Excerpted from Harvard Business Publishing, “It’s Not Who Your Customers Are, It’s How They Behave”, by Peter Merholz, February 11, 2009
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Businesses cannot exist without customers, so it’s sadly ironic that many, if not most, businesses, actually understand so little about them.
As a company grows, a smaller and smaller percentage of the staff interacts with the customers. In fact, those folks on the “front line” (think call centers, service counters, retail stores) are typically among the lowest-paid and have the least authority.
Meanwhile, back at headquarters fundamental decisions are made with extremely limited information about customers. There, understanding the customer is often considered someone else’s responsibility, because, “we have a department for that.”
No department has a complete view of the customer, however, and so in place of true understanding are models and frameworks that attempt to describe the customer. Many companies don’t go beyond demographics and market segmentation. While it’s helpful to know how they break down by age, sex, income, region, and other easily measurable characteristics, there’s actually very little you can actually do with that information.
In order to become customer experience-driven, you need to go beyond who your customers are, and understand what they do.
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Case Example: A large national bank with a sophisticated demographic model, but didn’t understand what cinched the deal.
Initial efforts focused on the “goal” of buying a product and outlining the steps that people took to achieve that goal.
And in doing so, there was evidence of an underlying motivational layer of emotion that actually guided their decisions. Buying financial products is challenging, because unlike physical goods, it’s hard to define what you want ahead of time. At Best Buy, you can point to a 52″ television and say, “something like that.” You can’t do that with a loan or a line of credit.
So what happened was that while people appeared to engage in the appropriate steps to make a purchase decision, because they couldn’t articulate an end state, they were simply going through the motions and would never commit.
We realized that customers must satisfy three sets of requirements — functional (does the product meet my basic needs); intellectual (through comparison, am I confident I’m getting the best deal); and, crucially, emotional (could I have a relationship with this bank?).
The bank wanted to drive all applications for new products online, but the customer research analysis made clear the importance of maintaining a quality cross-channel experience.
Edit by DAF
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