Importance of Customer Knowledge

by | Jan 15, 2017 | Customer Service | 0 comments

“An investment in knowledge always pays the best interest.” – Benjamin Franklin

A company must have customer knowledge. Why – simply because by definition this knowledge is about understanding customers in totality – their needs, goals, wants, emotional reasons for buying, and other such aspects. Without this knowledge, it would be impossible for a company to provide top class customer service, ensure customized products and services, and align its business processes and operations such that it is able to forge strong relationships with customers. Customer knowledge is about collecting, collating, and using the data that customer’s leave online – data such as browsing history, buying patterns, search behaviour, and other analytical pieces of information with regard to their preferences.

Companies must know as much as possible about their customers, however, the information customers leave is scattered and difficult to use unless companies collect it and make some sense from all of it. In addition, customer knowledge should be visible, shareable, and possible to be analysed by those teams that directly and indirectly serve customers, in order to ensure that the company is able to hear and respond to whatever the customers say and need. Despite understanding the importance of customer knowledge, several companies fail to provide what customers need and are unable to comprehend their preferences. This, according to research, happens because companies often turn complacent, taking their understanding of customers to be absolute based on historical data and their accomplishments with regard to customer needs. The fact is that customers change – their needs alter over time, and their expectations develop depending on the market conditions and their business needs. Hence, what may have been relevant for a customer in the past may be obsolete in their current situation, and unless companies have the most current customer knowledge, the gap the between actual needs of customers and what they provide, will continue to exist and widen. When this gap becomes too large customers often turn away from a company and seek another company with which to engage in business.

Customer knowledge is extremely beneficial for any company. If a company accurately captures customer data, it would be easier to organize and share this data within the company for use in various departments. Obviously, the customer service teams would need access in order to enhance their interactions with customers, the sales and marketing teams would be able to prepare customized content and pitches for customers, the accounts teams would have better control over payments and refunds, and other uses for teams. It would also enable the leadership of the company to understand buying patterns, ‘visit’ behaviour of customers on the website and social media sites, sudden changes in buying behaviour, reasons for complaints, and other such crucial quantifiable factors.

As mentioned, as customer knowledge becomes deeper, a company would be able to build better and more emotional connections and rapport with their customers. This of course, is an on-going process since needs and expectations of customers change continually, and as long as a company can keep pace, the relationships with customers would sustain. Smart companies understand that they must not limit customer knowledge to their own relationship with the customers. A company must also have information on what customers spend with competitors and their relationship with them. This would enable a company to find ways and formulate strategies to outdo their competitors, such that customers spend more on the company rather than elsewhere. Of course, it would be impractical to expect that a company is able to collect every single piece of information on their customers, but whatever data it may have, should be useful and such that a company is able to make things easier for its customers.

Since businesses exist for and because of customers, the aim of collecting customer knowledge should be develop and sustain robust customer relationships, with an eye on customer loyalty. This knowledge should be the guiding factor for companies to know which offerings to give customers, when to give them, and at what rate. In addition, customer knowledge would enable a company to mould and monitor customer behaviour to advantage, and help the company with designing future products and services, and compete in new markets successfully. Customer knowledge would also help a company to know the reasons for which customers may stay or defect and whether lowered pricing by a competitor could be one of the reasons leading the company’s customers away.

Many companies skimp on collecting and analysing customer knowledge simply because it requires a great deal of effort and cost. Hence, some companies tend to collect such knowledge only for larger accounts in the B2B realm, where the value they get would justify the costs they would incur on collecting and analysing huge amounts of customer data. This may not be a sensible approach for most companies – customer knowledge should be aimed at getting an all-round and overall view of all the customers of a company, in order to improve sales, profits, and gain customer loyalty. Customer knowledge must not however, be confused with other systems of customer data management – CRM for example. According to experts, while there may be some factors that overlap, CRM is more structured but has a lesser variety of information to build insights leading to stronger ties with customers.

Experts also add that customer knowledge if collected correctly would include information about individual customers that would tell the company who they are and, what they do, and what their expectations would be from the association with the company. In addition, customer knowledge would enable a company to analyse all the customers as a whole, in order to put together behaviour patterns, needs, and allow the company to customize its offerings based on individual customer requirements. Customer knowledge would therefore, have both qualitative insights – preferences, likes, and dislikes, and quantitative insights – number of orders, total value of the customer’s business. With an all-round view of customers, a company would be better equipped at preparing targeted communication and content, enabling an even stronger bond and relationship with each customer.

Customer-focused companies understand how to use customer knowledge. This means that they know how and when to address concerns that customers may have with regard to the safety and privacy of their information. These companies are constantly aware that every customer is a live person and are careful not to treat any customer as data or a number, but with a lot of respect and care. It is advisable for companies to be completely honest and transparent about why they collect customer knowledge, the manner in which it is stored, and how it is used. This is reassuring for customers, knowing that their data is being used to make things easier for them and in their best interest, and that the company would never use the data to manipulate them in any manner. The better a company can do this, the more trust and reliability it would build among customers and in the market, thereby increasing customer loyalty and market share.

We have mentioned several times, and at the risk of sounding clichéd, we repeat that customers buy from companies they like and trust, and those companies that constantly display the eagerness to listen to them and learn. Companies that are able to do all of this consistently, forge ahead of their competitors, increase the number of happy customers, and are able to convert happy customers to loyal brand ambassadors. Such customers bring more business, leading the company to success and gaining quantifiable benefits for a very long time. Is your company a customer knowledge leader?

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