Institute of Product Leadership
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Knowing versus Understanding Your Customer

When it comes to retaining your customer, you simply do not need to know them but should also try to understand them. If you wonder that why are your competitors holding a superior hand than you and why are they successful in catching the pulse of the customers?

The reason could be that they are putting more efforts in understanding the customers than you.And here you are....You just know who your customers are, but do not understand them?
Understanding them could mean the difference between retaining customers and losing them to the competition.

Knowing your customers -- information typically collected by a business -- means you know who they are demographically, what content they're reading, and so on. Most companies do a good job on this front.

When it comes to understanding customers, however, many companies come up short. Understanding customers helps businesses deliver an online product with meaningful and compelling value propositions that meet not only their current needs but also their evolving and future needs.

Gain customer insight and just merely not know but try to understand your customer's:

• Purchasing power: Find out the degree of disposable income within the community.
• Demographics: Demographics serve as a means of locating geographic areas where the largest number of potential customers live.
• Residences: Are homes rented or owned? In what kind of accommodation do they live .
• Means of transportation: Do prospective customers in the area own vehicles, ride buses or bicycles, and so on?
• Age ranges: Does the community consist primarily of young people still approaching their prime earning years, young professionals, empty nesters or retirees?
• Family status: Are there lots of families in the area or mostly singles?
• Leisure activities: What type of hobbies and recreational activities do people in the community participate in?
• Credit risk profile: The credit risk profile of the customer needs to be evaluated in order to understand your customer well.
• Attitudes to and uses of technology:
• Environmental and ethical views
• Their preferences to go to your competitors

To innovate and retain your customers, you should clearly understand their preferences if you want to stand out from your competitors.


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