Don’t Assume Businesses Know What Their Customers Want
October 17, 2017
When a business operates with limited knowledge for what their audience appreciates, valuable indicators that validate marketplace strategies or signal that it may be time to pivot are lost.
Recently, I was asked by a private equity group to speak to an executive leadership team from one of their portfolio companies, a specialty beverage company. The purpose for the meeting was to determine existing audience sentiment and perception for the business overall and the products they provided into the marketplace.
Within the first few minutes of the meeting, it was clear that the executive leadership of this company had partial awareness to why consumers bought their products and, more significantly, why they didn’t. After further dialog, I understood that most of their audience insights were collected from small focus group studies and direct customer feedback provided through a few retailers. The business lacked an insights mechanism to alert them of any changing audience interests and opinions through a consistent and data-driven approach.
This company’s story is not uncommon.
While working with numerous private equity owned business operations I’ve observed that, in the absence of customer and end-user insights, most groups primarily focus on monetary metrics to gauge the overall performance of portfolio holdings. This frequently leads to erroneous strategic decisions since marketplace data is much more instructive than financial data.
In recent years, advancements in the usage of content marketing, social monitoring, digital media and mobility analytics have provided decision makers with an overabundance of data and relevant insights.
Private equity groups can sharpen their due diligence practices and validate strategies for targeted businesses by leveraging the same tools savvy marketers have been using as audience “e-Listening” tools to assist in messaging, brand positioning, reputation management and content development.
Organizational R&D divisions leverage similar tools to better understand end-user needs, challenges, and preferences. These enlightened groups appreciate the access to a large sample size of end-users to collect competitive intelligence.
As a practical course of action, private equity groups should inquire about the following when conducting due diligence– and they should ask related questions to the executive leadership of the businesses that they already own:
Do you recognize what your customers are saying and what they really value?
What motivates the customer/end-user to buy your products or services?
How does the overall brand and your products and services compare against the competition?
Do you monitor how audience segments differ across the buyer’s journey?
How do you collect and extract insights to strengthen marketplace position?
“When private equity ownership and executive leadership of a business operate without the necessary tools to properly listen to target audiences, customer acuity vanishes.”
Substantive answers to these questions would deliver a measurable profile view for the ideal audience of the business. Insights from these answers could provide reasoning as to why customers buy – and why they don’t.
The data is out there. Leveraging it to understand what audiences really want can transform businesses.
Such answers and insights could explain challenges and identify new opportunities beyond what any balance sheet could illustrate.