Experts of entrepreneurship will tell you that to be successful in any entrepreneurial venture, you must learn and understand three critical components of business: Your customers, your competition, and your industry. Let us discuss the customer bit. This is because it impacts the other two.

The Question

There is this one question I am known to ask quite often in my practice. The question might come in varied forms but the meaning is the same. In almost all instances, both new entrepreneurs and those who have been at the game for a while, struggle to answer this question:

• Do you understand your customers?
• Why do they buy what they buy?
• What are your customers saying about your products, customer service, personnel, location, business hours, process, price levels, inventory levels, appearance, character, leadership style, business model, etc. ?
• Do you as entrepreneur know why your customers patronize your business?
• Do you know their backgrounds, their businesses, and the demographics of your market?

The Fact

A business entity that does not understand the rationale behind customer purchases and consumption patterns is bound to lose its market share to the competition. Businesses that cannot understand how the consumer’s mind operates will have challenging times figuring out how to target a marketing campaign to attract the consumer’s attention.

Consumer behavior and patterns describe and explain why customers buy or patronize a particular product or service and how they react to changes in price, product and service composition as well as the quality of either the service or product. Consumer purchases and consumption patterns are dynamic and tend to react towards economic, financial, technological, emotional and innovative changes.

Knowing and understanding customer behavior enables the organization to formulate and tailor their products and services to suit customer behavior patterns. The challenge, therefore, is for business organizations to constantly monitor these behaviors to help them formulate the relevant marketing policies and strategies to satisfy their consumers.

The Academia

The Academia postulates that businesses can gain the necessary insight into customer consumption patterns through exploratory research. They contend that scientific research helps businesses to improve their marketing strategies. Exploratory research is also a useful tool for public policy formulation and aids in social marketing.

To Proponents, exploratory research provides insights into and creates an understanding of the problem confronting the researcher which within our context, is the entrepreneur. Exploratory research is used in cases when you must define the problem more precisely, identify relevant courses of action or gain additional insights before an approach can be developed. The methods used to collect data are expert surveys, Pilot surveys, Case studies, Secondary data: Qualitative research and analysis. It is worth noting that, companies like Dell and Starbucks are deep into exploratory research.

The Misconception

The mention of research is a put off to many entrepreneurs especially the new entrepreneurs who are full of passion and pregnant with their new vision and ideas and in a hurry to give birth to them. To most of the small business entrepreneurs, research is a waste of time, energy and scare resources. To another group of entrepreneurs, research is a herculean and odious task and they cannot afford the time and manpower for that. To others, research connotes scholarship and they don’t have the aptitude for that. One such new and passionate entrepreneur told me, “ I don’t deal with theories, all those book people, what do they know about practical business? Have they run my kind of business before? The reality is, many of the proponents, consultants and business writers are entrepreneurs themselves or have helped build businesses in the past and only write to share their experiences. Many have failed several times and others have succeeded, so they can only testify of what they have seen and experienced.

The How-To

To all such entrepreneurs who are skeptical about research, I am not advocating for anything odious. Sometimes all it takes is studying the buying patterns of the customers and asking questions. Just watching what your customers are buying and listening to whatever they are saying go a long way to help the entrepreneur to know the mind of the customer. Sometimes taking critical note of what customers ask for or buy often or repeatedly can help you get into the mind of your customers. If you want to take it a bit further, a critical analysis of your inventory turnover can tell you what your customers are thinking about and what they are craving for. For those of us in the service sector, an entrepreneur has to find out what topics and issues do our customers consult us on most and more often.

By fostering a cordial and lasting relationship with your customers through superior customer service and finding out from them what their views are on varied aspects of your business and the industry as a whole, you form a basis for research. You might probably say “How can I befriend all my customers”? Well, I am not advocating that you become friends with your customers, but get closer to some of them by identifying a core group of customers and making them your “unofficial” focus group. Where you have a larger customer base, form multiples of such “focus” groups and listen to and watch them.

Using the Environment

In many instances, the news and the environment can give the entrepreneur pointers as to what his or her customers are thinking. Listen to and watch technology closely and you will know what’s trending. Watch your competitors to see what they are doing but more importantly what they are not doing. In many instances, take your personal drive and convictions out of the equation and put what your customers need in the driver’s seat. In other instances, make use of secondary data to understand the prevailing phenomenon and customer behavior. Where resource abounds, hire an expert. There is absolutely nothing wrong in hiring an industry expert to help. On the contrary, there is everything to gain.

I know I am treading on “sacred” grounds here. I am amply aware of the school of thought which advocates that entrepreneurs and business owners need to identify their why and seek to “sell” that why to their customers to buy into it. My contention is that, to be able to achieve your why in an organized business venture, understanding the why of your customer first! Being conversant with the behaviors and thought patterns o your customers can help you to succeed even more.

I have personally been a witness to a rather awkward situation where a local business entity provided portable drinking water facilities for the people in the communities they serve in the name of social responsibility but the people spited and rejected the gesture and instead opted for a sporting complex to be constructed. This situation developed into a great tension and suspicion between the community and the local business.

The Need for the Why

Theoretical research in many instances helps the entrepreneur understand, explain and predict a phenomenon. It is a tool that can help the entrepreneur succeed and maintain that success. Knowing the mind of your customers helps the entrepreneur to innovate and adapt to prevailing changes and patterns. The resultant consequence is that your customers become loyal. This is because the customers see you as dependable and able to meet their needs at all times. Your customers will also appreciate you for placing a premium on their input and views as vital to the growth of your organization. They will “own” your business and become its greatest advocates, ambassadors, and marketing agents for referrals. Being able to get into the mind of your customers helps to put in place a customer-centered strategy aimed at attracting and keeping your customers which ensure continued patronage with its consequential profitability.

As an entrepreneur, you are able to appreciate your customers better when you are conversant with what they bring to the table. Being conversant with their taste, preferences, choices, purchasing habits, patterns, and history helps you appreciate and serve them better. Knowing the mind of your customers also helps the entrepreneur to fashion their process management policies to ensure higher efficiency, effectiveness and higher productivity.

During the process of relating and interacting with your customers, the customers become your unpaid consultants giving you insight as to how to please them. They also indirectly telling you how to formulate your customer innovation policies tailored to their customer experience and value proposition.

Get to know the mind of your customers. It is your ticket to success. Failure to do that can spell the doom of your enterprise. Research should not be a subject to scare the entrepreneur as expensive, tedious and time-consuming. It should be seen as a success tool necessary to help businesses stay competitive in today’s business environment where innovation is the order of the day!

Dr. Ken Barnes is a Management Consultant with Specializations in Entrepreneurship and Business Management, Marketing and Human Capital Development.