Understanding the Needs of your Customers and Consumers

“We can only truly mitigate risk in the decisions we take and how we allocate scarce resources if we have an expert understanding of our marketplace.”

Following the introduction to this series of four blogs on Building a Strong Value Proposition, we focus on market research and the importance of understanding the needs of customers and consumers.

Prior to the network session, we encouraged participants to reflect on what they thought they knew about what their current customers and consumers value. Our reason for asking this question lies in the following discussion:

Why is market research so important?

Participants commented on the desire to use the network meeting as an opportunity for ‘simplifying’ and ‘zooming out’. This was the point at which our Expert for the day got on all fours and started to inspect the carpet closely, before jumping back up and surveying from afar, a response that entertained, intrigued, and left participants a little confused! It was then that the Expert clarified what he was illustrating:

“It is okay to talk about ‘zooming out’ if we refer to the necessary move from an operational to strategic level thinking process, but to zoom out and generalise before we really understand what is going on in our specific marketplace is dangerous as we may be basing our decisions on nothing more than assumptions, ‘gut feelings’”.

The Expert had a point. Too often our decisions in life are based on assumptions and inaccurate information.  In his book “The Signal and the Noise”[2] Nate Silver, an American Statistician, talks about the dangers of making approximations, along with the importance of finding the objective truth. We individually process information everyday by approximation. If we didn’t, we wouldn’t be able to function. We pick up on patterns and regularities in our environments. However the more information there is, the more stuff we have to fight through to find out what’s really going on.

Nate reminds us that “90% of the information in the world has been created in the last two years alone” [3]. This would be good if this data added to our understanding of the world, but the fact is it doesn’t. The majority of this data is stuff we already know; it adds nothing to our existing understanding. Nate labels this as ‘noise’.

This is where we can fall into a trap. We can begin to believe that our approximations of the world are real and accurate and we can pick up on patterns that do not really exist. Still this is the type of data that we use to base our decisions on, including how we run our businesses and allocate resources. What is to be recognised here is that we can only truly mitigate risk in the decisions we take and how we allocate our scarce resources, if we have an expert understanding of our marketplace. We do need to be realistic here, our understanding of our marketplace will always be imperfect, and so it’s about gaining as much insight as possible.

What is the difference between a customer and a consumer, and does this matter?

The distinction between a customer and consumer is an interesting one, and one challenged by our business owners, so we sought to clarify these terms. If we run a Business to Consumer (B2C) organisation we engage directly with consumers, the ‘users’ of the end product.  If we lead a Business to Business (B2B) organisation we will be supplying our products and services through a ‘gatekeeper’, one who holds the key to the end consumer.

In B2C it is easier to understand the needs and wants of the end user, as you will often see them ‘consume’ the product or service, providing you with valuable feedback. However in a B2B business, you will have to work harder for this market intelligence. You will need to work with and through customers. In doing so, you’ll need to be careful that you do your own research on consumer need, rather than accepting what your customers believe is the case.

I remember a story that a business owner told me that is pertinent to this discussion. The business owner ran a firm that manufactured blinds (hereafter called ‘Blind Co.’). He met with the department store John Lewis and their sales team presented some market research that they believed pointed to a consumer need for do it yourself (DIY) blinds. Studiously the business owner returned to Blind Co. and began designing the product. After considerable resource and time were expended, he returned proudly to John Lewis to present the product – which they promptly displayed in their stores. Time to sit back and watch the orders roll in (or so he thought) – but they didn’t as there was little interest for this product from the marketplace. The business owner had taken the customers understanding of the market as red and had not checked these assumptions through his own research – and in doing so, had remained blind to the marketplace (excuse the pun!)

Market Research does not have to be Expensive: Our Top Tips

As we have highlighted above, all too often we can rely on subjective assumptions: our instinct, what our ‘gut’ is telling us; instead of collecting, interpreting and using objective data on our marketplace. There is often a view put forward that market research costs an arm and a leg. However, our resident Expert challenged this view and provided some Top Tips that business owners can use to challenge their thinking on what customers/consumers value.

First there is where to find information and here we have the ‘3 T’s’ – Till Roll (who you sell, or have sold to), Talk (to stakeholders – customers, consumers, stakeholders (e.g. Government) and competitors) and Twitter (social media). At this point, one participant remarked “My customers don’t complain, so they must be happy!” Here the Expert challenged participants to move beyond smiley faces, to get to a deeper level of understanding about why your customers/consumers make the purchasing decisions they do. There are dangers in making assumptions, and not asking why they are happy, and how you could make them happier!

So there is a need to think about what to ask. The ‘5 W’s’ were introduced as a way to develop our own inquiry processes and learn about our customers/consumers. A customer/consumer conversation might go something like this:

  • What… did you buy?
  • When… did you buy it?
  • Who… did you buy it from?
  • Why… did you buy it? Or, ‘What problem were you looking to solve?’
  • What if… “What if we had done X…” “What if we did Y…”

The ‘What if’ question is one not often asked, and opens up all sorts of possibilities and opportunities to meet the needs and wants of customers/consumers.

And finally, you’ll need to think about the method you use to collect, analyse, and apply (use) the data – and our tips here were: record it, take it seriously, do it well (outsource?) and do it regularly (every quarter).

Make a Difference (MAD) challenge from this section: In reading this section, we would ask that you reflect on the following questions:

  • What do you think is the difference between a ‘customer’ and a ‘consumer’ in your marketplace, and why do these distinctions matter?
  • What do you know about what your current customers and consumers value? What evidence do you have to support your claims?
  • What choices do customers/consumers have when making a purchasing decision in the marketplace within which you compete?

To read the blogs that form part of a series on Building a Strong and Compelling Value Proposition click on the following links:


  • [2] Silver, Nate. 2013. The Signal and the Noise: The Art of Prediction. Penguin.
  • [3] See: “Accelerate delivery of pervasive analytics with a big data platform” at www.ibm.com 


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