Outperform Your Competitors

December 8, 2008

First appeared: NNBW 8/20/02

“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) Respond what you learned by responding to the markets’ needs. These are three basic business activities that most companies do, but not formally or systematically.

Gather 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 like 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?

If you are going to all the effort to learn about your market, communicate the relevant market intelligence to the people in your company.

Most companies don’t formally do anything!

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/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? UNR is currently executing a benchmark study assessing the market focus of businesses in this region in conjunction with EDAWN, 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/study/.

For more information: If you have any questions regarding these articles, or desire further information, please contact us.

You may also be interested in:

• Responding to what you’ve discovered
• Outperform Your Competitors (Spanish)
• Duking it out with your competitors

Topics in this post: customer-focus |