A Cautionary Tale: The Importance of Understanding Your Customers


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“Why Best Buy is Going out of Business… Gradually” has hit a national nerve (http://tinyurl.com/89dydhr). In the two weeks since the Forbes’ article posting, it’s exceeded 2.6 million hits and has prompted scads of confirmatory comments.

Yes, key metrics are cited (the stock losing 40% of its value in 2011, its P/E of 6.23 vs. an industry average of 10.20, and an average analyst rating of B-). However, to discover the real reason for Best Buy’s downfall, author and Internet industry analyst Larry Downes proposes a simple test: “Walk into one of the company’s retail locations or shop online. And try, really try, not to lose your temper.”

Apparently, that’s where our collective experience kicks in. If you’ve ever approached an employee in blue to help you buy a PC, tablet, speakers, or cable, chances are you know the challenge. (I failed Downes’ test last weekend when I heard, “That’s not my area” and “I understood your question, we just don’t have it.”)

Whether in-store or online, the Forbes’ article asserts, “Best Buy just doesn’t understand its customers’ point of view.” And that’s how a company can go from being on Fortune’s Most Admired Companies list in 2006 to struggling in 2012.

When you stop understanding your customers, they stop buying from you.

Understanding your customers, your suppliers, your distributors, and your dealers requires vigilance. Just because you understood them in 2006 or 2009 doesn’t mean you understand them today. In order to increase sales in your channel, you need to validate your assumptions about their needs, requirements, and expectations.

How do you do that? You ask and you listen. Any strategy to increase sales has to begin with understanding the voice of the participant—whether it’s your salespeople, your dealers, or your distributors. Only in truly understanding their world can you design a program that works.

Rhonda Sunnarborg
Rhonda works with companies to improve the effectiveness of their business channels by addressing key questions: How do you get distributors or dealers to support your full line? How do you get more mindshare of dealer salespeople? Do you need to figure out who your end-customers are? Rhonda has more than 20 years of B2B experience working with Fortune 500 companies to change the behavior of dealers/distributors, sales people, and employees. She is a member of the Business Marketing Association and has served on the national board for Recognition Professionals International.


  1. …..for ‘understanding’, in an enterprise-level context, is customer centricity. When organizations can’t make optimizing customer experience part of their DNA, and a priority for existing in the first place, failure is almost an inevitability. The cure: As you note, asking stakeholders and listening to them are critical, as are analyzing and acting on what insights they provide.


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