Know Your Customers For A Head Start

19 Mar, 2012

The old cliché that the customer is king still holds good – and, when starting a businesses, getting to know the people you sell to can be crucial to success.

Stuff U Sell was set up to take the stress out of using online marketplace Ebay, by doing all the selling on their customers' behalf.

So, if a customer is not happy about any part of the service – its website, the collection of items, or the eventual selling price – Stuff U Sell can suffer. It therefore takes customer research very seriously.

Every Thursday, at the weekly management meeting, founders David Bracken and Fraser Pearce make each member of their senior team read aloud comments from customer feedback forms.

"It can be a painful process," Bracken says. "But we learn a lot from the frank reviews that people write." Most of the feedback is actually positive, Pearce notes. "Most of the time, when people are asked to give free feedback, they will give two things that are good and one thing that is bad."

However, it does ensure problems are addressed. For example, the company switched from using third-party couriers to collect customers' items, to using a dedicated in-house team, after complaints about service standards.

Reading out all the comments to the group means that people are more likely to fix problems quickly because they become accountable to the rest of the group, Pearce claims. "It embeds it a little," he says.

This direct contact with customers can be easier to maintain when you are small firm.

Although Stuff U Sell has grown substantially in seven years of trading – Pearce claims that it will sell £3m-worth of customers' items this year, up from £100,000 in its first year "the team is still able to read all the comments about customer service in the weekly meetings.

But he admits there will come a point when the process has to be refined, because the volume of customer survey comments will be too great to cover in a single meeting. He believes the key will be to reflect the balance of positive and negative comments.

Being creative types, entrepreneurs can often hit upon surprising ways to keep up to date with customers.

Mark Needham, founder and chairman of consumer electronics distributor Widget UK, buys £500 of shares in all the publicly quoted retailers that buy from him.

"As a share investment, this has had its ups and downs," he says. "But, since I make sure I get the paper certificate rather than holding shares online, it means I get the printed annual and interim reports mailed to me."

This provides some valuable insights, Needham claims. When Kesa sold the electrical chain Comet to private equity, for example, Needham was sent a detailed breakdown of the deal as a shareholder.

As a shareholder, he is also able to hear directly from the senior executives of customer companies at their annual general meetings. "It is one of the few occasions in which you can see the whole board interacting together," he says.

For the Supper Club, a networking group for ambitious entrepreneurs, getting to know the customer is an intrinsic part of the service. Every member has one-to-one meetings with Supper Club executives before they join – and then at regular intervals if they decide to sign up. This is then backed up by an IT system that can track connections between members.

Knowing customers' interests and knowledge gaps means that the Supper Club can tailor every event to their needs – something that other networking groups cannot offer, founder Duncan Cheatle says.

"We are going a stage further [than other entrepreneur clubs] because we are trying to facilitate value between our clients," he argues. "Every introduction to each member is valued highly by the individual as we understand who they need to speak to to get the advice they need. This often leads to members working with one another and sourcing things they need from inside the club."

Using its knowledge of members has knock-on benefits for the business, because the members then become advocates for the Supper Club – discussing it at other events and referring friends, suppliers and business partners to ask about membership, according to Cheatle.

"Our members are essentially one of our greatest marketing tools."

Knowing their customers also means that the Supper Club can try to help those who tend to support others rather than seeking direct benefits from the network, Cheatle adds.

"The club is about give and take," he says. "If someone is constantly giving more than they are receiving – introducing lots of members, giving lots of advice and taking lots of phone calls "then we will go out of our way to help that person."

Opportunities arise from the club's partner organisations. For example, Cheatle points out that the Supper Club can be offered places on trade trips to emerging markets, which it can invite its more generous members to join – knowing that they are deserving of the extra support.

"If someone has done a lot, we feel as a club that they are owed something," he explains.

Knowing your customer, it seems, is also a route to making them happier.

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