"There is only one boss the customer
and he or she can fire everybody in the
company by spending his or her money somewhere
else." - Sam Walton, founder of Wal-
Mart
Sam Walton definitely understands the
power of customers and one of the
mantras in today's marketplace is "customer-
focus." Why is that? Because in
today's economy, more than ever, customers
are becoming more powerful as
they become increasingly discriminating
about their purchases. This is leading to
intense competition for businesses.
Whether you are a business-to-business or
a mass-market company, selling a product
or a service, the competition for your customer's
pocketbook is intense.
If you want to out perform your competition
and keep your customers coming
back, implement one basic business strategy
- focus on your market. This means
taking customer focus to a higher level
and having a company-wide strategy that
is not only customer focused, but is also
market focused.
What does it mean to be market
focused? Specifically, you need to understand
your customers' needs and wants
better than your competitors do and provide
your customers with superior products
or services. To do this you need to: 1.
Gather information about your customers
and your marketplace; 2. Communicate
the information collected to your managers
and employees; and 3. Act on what
you learned by responding to the markets'
needs. These are three basic business activities
that most companies do, but not formally
or systematically.
Generate and use relevant information
about your customer and marketplace.
Information or market intelligence that
your company needs to make strategic
decisions includes knowing more than just
data on customer needs and wants. You
also need to look at environmental factors
such as government regulation and policies,
technological changes, competitors
and their activities, and more importantly,
future industry trends.
Your company probably informally
gathers a significant amount of customer
information in meetings and discussion
with customers and distributors, in sales
reports, and in databases, to name a few.
Sources for environmental information
include trade publications, industry events,
and your local network. Intelligence gathering
can be broad or specific depending
on your company and budget. The key is
to gather information that is comprehensive
enough, but is also relevant and usable
to your company. After you have the
information, what do you do with it?
Most companies don't formally do anything!
If you are going to all the effort to
learn about your market, communicate the
relevant market intelligence to the people
in your company. The information you
gathered needs to be regularly compiled in
a usable form and then effectively shared
with your managers and employees.
Spreading the information throughout
your company can be as basic as informal
hallway meetings or as thorough as building
a customer and market database.
Other ideas include periodic newsletters,
management lunches, forums, internal
message postings, and formal reports. In
the end, what is crucial is not the method
of distribution, but the end result.
Intelligence needs to be communicated
clearly, continuously, and appropriately so
your staff can strategically respond to the
market.
Responding to your market is the critical
last step to being market focused. You
can generate information and communicate
it internally, but unless you respond to
market needs, nothing has been accomplished.
This is the hardest step for companies
to implement, but it is the most
important. If you're still in business, your
company must be growing and developing.
Just like the other two steps, using
market intelligence to respond to your
market is not taking on a new activity.
Rather it is using what you've learned to
drive your strategies. Your company should
be driven by understanding what your customers
want, figuring out if and how to
meet their needs, and producing and
offering the wanted product or service
they want.
How does this help my company's performance?
If you link these activities
together, you will provide superior value to
your customers, which results in improved
firm performance. Here is a motivating
fact: Numerous academic studies have
proven that companies that link these
activities together and therefore are more
focused on their market, achieve greater
levels of financial, non-financial, and overall
business performance when compared
to their competitors. A company that
increases its market focus by 10 percent
will see an increase of between 17 and 20
percent in overall firm performance.
How market focused is your company?
University of Nevada-Reno is currently
executing a benchmark study assessing the
market focus of businesses in this region
in conjunction with Economic
Development Authority of Western
Nevada, the Reno-Sparks Chamber of
Commerce, the Sparks Chamber of
Commerce, and the Hispanic Chamber of
Commerce. If you would like to know
how you compare to other Reno-area
companies, you can take the survey at
http://www.coba.unr.edu/faculty/olsen/stu
dy/.
"A company that increases its market focus
by 10 percent will see an increase of
between 17 and 20 percent in overall firm
performance." - Erica Olsen