by Rick Leibowitz (January 2006)
“There is only one boss: the customer. And he/she can fire everybody in the company, from the chairman on down, simply by spending his/her money somewhere else.”
The above quote is attributed to Sam Walton, founder of Wal-Mart. Whatever your opinion may be about his legacy as a business owner, there is no debating that he was an entrepreneurial genius who recognized that customers are responsible for 100% of every businesses’ net revenues.
“Customer focused” is a business hot phrase that has been circulating for decades, but in my personal opinion, it is a culture that is not cultivated by nearly enough business owners. For the average small business owner, not committing to a customer focused culture eliminates the largest competitive advantage they have in the marketplace over lower priced competitors and can often be a fatal determining factor of business livelihood.
Customer focused does not mean just providing friendly service (although it is a very valuable component). It means getting to know what your customers want or need and providing a key benefit that fulfills those needs.
Always keep in mind the famous statement from Dale Carnegie, “Human beings are not creatures of logic. They are creatures of emotion.” In any fickle marketplace, perceived value, convenience and immediacy of demand are all emotional functions that do not always relate to a logical cost-benefit competitive analysis.
The savvy small business owner has the ability to be more intimate with their market and really understand the wants and needs of local customers. More specifically, focus on finding out how your customers (or potential customers) perceive your products or services in relation to your competition in each of the areas below, which are often referred to as the “4 P’s of Marketing:”
So how well do you really know your customers? Whenever I discuss marketing with clients, I always ask this question.
Even though large box stores have a reputation for “impersonal service,” most make a serious investment in research to understand customer buying habits. Still, their research is usually based on samples of information that may have been gathered miles away from your market.
As a small business owner, you can gather more locally relevant information. The caution is to not make emotional assumptions of customer demands and to be logical in how you do your market research.
Some effective forms of local market research include:
Of course, the information you gather is only as good as the questions you ask. Take some time and think about what you want to know from your customers. Revisit the 4 P’s of marketing and create a winning questionnaire.
Once gathering that information, it is important to remember two other critical P’s of marketing, positioning and people. Positioning is your market niche, which should contain a key benefit message and it should be utilized in all of your marketing. It should clearly define what is special about your company in relation to the competition. Below is an example of positioning statements using theoretical, competing breakfast cereals:
The key in creating an effective positioning statement is to identify a customer benefit that you can provide and, in as few words as possible, create that message in terms that will appeal to your customer’s emotions.
The people portion of marketing is remembering that 100% of your customers (and employees) are human beings. Without getting into too much psychological analysis, it is important to remember the power of ego. As stated earlier, many purchasing decisions are emotionally influenced and one of the most powerful selling tools is to actively recognize the customer’s need to feel that they are understood. Show your customers that you understand their needs better than the competition. If you cannot compete on price or place, your only options are through product (quality, personalized and knowledgeable service) and promotion (direct interaction in making a sale). Also, if you are using customer comment cards or surveys in your market research, consider providing feedback to your customers that shows you are aware of their concerns and you are responding to their needs. Of course, you will not be able to meet all of their needs, so put a positive spin on what you can do and, perhaps, help them understand those things you cannot and why.
As a small business owner, you have the opportunity to use your people skills above and beyond your larger competitors, and probably, your less informed small competitors. Get intimate with your customers and build a lifelong relationship of success.