The most recent Business Week on the newsstands (April 24, 2006) contains a special report on Innovation conducted with Business Week and Boston Consulting Group....

One key finding is innovative companies tend to have a better understanding of their customers including who they are, what makes them buy, and what makes them loyal. "Getting inside the minds of customers is essential for "aha!" moments that lead to innovation," the article says. Sadly, however, the article also notes, "true insight remains elusive: one quarter of our respondents still call customer awareness an innovation obstacle."

I'm not convinced that customer awareness is the issue, since I'm sure most companies are "aware" of their customers. I think "customer understanding" is a better phrase, since outside consumer packaged goods and retail industries, most companies don't have a firm grasp of what makes their customers tick, and more importantly how to make them satisfied.

I'll make an interesting observation. I'm not sure that many companies care about customer insight.

In my opinion, too many companies are still focused on "transactional" relationships with their customers, where they advertise and promote their products and services and then pray that a customer notices the company, actually has a need, gets the time to call the company, and actually follows through with a store visit or purchase.

In the B2C world, I've seen companies from small to large advertise and promote a product or service and then not bother to answer the phones or provide a pleasant customer experience once the customer decides to interact with the company. In the B2B world, where target customers are usually large enterprises, many companies still have a "build it and they will come" attitude or worse spread their marketing and business development dollars too thin (across industries and sub segments) to be effective.

If a company is truly "customer centric" (and I really don't like using that phrase because it sounds like consulting speak), then they are usually maniacal about their customers. Think Apple, Toyota, Starbucks etc... These types of companies pay more than lip service to customer care, and essentially fall over backwards to keep customers coming back and buying more.

Passion about customers is just a start, however.

Customer focus needs to come from the top down. It's easy to identify companies that care about customers by simply observing how much time the CEO and his or her direct reports spend with customers, and if customer interaction is encouraged or discouraged in middle management. It's also critical to have an infrastructure to support good customer care such as the right information technology to "mine customer insights" as the article suggests.

Innovation, drawn from true customer insight, need not be hard to master. But it takes a willingness, commitment and investment in time, talent and dollars to get there.

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Paul Barsch directs services marketing programs for Teradata, the world's largest data warehousing and analytics company. Previously, Paul was marketing director for HP Enterprise Services $1.3 billion healthcare industry and a senior marketing manager at global consultancy, BearingPoint. Paul is a senior contributor to MarketingProfs, a frequent columnist for MarketingProfs DailyFix, and has published over fifteen articles in marketing, management, technology and healthcare publications. Paul earned his Bachelors of Science in Business Administration from California Polytechnic State University, San Luis Obispo. He and his family reside in San Diego, CA.