Fundamentals. We all know that they are important yet often, they are easy to forget or overlook. Ask any Sales Director or Sales Manager: “How important is it that your team really understands its customers?” Most, if not all, would agree that this is massively important. Yet in our work with clients, we find again and again that retail customer understanding is lower than we would anticipate. It’s often lower than the sales leaders thought too. So how well does your sales team really understand and know your customers? How well does the rest of your business understand retail customers? And what are the consequences of this lack of retail understanding for your business?
Know your customers? A lack of retail customer understanding is really expensive
If a sales team doesn’t understand and know your customers deeply, then it is harder (and more expensive) to trade effectively with them. And it isn’t just a sales problem either. If the sales team doesn’t understand retailers, then that will impact the company’s ability to effectively deliver shopper marketing and trade marketing solutions. A lack of customer understanding will increase the chances of rejection of initiatives or increase the cost of delivering those initiatives. And all that slows brand growth and increases the cost of doing business at retail. It also makes retail customer alignment and planning harder too. Have you ever been disappointed with the lackluster outputs of a Joint Business Planning session? The chances are that part of the problem was a lack of retail customer understanding at the outset. If you don’t know your customers deeply, then the implications can be huge.
Know your customers? Retail customer understanding isn’t just about more data
Firstly, of course, this isn’t a universal situation. There are many customer-facing managers who really do understand their customers deeply. But as we work with sales teams and marketing teams around the world, we are noticing a worrying lack of understanding in many situations. And while some retail customer managers are almost drowning in data, they are missing some of the other key customer information. Retail is changing faster than ever before, and retailers’ strategies are changing too. Customer managers of old might have been able to rely on an historic analysis of retail customer needs and strategies – in this world of rapid change, that isn’t good enough.
Retail Customer Understanding is critical
Knowing your customer – having a deep level of customer understanding – is a critical success factor for consumer goods companies. With the exception of direct to consumer channels (which still represent a tiny fraction of the consumer goods industry) all other product is sold via retailers. Retailer support for initiatives is critical for consumer goods success. Retailers will support activities which meet their needs and support their strategies: plans which work against retailer needs are likely to be rejected or will be a lot harder (or more expensive) to negotiate or push through. If you don’t know your customer, then life will almost certainly be harder.
Really know your customer? Retail customer understanding needs to be broader than the buyer
And retailer decision making goes way beyond the buyer that we meet with on a regular basis. While many key account managers are pretty good at understanding what is on the buyers wish list – their understanding of the needs and KPIs of the store operations teams, logistics, or marketing are often weaker. All of these teams can kill your plan, or fail to support it 100% – and that can be fatal for your plans.
Retail customer needs go beyond category growth
It’s very easy to be blasé about customer needs. Too many people see initiatives such as category management and convert it into a short-hand that a retailer’s prime need is to grow the category. Well – it might be an important need, but it isn’t the whole story. Not by a long shot. How about profitability? Cash flow? Inventory? Until the team has a clear picture of the retailer’s broader needs, goals and strategies, we’re going ‘into battle’ with one eye closed.
Retail customer understanding must be shared
And for those sales managers who have read this far and are feeling pretty good about their level of retail customer understanding – good on you – to a point! But for you to know your customer isn’t enough. The real test is how well the organization understands that customer, and whether this information is built into future plans and initiatives.
Think you know your customer? Retail Customer Understanding – A Quick Test
So how well do you or your team score? We do a full assessment in our workshops and consultancy interactions, but for now – try answering the following questions:
- Do you have a clear picture of the retail organization, beyond the buying team, and including the key managers and contacts in all departments?
- Do you know the KPIs of each of these individuals or teams? Do these KPIs go beyond category growth, category margin and inventory levels?
- Do you have a written statement of all of the retailer’s key strategies and an assessment of how they impact your business?
- Have you read and analyzed the retailers published annual report?
- How frequently do you read articles about your customer?
- When was the last time you visited a store?
- When was the last time you visited the store with someone from the retailer?
- When was the last time you visited a store with someone from the retailer who wasn’t the buyer?
- How often do you meet members of the retail team beyond the buyer?
- Is all this information documented?
- When did you last share this information with the rest of the business (marketing, shopper marketing, trade marketing, supply chain?
Retail Customer Understanding – Start Now and Build
If any of these questions made you feel a little uncomfortable, you are not alone. But now is the time to start getting to know your customer better. Building retail customer knowledge isn’t a one-off project – it is an ongoing discipline. Don’t wait until the week before that joint business plan presentation – start now! Start doing some of the activities listed above: start building a database of customer knowledge. Schedule time to review and update this. Create tasks to go find and out information. And to then share it with the rest of your business. And when I say ‘share’ – I don’t mean emailing it to everyone, nor sticking it in a shared file. Consider different ways you can bring this knowledge to your colleagues. Could you go to a store with them and use that as a sharing session, for example? Is there a simple ‘one-page’ view that could summarize what each team needs? Could you sit with them and understand their frustrations with your customer (they will have some, I promise!) and use your customer understanding to both explain why those frustrations exist, and work together to work out how to overcome them.
If you’d like a more complete assessment of your retail customer understanding, we can help. We even have super tools to help capture and manage all this information. It’s the first fundamental step to better success at retail. It is the first fundamental step toward transforming relationships between manufacturers and retailers to create genuine added value. If you’d like to learn more about these key steps, and how we can help, please get in touch.