items, and their suggestions. Are shoppers looking for skirts or trousers? Bold or subtle colors? These impressions are sent directly to a group of designers and operational experts at headquarters, together with detailed daily data on exactly what is selling and where.

The combination with deep insights from what people are searching for and buying online puts them at a clear advantage over online-only fashion companies. All these insights are rolled up, aggregated, scaled, and analyzed almost in real time and turned into designs for new garments or into improved production, logistics, and marketing practices.

The key is in the flexibility to adapt to customer preferences and the precision to create and produce what customers are asking for, at the moment they are asking for it. At the end of the year, Inditex’s more than 700 designers will have come up with 60,000 different creations, and the stores worldwide will have received new waves of collections twice per week.

Wire your privileged insights into how you work

Put your privileged insights to work by connecting them into your operations — changing structures, processes, incentives, metrics, information flows, etc., to enable every part of the business to make decisions that are based on your unique insights.

The most obvious (though not always well-executed) example of this involves wiring privileged insights into your company’s innovation process, by using them as the basis for ideation and looking for many ways in which customers can be integrated in the actual development process (for example, in beta pilots). But privileged insights need to be linked to many areas beyond innovation, including the determination of investments in tools and technologies that facilitate ongoing experiences, the interaction of your selling and customer teams, and your forecasting and strategic planning. Be prepared for those insights to materially change the fundamentals of your business, not just lead to incremental changes or a new feature in some of your products. And rethink how you measure the impact of your privileged insights capability; the metrics that most companies use today don’t go nearly far enough, and more innovative measures like, for example, return on experience (RoX), should be considered by companies pursuing this capability.

Consider Salesforce. From its inception, Salesforce has been acutely aware of the need to build its business on trust — not surprising given the sensitivity of the data customers share on the platform. This values-based relationship with users allows the company to gain deep insights into what works well, what needs improvement, and additional services customers would like to get.

These insights directly feed into and fuel Salesforce’s product development strategy and allow the company to extend its value proposition. With a customer success orientation at the heart of the relationship Salesforce builds with its customers, the company has established a unique platform that allows it to leverage insights from customer usage data to inform strategies that enhance long-term customer value and thereby drive customer retention and growth. These insights enable Salesforce to more effectively co-develop solutions with partners and customers, tailor them to various industries, and offer them as part of their platform as new industry clouds. This unique system of product development and innovation fueled by proprietary customer insights is one of the key factors that has made Salesforce the fastest-growing software company of all time.

The power of a privileged insights system stems from its self-reinforcing nature: The more customers trust your company and derive value from the your products and services, the more likely they are to open up and engage with you. The more they do so, the more insights you’ll be able to gain about what customers want and need; and the more insights you have and the better you are at wiring those insights into everything you do, the more you can improve your customer experience, products, and services and build additional trust and connection with customers. It’s a true flywheel.

For the flywheel to work and fuel your company’s success, you need to work on all three of these areas, starting with a brutally honest assessment of the real gaps you may have across each area and realizing that creating a system of privileged insights will not come without meaningful transformation.

It’s easy to see how neglecting one area is going to keep the whole system from working. Indeed, if customers don’t trust you, they’re not going to open up. If providing insights is a one-way street, it may only appeal to the most loyal and passionate of your customers. And if you’re letting your customers down and don’t act on the feedback, you will most probably not get a second chance to get it right.

This is a big task and requires a fundamentally different way of thinking about data, research, and the entire cycle of touch points with customers. But it’s one that any company in any industry needs to take on to stay relevant. We can think of no other capability that is so universally needed.

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Let the Urgency of Your Customers’ Needs Guide Your Sales Strategy

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3 months ago

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July 6, 2023

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When companies are creating profiles of possible target customers, there is a dimension they often overlook: the urgency of the need for the offering. This article provides a process for segmenting prospective customers in this fashion and creating a sales strategy.

Many business leaders believe that they fully understand their best target customers. They’ve developed clear profiles (a.k.a. personas) that are richly detailed with well-researched parameters, such as standard characteristics (e.g., age, education level, years at the company, role) or firmographic (e.g., annual revenues, number of employees, industry, geography, years in business). While such characteristics are important, they ignore another crucial characteristic: urgency of need.

A company that offers a software-as-a-service billing solution for small and mid-sized private dental practices may focus on classic demographics, such as the size of the practice (number of employees or number of dentists), the age of the practice (since older practices may more likely have outdated systems), or the amount of insurance billing the practice does each year.

These variables are useful in helping to produce a list of prospects, but they don’t determine which of these dental practices the sales team should call on first. If, however, the company added data that reflects which of these practices’ needs is most urgent — say, those that have advertised for billing and claims administration help more than twice in the past year (suggesting that they are struggling to keep up with billing) — salespeople would be able to prioritize their attention on these prospects.

The Four Segments

This needs-based approach entails segmenting potential customers into four segments:

  1. Urgent. The customer recognizes that it has an immediate need. (We just had another billing person quit!)
  2. Non-urgent. The customer recognizes the need, but it isn’t a high priority at this time. (We realize that our billing needs are changing and our current system will need to be revamped. We plan to start looking into this in the next year.)
  3. Currently met. The customer believes it already has an adequate solution to address the need at this time but recognizes it may not be a long-term solution. (We have an older billing system in place that still does the trick for now.)
  4. None. The customer simply has no need nor expects such need anytime soon. (Our small practice has a limited number of patients who pay out of pocket. Since all payments are made at the time of service, we simply don’t need a complex new billing system.)

This focus on the urgency of target customers’ needs may sound like common sense, but we have found in our work with B2B companies — from mid-sized firms to Fortune 50 giants in an array of industries such as financial services, enterprise information technology, utilities, industrial solutions, and health care technology — that they often fail to consider this dimension. Here is a process a firm can employ to apply this approach.

Identify new customers.

To identify prospects outside of your existing customer base, you can use available information. One is a source we mentioned: help-wanted ads that reflect a particular need.

But there are plenty of others. For instance, if a company sells inventory management solutions, a source of valuable data might be manufacturing industry merger-and-acquisition data, which could reveal companies with an urgent need to change or merge systems such as those for managing inventories. If a company sells quality-management solutions, a source of valuable data could be companies that are getting hammered for poor quality on social media.

Gather the necessary information.

Identifying your customers’ true urgency of needs requires looking beyond your typical demographic and firmographic profiling. This starts with an outreach initiative to talk to customers and prospects. The purpose is to ask questions to identify new target customer parameters that may be impacting the customer’s urgency of needs:

  • Frustrations. How urgent is the need to resolve these frustrations? Which frustration would best accelerate success if resolved?
  • Goals. Are your goals clear, consistent, reasonable, and measurable? Have your goals shifted recently?
  • Roadblocks. What keeps you from reaching your goals? (i.e., What keeps you up at night?) What is the magnitude of the impact of these roadblocks?
  • Environmental and situational factors. Are you experiencing any industry consolidation, organizational or executive management changes or instability, competitive changes, regulatory changes, and so on? What is the magnitude of the impact of these factors?
  • Technology factors. Are there new or changing technologies that will impact your ability to achieve your goals? Are you at risk due to technology end-of-life issues or incompatibility?

Assess your firm’s ability to serve lower-level segments.

Once a company has performed its needs-based segmentation effort, it should seek to answer the following questions about each of the four levels. The findings will dictate the sales and marketing strategy, level of investment and resource allocations.

Level 1. Urgent need

How quickly can we meet their need? How can we best serve them? Is the market opportunity large enough to focus only on these prospective customers? Given the customer’s urgency, how do we price our products to optimize margins without damaging relationships by appearing exploitive?

Level 2. Non-urgent need

Can we convince them that their need is more urgent than they currently believe? How do we effectively stay in touch with them so we remain top of mind when they perceive that their need has become urgent?

Level 3. Need currently met

Should we walk away from these prospects? If so, when and how do we touch base with them to see if their needs have changed? Or is there an opportunity to continue to work to convince them that their need is either more significant than they realize or could be much better addressed? If so, what’s the best approach to get them to reconsider their current situation and recognize their true need and its urgency?

Level 4. No need

Should we completely remove these contacts as any potential prospect? Is there some other need we may be able to address for them — perhaps with another product? Should we be in contact on a planned basis to see if their situation has changed? How do we best do that?

The ideal customers are those who clearly understand and recognize they have an urgent need for your offering. However, if that opportunity is not enough to meet the company’s sales volume target, it may be necessary to extend efforts beyond Level 1. Gaining the attention of these additional target customers, challenging their perceptions of their needs, and educating them on how your offering could benefit them will require resources. Consequently, a critical assessment is required to determine whether the opportunity outweighs the investment necessary to address customers in these other levels.

Test your new targets.

Before committing to a complete revamp of how your salespeople are prioritizing opportunities, select one or two experienced salespeople to help you test your new target customer parameters. Identify a few prospects that align to your revamped target profiles, and see how the selected salespeople are able to penetrate them.

Revamp your sales messaging and training.

Include prospective customers’ level of need in your sales messaging — the language that the sales team uses in its interactions with customers. Revamp your sales tools (materials such as brochures, technical papers, and customer testimonials used in the selling process) to include the urgency of need. And teach salespeople how to read and react to the prospective customer’s level of need and adapt their language appropriately.

By adding urgency of need to target customers’ profiles, companies can do more than differentiate their offerings more effectively. They can also identify new growth opportunities and successfully pivot away from slowing or tightening markets. They can accelerate the sales of new products. Last but not least, they can turn underachieving sales teams into strong performers.

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11 Ways Tech Adoption Impacts your Small Biz Growth

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3 months ago

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July 5, 2023

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Small businesses rely heavily on technology to drive development and innovation. Adopting the correct technological solutions can help to streamline processes, increase efficiency, improve client experiences, and create a competitive advantage in the market.

In this post, we will look at how technology contributes to the growth and success of small enterprises.

photo credit: Ali Pazani / Pexels

1. Streamlining Operations

Implementing small business technology solutions can automate and streamline various aspects of small business operations. This includes using project management software, customer relationship management (CRM) systems, inventory management tools, and accounting software. Streamlining operations not only saves time and reduces manual errors but also allows small businesses to allocate resources more efficiently.

Tip: Regularly assess your business processes and identify areas that can be automated or improved with technology. This continuous evaluation ensures that your technology solutions remain aligned with your evolving business needs.

2. Enhancing Customer Engagement

Technology enables small businesses to engage and connect with their customers more effectively. Social media platforms, email marketing software, and customer service tools allow businesses to communicate and build relationships with their target audience. Customer relationship management systems help businesses track customer interactions and preferences, providing insights to deliver personalized experiences and improve customer satisfaction.

Tip: Leverage data from customer interactions to create targeted marketing campaigns and personalized offers. Use automation tools to send timely and relevant messages to your customers, enhancing their engagement and loyalty.

3. Expanding Market Reach

The internet and digital marketing platforms provide small businesses with the opportunity to reach a broader audience beyond their local market. Creating a professional website, utilizing search engine optimization (SEO), and leveraging online advertising channels allow small businesses to attract and engage customers from different regions or even globally. E-commerce platforms enable businesses to sell products or services online, further expanding their market reach.

Tip: Continuously monitor and optimize your online presence to ensure your website is discoverable and user-friendly. Leverage analytics tools to track website traffic, visitor behavior, and conversion rates to make data-driven improvements.

Analyzing big data for decision making process

4. Improving Decision-Making with Data

Technology provides small businesses with access to valuable data and analytics, enabling informed decision-making. Through data analysis, businesses can gain insights into customer behavior, market trends, and operational performance. This data-driven approach allows small businesses to make strategic decisions, optimize processes, and identify growth opportunities more effectively.

Tip: Invest in data analytics tools and dashboards that can consolidate and visualize your business data. Regularly review and analyze the data to uncover patterns, identify bottlenecks, and make data-backed decisions to drive growth.

5. Facilitating Remote Work and Collaboration

Advancements in technology have made remote work and collaboration more feasible for small businesses. Cloud-based tools, project management software, and communication platforms enable teams to work together efficiently, regardless of geographical location. This flexibility opens up opportunities to access talent from anywhere, increase productivity, and reduce overhead costs.

Tip: Establish clear communication protocols and project management workflows to ensure effective collaboration among remote teams. Use video conferencing tools for virtual meetings and foster a culture of transparency and accountability to maintain productivity and engagement.

6. Embracing Emerging Technologies

Small businesses should stay informed about emerging technologies that have the potential to transform their industries. Technologies such as artificial intelligence, machine learning, blockchain, and the Internet of Things can offer new opportunities for growth and innovation. Being open to adopting and integrating these technologies into your business strategy can give you a competitive advantage.

7. Data Security and Privacy

Data security and privacy are critical considerations when using technology in small businesses. Implement robust cybersecurity measures, such as firewalls, encryption, and secure data storage, to protect sensitive customer information and intellectual property. Regularly update software and educate employees on best practices for data security to minimize the risk of data breaches.

Work with CRM system

8. Customer Relationship Management (CRM) Systems

A dedicated CRM system can help small businesses manage customer relationships more efficiently. It allows businesses to track customer interactions, store contact information, and monitor sales pipelines. Utilize CRM software to streamline sales and marketing processes, personalize customer interactions, and nurture long-term customer loyalty.

9. Continuous Learning and Skill Development

Encourage continuous learning and skill development among employees to keep up with technological advancements. Provide access to online courses, training resources, and workshops to enhance digital literacy and proficiency. Embrace a culture of learning and innovation to ensure your small business remains adaptable and competitive in the digital age.

10. Scalable and Flexible Technology Solutions

Choose technology solutions that are scalable and flexible to accommodate your growing business needs. Consider cloud-based software and platforms that allow you to easily scale up or down as your business evolves. This scalability enables small businesses to adapt to changing demands and seize new opportunities without significant disruptions.

11. Regular Technology Assessments

Regularly assess your technology infrastructure to ensure it aligns with your business goals and remains up to date. Conduct technology audits to identify areas for improvement, eliminate outdated systems, and explore new technologies that can drive growth. Stay proactive in evaluating and optimizing your technology stack to maximize its impact on your small business.

Businessman using biz tech solutions

Conclusion

Technology serves as a catalyst for small business growth. By leveraging technology effectively and staying agile in an ever-evolving digital landscape, small businesses can unlock their full potential, adapt to changing customer expectations, and drive sustainable growth.

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Nine Reasons Why Turning Down a Client Is the Best Option for Your Business

Published

3 months ago

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June 28, 2023

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While your business may not be right for every client, every client may not be right for your business. To that end, what’s one sign you should turn down a client, and why?

These answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most successful young entrepreneurs. YEC members represent nearly every industry, generate billions of dollars in revenue each year, and have created tens of thousands of jobs. Learn more at yec.co.

1. The Client Has Unrealistic Expectations

Sometimes you’ll meet clients with unrealistic expectations — even when those expectations are incompatible with your products and services. They might demand services that you may not be able to deliver. Trying to keep such clients can often damage your relationship with them, encourage them to spread bad word-of-mouth, and hamper your reputation. Identifying such clients in time can prevent that.

– Andrew Munro, AffiliateWP

s2. They’re Unresponsive

The number one way to tell if a client isn’t right for your business is if they are unresponsive. For client-business relationships to work, mutual understanding, communication, and respect are essential. If a client keeps pushing you aside when you need to clarify something for a project you’re working on for them, it may be time to move on at the end of the assignment.

– Daman Jeet Singh, FunnelKit

3. They Complain During Every Step

An obvious sign that a client isn’t a good fit for your business is when they complain about your work every step of the way. I’ve encountered clients who complain because they think they will get a better price or free work. If they are truly unhappy, try to correct the mistake once or twice, and if that doesn’t work, give them a refund. Catering to toxic clients will not help you grow or succeed.

– Chris Christoff, MonsterInsights

Meeting with a client

4. You’re Unable to Meet Their Needs

One should turn down a client whose expectations are hard to meet. They may not be in the wrong in the situation, and they have the right to expect certain things since they will be paying for the solutions offered. However, you should assess whether it will be possible for you to keep up with those expectations considering your current scale of operations or resources available.

– Stephanie Wells, Formidable Forms

5. They Exhibit a ‘Blame-Oriented’ Mindset

Watch for a “blame-oriented mindset” in your prospecting and sales conversations. Ask a question like, “What solutions or service providers have you tried before to solve this problem, and why didn’t they work?” Observe if the prospect takes any ownership for past failures or solely blames previous providers. Such an attitude is a clear sign of a lack of accountability and collaboration. Turn down such prospects!

– Devesh Dwivedi, Higher Valuation

6. They Constantly Dismiss Your Advice

Picture this: a client who insists on guiding you through uncharted territory while you hold the compass of expertise. When faced with a client who consistently dismisses your professional advice and insists on going against best practices, it’s time to question the compatibility of your collaboration. Remember: You’re the expert for a reason, and your recommendations should be valued.

– Abhijeet Kaldate, Astra WordPress Theme

Talking with a big client
photo credit: Karolina Grabowska / Pexels

7. They Aren’t Engaging in the Project

When a client consistently fails to provide the necessary resources, feedback or engagement required for a successful partnership, it’s time to hit pause. A one-sided relationship will leave you feeling like a solo artist in a duet. Seek clients who actively participate, collaborate and invest in the success of the projects you undertake together.

– Adam Preiser, WPCrafter

8. There Is Value or Goal Misalignment

Turn down clients if their values or goals are not aligned with your business. This can lead to conflicts and dissatisfaction and even damage your reputation. Focus on clients who share similar values and goals to maintain your brand’s integrity and benefit from the work you do for them.

– Nic DeAngelo, Saint Investment – Real Estate Funds

9. They’re Always Adding ‘One More Thing’

You can tell a client is not right for your business, especially if you’re a freelancer, if they keep adding “one more thing” to the project. For instance, if you’re a writer and a client asks you to edit some of their other work “as a friend,” it may be time to end the partnership. This situation will lead to you doing tons of work and extra assignments for free, which was not the arrangement. 

– John Turner, SeedProd LLC

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