Sunday, August 16, 2009

Know Your Customer?

Can we actually "know" the universe? My God, it's hard enough finding your way around in Chinatown. - Woody Allen

Among companies that operate under the Value Discipline of Customer Intimacy, knowing the Customer is a key factor of a successful sales strategy. The idea is that if a company becomes knowledgeable about its Customer's business, the company will become more effective at selling its products or services, even if they cost a little more. The Sales Person becomes or is expected to become, in effect, a consultative resource to the Customer by contributing industry knowledge and expertise in order to either:
- solve existing Customer problems
- advise on industry trends perhaps to foster innovation, and in general
- be the advocate of the Customer within the Sales Person's organization.
(Please refer to The Discipline of Market Leaders by Michael Treacy and Fred Wiersema)

Knowing the Customer requires an intimate relationship with the Customer. Intimate in the sense that there is frequent, constant and free exchange of information, in both directions, between Customer and the vendors' Sales Person. IBM was, without a doubt, the leader in practicing the Customer Intimacy value discipline. That is where I learned it during my training as a Sales Representative and where I practiced it in subsequent years as an IBM Sales Account Manager.

As an example, I was assigned, for a short time, the Department of Motor Vehicles for the State of Connecticut. At the first meeting with employees of the main office, they communicated to me their main concern: the public's perception that the DMV did not provide adequate service. The lines at the windows were long, the procedures were complex, tempers were short with the result that the DMV had the lowest public approval of all the agencies.

I called in for reinforcements. IBM made available, at no cost to the DMV, an industry specialist. She came down for a planning session and in a matter of hours helped determined the causes for long waits and delays. To make a long story short, the solution implemented at that time is now as common as Twitter but a Voice Response Unit (VRU) with prompts to provide the most basic information was in 1990 a clever idea.

The point being is that IBM had people who were knowledgeable on how to address problems in the customer service function. IBM knew an aspect of the DMV business and it knew how to improve it.
IBM knew and knows Customer Intimacy!

When the sales process is targeted at not just a single customer, like a major account, but rather targeted at thousands, if not millions, of Customers, two questions come to mind:
- Is it still necessary to know the Customers, as anonimous as they may be?, and if so,
- How do you get to know these many Customers?.

Most companies engage in an active process of getting to know their Customers:
- market research
- customer surveys
- focus groups and, in general,
- obtaining feedback from their Customers: their reactions to the product, how to make it better, and how to insure Customer loyalty to obtain return sales.

A main preocupation for companies that serve many, almost anonimous Customers, is to understand and predict their product usage behavior in order to preserve loyalty. In this environment companies make use of highly sophisticated tools that fall under the umbrella of analytics.

In the next blog I will discuss analytics as it applies to a particular sector of the economy and what kinds of results can be obtained from analytics. For now I want to leave you with the definition of the term Customer Behavior Analytics:
"CBA is a data-driven, customer-focused, analytics application that seeks to quantitatively understand when, why, where, what and how customers behave when they purchase or use a product or service".

The definition is from a document created by Mr. Jonjie Sena at Ventraq Inc. (

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