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Kellogg School Corner | Steps to knowing your customer better

Kellogg School Corner | Steps to knowing your customer better
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First Published: Mon, May 21 2007. 02 55 AM IST
Updated: Mon, May 21 2007. 02 55 AM IST
If marketing strategy is about locating that intersection between what customers want and where an individual firm can create value better than its competition, then superior understanding of customers is crucial. This two-part article suggests five steps to do just that. The first part detailed the first two steps: spending time talking to the consumer and spending more time with your consumer than your competition does.
Step 3: “Watch” consumers buy your product
Before consumers can use your products, they usually have to purchase them. There are many insights that can be gained from watching a consumer as he or she attempts to buy your product.
The blue-jeans manufacturer or retailer that helps a woman achieve the desired “fit like a glove” without trying on a dozen pairs of jeans, will win great rewards. She heads to the dressing room with seven pairs of jeans, dresses and goes back out for a larger size of this pair and a smaller one of another. Next, she ventures off to another store to try to find something better. Finally, she backtracks to the first store to find the pair she thought she liked best before. It’s no wonder that even women, who love to shop, say a trip to replace an old favourite pair of jeans is more of a chore than fun.
Manufacturers selling their arts and crafts products to the creative shoppers of retailer Michael’s need to think through how consumers can locate their products in its vast selection of 40,000 different items per store. Stand in the stores or let cameras do that for you. Watch what the consumer goes through in buying your product.
Home Depot watched consumers buy for home-repair projects in their homes. It learnt that most home-owners ended up making multiple trips to the hardware store in the process of completing a project.
Consumers might trek to Home Depot for the first shopping trip for their project. However, when they realized they needed an extra drop cloth, a different sized drill bit, or some more caulk, they went to the closest (often not Home Depot) hardware store. Home Depot realized that helping a consumer think through a whole project from start to finish might result in its capturing more of the project’s related revenue and profit.
insights from watching consumers buy aren’t limited to consumer products. Similarly to Home Depot, John Deere saw an opportunity watching landscape contractors get ready for an installation job. It saw these contractors spend hours going to one dealer to pick up sod, another for gravel and stone and another for topsoil.
Then the trek continued on to get the pavers, to another dealer for sprinkler system parts, and, finally, to a lighting supply outlet. In addition, since jobs weren’t planned well, many of these outlets were visited multiple times on the same job. From this insight came the formation of John Deere Landscapes, the landscaping contractor’s one-stop shop for not only parts, equipment and horticulture, but also for landscape design services and consumer-financing support.
Step 4: “Watch” consumers use your product
This may sound like voyeurism, but, yes, it’s time to “watch”. While consumers will share many aspects of their experience verbally, you get a whole different set of insights from actually observing consumers in the act of using your product or receiving your service.
This is the perfect chance to understand which features of your product create value, which ones are never used and which ones actually get in the way. Likewise, small aspects of service, often with little cost attached to them, sometimes go a long way in increasing the value of service perceived. The examples of the learning from “watching” products in use, and the innovations that have sprung from these insights are many. Here are just a few.
Computer manufacturers watched their purchasers struggle to hook up their new computers because they plugged the wrong cord into the wrong outlet on the machine, then went through a time-consuming and frustrating process to try to find their mistake. From watching this struggle sprung the idea to colour-code cord ends and the outlets they should plug into with matching colours.
The marketers of Kraft Macaroni and Cheese watched how kids used the product as a launching ground for imaginative playing with their food, and this insight became the basis for ten years of direct-to-kids advertising with the tag line, When the Cheese Starts Flowing, Kraft gets your Noodle Going!
Birth control-pill manufacturers noticed that women would take their daily pill and then, a few minutes later, question whether they had taken it. (Who hasn’t checked to see if their toothbrush is wet to confirm that they remembered to brush that morning?) Consumers knew that regular dosing was key to product effectiveness and worried about whether they could count on the product to work. From this insight came the invention of a system of daily pills—hormone pills for some days, placebo pills with no active ingredients for others and packaging that allowed the consumer to be absolutely sure that she had taken her daily dose.
Johnson Controls watched auto assemblers struggle to install car seats with electronic controls on the side of the seat. They noticed that the inside panel of the door, right next to the driver and passenger seats, had open space available for a superior control panel. From this observation came a move to create integrated seat and door panels for better driver utility and easier auto maker installation.
Step 5: Engage users as product designers
The final suggestion for improving customer understanding and market execution is to put the customers to work. This doesn’t mean actually putting them on the payroll, but it does mean extending the relationship with the consumer beyond the traditional bounds. Even companies that work hard to gain insight from their customers usually see them as research “objects”, instead of partners in product development.
An opportunity lies in engaging customers on an ongoing basis in product development and feedback loops. While consumer marketers have been the pioneers in traditional market research, business-to-business marketers frequently have more depth of experience in looping customers into the development process.
Business-to-business firms, especially ones with a relatively short list of significant customers, often co-design products for a key customer, sometimes giving that customer exclusive rights to the purchase of the product for some period of time in return for a guaranteed volume at attractive margin levels. Software companies frequently employ groups of “beta-users” to “try out” their products and provide feedback for product refinements. However, these techniques have applications outside of these areas where they are frequently used.
Having a better sense of how to create customer value than your competitor does is a huge advantage. The good news is that while many of these steps are relatively easy to take, it’s a rare firm that routinely does a good job in all five of these areas. That means there’s an opportunity to know your customer better, to use your firm’s product design and communication resources more effectively, and to take a step ahead of your competitive pack. That is indeed good news.
This is the concluding section of a two-part article. The first part appeared on 7 May
Julie Hennessy is clinical associate professor, marketing, at Kellogg’s Business School
Send your comments to kelloggscorner@livemint.com
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First Published: Mon, May 21 2007. 02 55 AM IST
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