Getting a holistic view of customers
As mentioned in my last post, it's fundamental for a business to know its customers to pursue the critical path. But in practice, how does a company learn about its customers? In this article, I'll analyze this question from a B2B perspective, the one I'm most familiar with.
On a high level, there are three aspects to learn about customers: who they are, what they need, and how their supply chains/tech stacks look like.
Who customers are
The following are some general dimensions a business should learn about its customers. The amount of effort to learn about each one depends on the business. If any of them is clear and known to all employees, a company can skip that part.
Getting to know who customers are should be part of the sales preparation and should be done before the first sales call. Otherwise, a business risks losing the chance to best interact with customers.
Macroeconomy dimensions - learn from public data or market research report
Country income level
Correlates to ARPU, and indicates profit margin in a country
Population
Indicates total addressable market
Penetration of a technology/product/etc.
Indicates market growth
Annual revenue per user (ARPU) of the technology/product/etc.
Indicates profitability in a country/market
Policy
Indicates the boundary of a business, and reminds things to pay attention to
Customer profiles
Financial health (Revenue/Profit/Profit margin/ARPU)
Indicates capability and willingness to pay
Market position
Indicates what kind of approach customer is taking, whether they focus more on growth or more cost-sensitive
Operations
From customers' user acquisition, cost-saving activities, etc can estimate customer needs
Technology maturity
Indicates what kind of solutions a customer may want
Software self-development capabilities
Indicate whether a customer would consider building some products on their own
Buyers' personas, influencer and decision-making process
Buyer - CTO/CIO/CMO...
The product needs to fit their goal, such as revenue or cost KPI
Influencer
These are the end-users, products need to fit their needs
Decision making - Corporate level/team level
Indicate how many people the company need to cater to
Vendor strategy
Do customers need to evaluate multiple vendors at the same time?
Do they use several vendors at the same time?
What customers need
It is the most important question a company needs to answer. In the first few B2B sales calls, the best sales spend as much as 70% of their time for the purpose. However, no formula can break down this question, and how much a company can learn about its customers depends on its capability to ask strategic questions. In general, there are two aspects of the question.
What kind of problems do customers look to solve?
It showcases the solutions customers have in mind. But sometimes, these are not the best solutions available
What challenges are they facing?
To best solve customers‘ problems, a company needs to understand what challenges customers are facing. Based on the information, the company can decide which part of the challenges they can address. For what they cannot handle currently, the company should evaluate what should be on its roadmap, and what is simply out of their scope. For things out of scope, the company should further look at buy/partner options, or decide if the current technology is not ready.
The end goal is to help with customers' critical path as much as possible with a viable cost.
How customers' supply chains/tech stacks look like
It's not enough to ask customers what they need. Often, customers only have a vague idea about what they want, and they are likely not aware of other things that can be optimized in their business. To fill the gap in understanding, companies can learn about their customers by looking at their supply chains, tech stacks, or something similar, depending on the industry.
For example, in data analytics, a typical tech stack looks like the chart below. Customers use one or more vendors at each node or have one vendor to deal with several nodes. For any company to win customers, it needs to understand how it fits in customers' tech stacks. More likely than not, customers will expect their vendors to have integrations with each other. And for a customer-centric company, it should try its best to make the data flow smoothly from data source to application, so that customers can focus on their core businesses.
Being in a highly competitive and fragmented market like data analytics, it's not easy for companies to figure out what players are at each node and how they differentiate from each other. Therefore, companies need to have an industry map. So whenever they come across any vendors, they can quickly locate them and decide if any further investigation is required. At the same time, sales teams need to ask customers about their tech stack and the underlying reasons for preferences. This information can help companies understand the gaps in customers' infrastructure and decide how they play the game.
One thing to note is that although sales teams will be the main people who face customers and ask strategic questions, they should not be the ones responsible for the background research or insights integration. Instead, a well-functioning company should set up teams for activities. This function can sit in corporate strategy, sales enablement, product management, product marketing, etc, depending on what organization structure fits the best. The reasons are two-fold: first, salespeople are best at talking to customers, negotiating, and closing deals instead of background paperwork; second, most salespeople are not trained for research or data analysis. Therefore, companies should build the proper mechanism and hire the right people to lead this team sport.
In my next articles, I'll talk about how to build internal systems for employees to learn about customers, and what kind of technology can support the scaling of those systems. Stay tuned! See you next time.