The first and most important question is: What is happening to the size of your target market? If the market size is shrinking, then you may need to rethink your target market.
The second most important question is: What have the customers started spending their money on? In other words, are their needs still the same but a competitor has a better perceived value proposition OR have target customers’ needs or priority of needs changed?
Let’s assume market size and customer needs are not the issue.
Then you need to further hone in on customers’ perceptions:
- Why are potential customers making one of three potential decisions? Why have they not bought from anyone? Why have they not bought from you? Why have they not bought from your competition? or from your competition?
- Why are your current and past customers making one of three potential decisions? Why did they buy from you? Why are they staying with you?
There are two ways to understand customer perceptions:
- Analytics can provide insights into customer behaviours and actions (e.g. who are customers buying from). You need to get deeper understanding – why are customers making decisions?
- Listening to them can provide you with the underlying reasons for actions and behaviours. Customer decision-making is both emotional (trust, brand, fashion, etc.), and rational. Emotions often drive decision-making.
It is hard to listen to customers. The 2017 Edelman Trust survey for Canada showed only 36% of respondents believe companies listened to customers. It is far easier to make assumptions and guesses as to what customers are thinking, rather than focusing on the “words out of their mouths” as well as behaviours and actions.
There are two ways to listen to customers:
- Passively – what customers ask and tell you in person; via emails they send; via questions, reviews and comments on your website or other social media; what they talk about when contacting customer service, etc.
- Actively – you proactively engage with your customers, e.g. one-on-one interviews, focus groups, surveys, etc.
The single most important question to ask the target customer is “Who would you recommend?”
Your understanding of the customer results in quantitative and subjective metrics.
You now have some understanding of why you’re losing customers. What sorts of changes are you going to make to people, processes and technology in order to impact the decisions made by current and potential customers? The business case will identify both the value of the changes as well as the costs.
So far you have been addressing an urgent issue – the short-term loss of customers and immediate plans to address this issue. Now you can step back at look at the longer-term issue. How will you ensure you won’t get into this situation again?
- How will you understand your customers better than the competition does?
- How will your customers perceive they receive a better value proposition from you rather than from your competitors?
- What changes do you need to make to your board of directors, advisory board and C-suite?
- What other changes are required to people, processes and technology?
To enable discussion with your board of directors, advisory board and management, download the following one-page slide: