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3 Goals to Successfully Listen to the Marketplace
At a recent suppliers’ conference, one of our clients looked at the phones, tablets, and laptops covering the tables and raised a provocative question, “We have more tools for communication than ever, but I constantly wonder whether anyone is listening?” We reflected on how much formal attention is given to listening and gaining insights from the marketplace and wondered why we still hear so many stories of misdirected supplier initiatives.
Blue Canyon bases its work on strategies that produce shared supplier-customer successes. With win-win outcomes available, connecting a continuing flow of messages from the market to strategy development is key. Every firm must eventually select a few targets for investment and management attention. One way to narrow the list is to ask what the customer would do differently if a certain change were made. If the customer can clearly explain how the change would leave them better off, then the change has the potential for win-win value creation. As always, economics rule in ranking the opportunities for investments in product or service improvements. Here, we suggest setting three goals to help ensure that you gain valuable customer insight.
1. Build the Foundation for Customer-Written Strategies
Critically valuable yet admittedly challenging, this goal is simple: include customer input in your own strategy development process by learning their perspectives on their future business environment and what they will need to succeed. Insights that connect to a company’s strategic plan (e.g. product innovation, new service opportunities, new configurable applications, etc.) can enable a supplier to get ahead of opportunities and strengthen its value proposition in areas of vital importance to its customers.
Case in point: after one of our clients found out about a customer’s new sustainability goals, they were able to contribute to meeting those goals—and bring a big “win” to the relationship. This success didn’t require particularly sophisticated listening skills, but the client did two things right: their listening was both timely (they heard of the initiative in time to contribute) and forward looking. Unfortunately, we hear more often of customer research efforts that fall short because they focus on past performance—not the future challenges and opportunities on their customer’s agenda.
In a different client scenario, someone asked the simple question, “Have we ever asked our customers about their expansion plans?” This sparked a new approach, and discussions turned toward how the company could keep up with service needs as their customers expanded into new geographies. They just had to ask. Some customers provided a very solid five-year plan, and none of them were without an answer—leading to new opportunities for our client.
Effective listening doesn’t stop with direct customers. Don’t forget about asking questions across the entire customer chain—the path that leads from a customer’s suppliers all the way to the end customers of its products. An electrical component manufacturer we worked with, for example, gained critical insight by listening to installers several stages down the customer chain. Those installers had a clear idea as to how the product could be improved to eliminate damage that had been occurring during installation.
2. Learn the Attributes of Best-in-Class Suppliers
The second goal is to learn what customers believe are the characteristics of a best-in-class supplier—one that has the potential to become the subject of future supplier success stories. We have identified three bases for qualification:
- The relationship between the supplier and the customer
- The supplier’s implementation competencies, e.g. the supplier’s ability to meet customer expectations
- The supplier’s ability to bring innovations in services and solutions, as well as in product design
Gaining these insights can be a challenge in B2B markets. First, the 80-20 rule almost always applies: a major share (e.g., 80%) of any supplier’s sales is concentrated with a relatively small number (e.g., 20%) of significant customers. While the factors used in the evaluation process may be the same, large relationships require unique implementation plans.
In addition, it takes insights from many touch points within the customer organization to gain an effective overall picture of the B2B customer relationship. This is far different from consumer markets, where each individual consumer knows, for instance, whether they liked the movie or not. It takes careful and systematic listening to understand what matters to buyers and influencers in the customer organization.
3. Discern Which Improvements Actually Matter
The third goal is to identify the performance improvement opportunities that are most important to the customer. In too many instances, this is the only goal that is addressed by customer satisfaction, Voice of the Customer (VOC), and Net Promoter Score (NPS) programs. While it’s important, it’s ranked third of the three goals in terms of long-term impact.
Since this third objective inevitably has a backwards-looking characteristic, we have found three ways to address this goal without becoming merely a recitation of “past sins.”
- Have the forward-looking and best-in-class supplier discussions first.
- Distinguish generic wishes for “better” from situations where current performance is quantifiably inferior vis-à-vis competitor performance or some other meaningful benchmark.
- Learn whether customers will reward a supplier for improvements in metrics where they say they want “better.”
Customers can provide solid ideas about what can be done better, yet hearing and listening for their messages can be difficult for suppliers. For instance, a client’s customer told us that packaging was costing them time and effort, but the supplier hadn’t heard of the problem because they weren’t listening to the right individuals. Once they did, however, they came up with a solution. A good listening program would never have allowed such a situation to persist for even a short period of time.
We have also seen countless examples of costly satisfaction studies that brought no payoff whatsoever. After all, avoiding product or service improvements that aren’t recognized by customers is as important as uncovering needs that will be recognized and rewarded.
Effective programs for gaining valuable customer insight can make a major impact on a firm’s business success, enabling them to develop and implement customer-written plans for growth and profitability. While listening to customers can be challenging, the payoff can be tremendous. Firms that focus on the future, that successfully listen to the marketplace about how to be a best-in-class supplier, and that cull out those areas where performance improvement will make a real difference will find their customers have much to say about the pathway to success.