The Importance of Knowing your Customer

These are the days of information overkill. We are bombarded with so much of data, concepts, approaches and are constantly threatened by competition, volatility, uncertainty etc. We respond by taking several initiatives in our organizations that often run at their own peril while we operate side by side with people working at cross purposes. Most likely, we may not be pouring ourselves deeply enough into basic yet important issues like “Who are our primary Customers?” or “Are we engaging with them enough?”.

While these may seem to be too basic questions to ask, answering them is not. Especially for the capital equipment sector, the word ‘customer’ is like a rubber band and stretches to include several people, departments and stakeholders that make this exercise rather difficult. In many cases, the true customer plays no direct role in getting revenue to the organization. Then, is the customer the one who uses the machine? Is he the one who pays for the machine? Is he the one who maintains the machine? This identification is not very apparent and we struggle to identify who the most important customer is. As a result, organizations treat all the stakeholders as customers, which results in a poor strategy. By not identifying the primary customer many organizations that consider themselves customer-focused become defocused.

In the present times of global competition, it is the value selling that brings in the profit margins. Capital equipment organizations that do not identify their primary customers are on a slippery slope. They continue to do normal business for the time being but then get pushed away by the competitors who can identify their primary customer and build internal processes to satisfy this primary customer before others.

We have been brought up on the ethos of the customer being the god and he being always right. This leads us to believe that all customers are equal. The need is to understand that all customers are unique, and choose different sets of offerings for the different sets of customers.

This must be done with a disciplined approach based on how the customer organization is likely to contribute to your growth and/or profitability. The framework to choose primary customers is asking ourselves: ‘Who is the best fit for our organization’s business culture and tradition’; ‘Do we have the technical and the financial capabilities needed to match the primary customers’ expectations’; “Do we understand what he values by tracking his buying patterns;” and “Do we have mechanisms in place to track and respond to shifts in his behaviour”. And take it from there.

We have been brought up on the ethos of the customer being the god and he being always right. This leads us to believe that all customers are equal. The need is to understand that all customers are unique, and choose different sets of offerings for the different sets of customers.

T K Ramesh
Managing Director and CEO
Micromatic Machine Tools Pvt Ltd

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