by Yarden Gilboa
Changes in customer and buying behaviors continue to rock the very foundations of many industries. According to recent surveys by PWC, Forrester, IBM, and McKinsey, disruptive trends in customer and buying behaviors are expected to continue over the next five years. Many organizations are undergoing digital transformations in order to improve customer interactions, engagement, and understanding.
For CEOs and their C-Suite teams, developing deep customer understanding is becoming strategically important to staying competitive and relevant to customers.
While customer understanding is becoming of vital importance to the C-Suite, the struggle continues on just how to attain customer understanding. New digital technologies are bombarding the C-Suite with promises of data-driven analytics. Advocating promises of revelatory insights through the push of a button. The yield on these promises, thus far, has been lacking.
What remains cloudy for CEOs and their C-Suites is what comprises deep customer understanding. CEOs, with a new focus on the customer, are asking how to develop a robust picture of the customer and how to engage with customers. And, also zeroing in on how they can deliver unique customer experiences through improved understanding.
7 Critical Elements Of Customer Understanding
What then are elements of customer understanding the C-Suite must master in the next five years? Here are seven elements CEOs and their teams must develop in order to make informed decisions to achieve growth:
1 – Research, Analytics, And Insights
Companies today will need to develop an integrated view of customer research. Incorporating the use of qualitative customer research that makes use of such techniques as goal-directed behavioral research, ethnographic research, and contextual inquiry. At the same time, incorporating the use of analytics wisely to help stay abreast of customer behavioral trends. Insights are then derived from a combined multi-variant view, consisting of qualitative and quantitative analysis focused on customer behavior.
2 – Persona-Based Common Views
One of the central purposes of personas, archetypal representations of customers and their goal-directed behaviors, is to help enterprises develop a common view of customers. Utilizing the first critical element of research and insights for persona creation, personas can help guide the organization towards a common shared focus on helping customers to achieve their goals. Organizations should strive to develop buyer personas, user personas, and customer personas. Each having distinct types of goals and goal-directed behaviors companies must address as they relate to innovation, marketing, sales, and customer experience.
3 – Customer Ecosystem
Digital technology is having a disruptive force on what constitutes an ecosystem for customers. Ascertaining customer dependencies on suppliers and other economic variables becomes crucial to overall customer understanding. For example, in one buyer persona research study completed for an organization in the logistics industry, we found as manufacturers became more global, U.S. based logistics firms were required to tap into localized country transporters with GPS tracking. This was necessary in order to serve the needs of U.S. manufacturers who were expanding rapidly in the Asia-Pacific region. Organizations today are severely lacking in understanding how ecosystems are rapidly changing and how to adapt.
4 – Customer Journey Mapping
While customer journey mapping has been around for approximately fifteen years, they are taking on a renewed emphasis due to the impact of a changing digital economy and shifting customer behaviors. The majority of customer journey maps I have witnesses, unfortunately, are generic internal process maps and yield little insights into how organizations can enhance customer interactions and engagements. They should be focused on unique scenarios and most importantly, goal-directed behaviors. Additionally, they should provide insights into how to create and deliver unique customer experiences throughout the entire customer lifecycle.
5 – Customer And Buying Scenario Mapping
At any given time, customers and buyers may have multiple scenarios occurring, which require different types of interactions and responses. Scenario mapping provides context around customer issues, problems, and processes, as well as, the path customers take to reach end goals. This can include views of buying interactions and future customer engagements. More importantly, scenario mapping can help companies to identify new opportunities in helping customers achieve their goals and reposition for growth.
6 – Emotion, Empathy, And Mental Modeling
As has been found in various studies, the influence of emotions on the choices made by customers can be significant. In a 2014 Forbes Knowledge Group study, 67% of business executives said the greatest influence on their business decisions were subjective considerations. Such as emotions, attitudes, perceptions, and norms. Mental modeling encompasses understanding the world-views customers possess and how they influence choice. With a growing global economy, this includes understanding cultural influence. Collectively, these can lead to having an empathetic view of customers, which also can highlight new growth opportunities.
7 – Customer FutureCasting
Customer FutureCasting involves the use of envisioning and scenario mapping to understand what likely awaits customers in the future. Enabling organizations to use the above elements to formulate a trajectory on what goals and needs are most likely to be important to customers. It takes a certain qualitative research approach to accomplish, however, the rewards can be significant. For example, Thomson Reuters has been able to “futurecast” anticipated global changes in finance and tax regulations, resulting in a spirited campaign to help customers be educated and prepared in the next two to three years. With rapid changes in digital technologies and customer behaviors, this will become an important aspect of customer understanding.
It Takes All Seven
The current state of customer understanding, for many organizations, is characterized by very fragmented efforts. CEOs, CMOs, and the C-Suite can make an integrated and holistic view of customer understanding come to life when they see the seven elements as interdependent upon each other. This is very different than what exists today.
It is not uncommon to find different groups, departments, or divisions working on one of these elements without the other knowing about it. Thus, CEO’s will need to lead the effort to bring a guided and framed view of these seven elements of customer understanding into the C-Suite. (Below is one example of how to frame such a view with the customer persona at the center. It does not suggest all information can fit on one page. The canvas is meant to serve as a guide.)
While many organizations are striving to gain insights into customers and reorganize their businesses around customers, how this gets accomplished is still a challenge. What we can say is this: to put the customer at the center of the business, organizations must put customer understanding at the center of their strategy, planning, and day-to-day operations.
(What follows is s short video clip featuring David Edelman of McKinsey and Company. Edelman states the “number one thing executives have to do is look very deeply at their customers”. And, how the CEO can guide the vision for meeting the goals and needs of customers. A good perspective from David Edelman.)
I’d suggest that there’s another element of customer behavior the C-suite must master. It isn’t addressed in your post, and it is usually a secondary or tertiary consideration in most organizations. It’s having an understanding of what employees, customer-facing and otherwise, know (and don’t know) about customer perceptions of product/service value delivery. Just as employees can directly and indirectly impact customer behavior, it is now well-accepted that a more compelling, engaging, and involving customer experience can be delivered if employees are exposed to, and trained in, what works and doesn’t work for the customer. This applies, irrespective of b2b or b2c vertical.
Through techniques such as ‘mirroring’ research, we’ve often demonstrated to C-suite execs just how much disconnect there is, and where, between employee perception of customer need and value delivery and what customers actually think. The thinking for this isn’t new, nor did we ‘invent’ it. Gap profiling is a 30 year old idea that comes from the Servqual model. If organizations truly want employees to be brand ambassadors, this should become a priority.
Tony- this is a great set of elements, but I would suggest the need for an 8th one, that is direct, face to face engagement with those customers. Especially for executive-level clients, there is no substitute for meeting and talking with them directly, and involving them in the company’s business strategy to stay relevant and maintain a competitive edge. This is why we find that programs like Customer Advisory Councils or Boards, or Executive Forums have such an important role to play in keeping C-suite connected to what customers want and need. Seeing (and hearing) is believing, and no matter how much data they see, and how many journey maps someone walks them through, the C-suite will still find it easier to comprehend and consider the need to take action when they hear directly from their strategic clients on what they care about.