Know your customer!or lose them….?

Handing over my customary packet of biscuits (2 this time, nothing to do with Christmas, but will come back to that later) and the customer responded

Thanks, it surprises me that the majority of our suppliers don’t understand what they need to do to get an order ….

We, then, had a discussion about knowing your customer. I have to point out that this is the only customer to whom I give a packet of biscuits anytime let alone every time . Moreover, if I didn’t do it all it would not effect the level of business I get from this particular customer but the rationale underlines the need to knowing the customer. This knowledge is probably one of the most important part of any business , especially within retail and at every level of the chain.

For many years retailers have invested vast amounts trying to find out more about their customers. Whether it be via market research, focus groups , consumer panels, loyalty cards, and more recently ‘algorithms’. Yet, I believe they all have their failings . The first three, plus other similar techniques are flawed in many ways. They are an artificial construct. They are driven by the information the retailer asks for , and they work on relatively small samples. Admittedly ,these samples are then subjected to statistical analysis but as we all know with political polling this is a science that is not a particularly accurate one . Consumers or customers of any sort are prone to respond to questions and discussions in a very different way when not faced with real decisions.

Great example of market research being ignored

Market research indicated that consumers would never buy sony’s Walkman cassette player that didn’t have the capacity to record and users would be irritated by the use of earphones. The Walkman went on to sell 330 million units.

I strongly believe that algorithms plus massive data analytics, whilst being very powerful tools, have a degree of unreliability built in, because they rely on patterns . We, as humans, very often make decisions that are not the consequence of patterns or that pattern may not actually relate to the apparent purchaser. My Amazon order history is a case in point.

I would suggest that Amazon’s analytics would offer a number of potential profiles such as

  • Married with young family
  • Married with older children
  • Married with with grandchildren
  • Married with no children but has wider family
  • Married with no children but close friends with children
  • Any of the above with eclectic music and reading habits, plus outdoor recreational interests

The truth none of them are really comes close to an accurate customer profile relating to me or my purchasing preferences.

The point I am trying to make is that no matter who or what (organisations) you are aiming to trade with , you have to engage with them. Which is why many organisations are looking at the way they relate to the partners in their particular chain. I have always questioned the rational behind most multiple retailers policy on not letting the buying departments develop relationships with their supply chain. It says more about their inability to train and trust good professional buyers as opposed to a patronising, and insecure view that every buyer is going to be corrupted by the evil temptations laid before them by suppliers . As a consequence it leads to a lack of real product and market knowledge within certain product sectors . I believe that many of them are now paying the price.

Steve Jobs of Apple used to quote Henry Ford ….

If I had asked my customers what they wanted, they would have said ‘faster horses’

Apple use a technique called ‘ethnography ‘, which translates into watching how people react to product in their stores. Now there is very little actual selling activity within their stores. It seems to be more about interacting with the consumer and getting to know more about them.

With all this accrued data, they then create product that the consumer didn’t know they needed. That surely is really knowing your customer.

I go back to the 2 packets of biscuits . I bought 2, not because it is Christmas but because I like nuts. For the infrequent visit to our biscuit tin(actually sealed plastic container) I try to ensure there is a biscuit with nuts, despite our visiting daughter having a nut allergy , they are there for me. However, I know that the majority of the staff at this customer prefers chocolate. On proferring both packets on my arrival , the chocolate pack was politely whipped from my hand…

Thanks very much that one will do nicely , you can have the rest …

Not quite ethnographic, but I try to know my customer…

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