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How well do you understand your customers?
Many businesses invest a great deal of time and effort into knowing their customers – but too few focus on understanding them.
More than just knowing a set of demographics, understanding your customer can help businesses to truly get into their mindset in order to sell to them. Understanding customers means knowing what motivates them, what questions they want to answer, what obstacles they are coming up against (which is critical for improving customer experience) and how their behaviours are changing and evolving.
A report by AVADO, has discovered a strong link between an organisation’s digital literacy and the level to which they understand their customer. AVADO conducted a survey of over 250 businesses, based around eight key digital capabilities, in order to provide a benchmark against which businesses could measure their own digital competence against the wider industry. The results are produced and analysed in The Digiskills Report.
So what link did the survey discover between an organisation’s digital skill and level of customer understanding, and what can marketers take away from this to improve their own customer insight?
Overall, less than half (44%) of the respondents to the Digiskills survey felt that everyone in their organisation fully understood their customers, their preferences and their behaviours.
However, there was a clear correlation between those companies who did feel they understood their customers and the level of digital literacy within the organisation.
At organisations where everyone was able to carry out three ‘representative’ digital capabilities – the ability to use basic data manipulation software, the ability to hold a conversation about basic cyber security, and the ability to hold a basic conversation about coding – 83% said that they felt the whole organisation understood their customers.
By stark contrast, at organisations where none of these digital capabilities were completely present, just 18% felt that the whole organisation understood their customers, while nearly half of respondents (47%) outright stated that it was not the case.
The report theorises that if digital literacy is linked to customer understanding, it stands to reason that some of the driving factors of digital transformation are closely correlated with enhanced customer understanding. In organisations where a clear digital vision had been set by company leadership, 63% of respondents felt that everyone in the company understood their customers.
But where there was no digital vision present in an organisation, only a fifth of respondents (20%) said that there was widespread customer understanding throughout the organisation.
Moreover, where a company’s Learning and Development division understood the digital skills which needed to be developed by an organisation, customer understanding was found to be more prevalent. 65% of respondents who thought that their L&D function understood the skills needed also believed their organisation fully understood its customers, compared to 18% of respondents who felt their L&D function did not understand the skills needed.
Owen Smith, Head of Product at AVADO, wrote in the report that, “The ability to take the customer’s perspective is vital for every modern business in an age where the consumer – the end customer in many cases – is setting the digital agenda and dictating the pace. It’s more than understanding their demographic and goes beyond actively seeking their opinion.”
So why are those organisations where digital transformation is more advanced also those who best understand their customers? There are a number of reasons why this could be the case.
The first is that organisations whose employees are more digitally skilled are likely to use more advanced data-gathering and processing methods, which can help them get to grips with customer needs and behaviour.
Secondly, companies who are prepared to invest in remaining competitive in the realm of digital transformation are also likely to make investments into staying competitive in other ways. Continually monitoring customers’ profiles, opinions and desires can help direct product and service evaluation, hone communications, and provide early warning of potential obstacles; it stands to reason that a digitally literate organisation would have more of these key attributes.
Employees who are digitally savvy are also better placed to understand their increasingly digitally savvy consumers. If an organisation does not fully understand mobile technology, for example, how can it understand and cater to those customers who want to interact with its business via a mobile device?
Shevaun Haviland, Founding Director of the ADBL, commented:
“At many organisations, individual functions are not fully integrating with the digital world they and their consumers now live in.
“Yet to compete with digitally savvy competitors, enhance productivity, and meet fast-evolving consumer expectations, they need to be. This is the end responsibility of each organisation’s Learning and Development function.”
She believes that in order for L&D functions to fulfil this responsibility, “they need to understand, and use, digital.”
As evidenced by the findings of The Digiskills Report, this initiative needs to come from the top: companies whose leadership set a clear vision for digital transformation, and those whose L&D functions have a thorough understanding of what digital skills need to be developed throughout the rest of the organisation, are much better placed to perform ahead of the pack in other areas – such as customer understanding.
“To be competitive and to be trusted, everyone in an organisation should be familiar with their customers’ experience, whether that is a mobile website, app, e-commerce platform or any other digital channel.
“It also needs to be recognised that customers’ digital expectations are not being set by organisations themselves, and they aren’t even being set by direct competitors. Digital expectations are being set by the digital experiences we all, as consumers, have now come to take for granted in all walks of life,” says Owen Smith.
And for organisations to be able to comprehend these digital experiences, digital literacy is a must.
Click here to download the full Digiskills Report from the ADBL and AVADO, and discover more analytically-driven insights into digital capability.