Importance of Understanding Customers

“Forget ‘branding’ and ‘positioning’. Once you understand customer behaviour everything else falls into place.” – Thomas G Stemberg

There is no debate at all that understanding customers is quintessential to providing them with the kind of customer service that they would want, which ultimately would translate to the success of a company. By getting to know customers, a company is not only in a better position to cater to their needs and expectations, but also would be able to anticipate proactively future needs, behaviours, and expectations. The process of understanding customers begins with active listening and remaining aware of what they wish to convey when interacting with them. The better a company is able to get a grip on customer needs and expectations, the higher its chances of gaining their loyalty, and receiving word of mouth recommendation from them.

The good news is that understanding customers today is not that hard for companies completely focused on providing better service. It is however, not easy to gain such focus, and would happen over time, when companies consistently view their service from the ‘eyes’ of their customers, make consistent attempts to gain feedback and insights, and having a system in place to use the information and data available about them to serve them better. Of course, many companies still struggle to really understand and know their customers, for a variety of reasons, including the ever-changing needs and expectations of customers depending on their situation.

The first step to understanding customers is for a company to look inward – that is assess the kind of service it may be providing, and the kind of experiences customers have with the company through each touch-point. There could be several minor irritants that your customers may be facing, but do not point them out as they may seem insignificant. Things like phones not answered, unfriendly front-end staff, untidy office, and other such things – may not seem very big, but could damage the impression customers may have about your company over time. We have mentioned several times that customers hate to wait, and companies that ignore this fact are most likely to lose customers. Customers expect that companies keep the promises they make, and at least occasionally exceed their expectations. Understanding customers is all about what would make them happy. Among the top priorities of customers is personalized service – such as addressing them by name, remembering their ‘history’ with the company, wishing them on special occasions, and other such personal touches go a long way in delighting customers. Happy customers are more likely to stay and provide more business, while also telling their friends and associates about the awesome service your company provides.

Understanding customers is an inextricable part of top class customer service, and therefore everyone in the company must make it their priority. Each person must focus on delivering service excellence, by meeting and exceeding customer expectations. Customers easily perceive top class service and are usually quick to reciprocate by offering repeat business, referrals, and high quality testimonials.

As mentioned, customer data is everywhere. It is not sufficient for companies to simply collect and collate this information. Instead, this data must be used judiciously such that it leads to a better understanding of customers. Investing in CRM systems, which would allow your company to keep this information as a centralized database, which can be updated regularly, and be used by the employees interfacing directly with customers. In addition, this data would reveal patterns, and buying behaviours of customers, while assessing how well your company was able to understand them and the kind of service it provided. Without knowing the internal shortcomings and strengths, it would be impossible for a company to gain a complete and in-depth understanding of its customers. Such centralized databases help companies to keep a track of past and current customer preferences, which would enable the company to send relevant information, offers, and product information to customers. Looking out for customers, makes them more amenable to listen to your company, be less price-sensitive, and provide more business, resulting in increased profitability and success for the company.

One of the top ways to make customers feel important, valued, and understood is by asking them what they think about your company. However, it does not suffice to gain these insights – it is important for a company to be prepared and have a strategy to implement changes and improvements based on what customers say. In addition, it is necessary to let customers know how your company used their feedback, and the resultant changes made. Gaining customer insights is an important method of understanding customers – asking for their feedback encourages them to share their opinion, and let a company know if they are dissatisfied in any way. We know that customers do not often take the time or make an effort to provide feedback on their own. This trait works against companies since even dissatisfied customers would rather be silent and soon leave, than take the time to provide feedback. Directly asking customers what they feel about your company displays commitment and dedication towards their needs and is a step in the right direction towards understanding customers.

Without an in-depth knowledge and understanding of customers, companies would find it hard to provide exactly what customers expect. Over time, this creates a huge gap between customer expectations, and the belief companies have about their service and products. This gap is one of the major reasons for customer attrition, since companies would continue providing service they believe is great, while customers may experience it in a diametrically opposite way. Understanding customers brings about awareness, which in turn would do away with any gaps or discrepancies between expectations and service delivered. In addition, it would allow companies to set aside sufficient resources to manage the needs and expectations of customers, while remaining agile to the ever-changing customer requirements. Companies would also be better equipped to understand the emotional reasons for which customers buy, the pain areas that customers would want to be rid of and the benefits they would hope to gain from associating with a company.

Understanding customers is also about adding value to an already well-established relationship. We have discussed previously that companies often fail to pay attention to their existing customers while making efforts towards gaining new customers. This, however, is one of most glaring mistakes that companies make, within the customer service realm. The fact is that it takes a lot more time, effort, and money to gain new customers, as compared to the resources required to retain current customers. In addition, new customers take time to become profitable, while existing ones are usually already at a point of profitability, hence it is good business sense to provide top class service and pay close attention to the existing profitable customers.

The fact that businesses exist because of customers, can never be over emphasized, and for any company customers would be the best and biggest asset. Without a strong, large, and profitable customer base, no business can last too long. It is the duty of every company and business to ensure that serving and understanding customers becomes part of everyone’s job and daily tasks. Understanding customers is what underlies good relationships and emotional bonding with customers, which in turn is the competitive edge that any business requires today.

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