Why we should invest in understanding the rationale behind our customers buying?

In today’s (2022) business environment it is quite evident that the growth mindset is widespread from world’s largest multinational conglomerates to self employed smallest business you can ever imagine of. It is evident that the single most important factor for success in any business lies around the customers of any business.

For the last few decades in almost every aspect of leadership development for businesses, one of the key elements had been ‘making the business customer centric’ as this customer centricity had proved to be given significant results for businesses over many other elements of focus. It is quite evident that the customer decides where a business is heading, be it business to business context or business to consumer context.

 

There is a saying that is widely used among business leaders, “the existence of any business is around making its customer’s life easy, if you do it well the customer will reward you with purchase”. 

There are many versions of this statement, the idea behind this concept reiterates the importance of making your product or service right for the customer.

 

 

When you decide your customer is going to be center of your business, the obvious next question is going to be ‘how to acquire more customers?’. This is a high priority question any business needs to ask every single day of its existence because it is the single most important key to the growth of the business.

Growth through customer could be acquired in few areas of focus,

1. Driving repeat purchase of existing customers
2. Getting existing customers to buy more
3. Attracting potential new customers
4. Triggering potential new customers for purchase and driving repeat purchase from newly acquired customers 

It is when a business think on these focus areas is the time it is important to bring the topic of buyer behaviour on to the table. Driving growth through each of above focus area would mean that the business clearly understand why the existing customers buy from the business and how can the business have more customers buying from the business for the same reason. Best solution around this question is to ask from the customer than assumption. The more customers a business asks, clear the answer would be.

The sample size will decide the level of forecast accuracy. Sample should represent the actual customer base and this research should be an ongoing exercise where the business takes considerable amount of its management time to review the relevance of the business activities with the results of understanding the key elements that drive rationale behind the purchase decision by the customers.

Sales turnover of any business could narrow down to four key components.

1. Customer Penetration (How many customers does the business have)
2. Weight of Purchase (Average number of items each customer purchase)
3. Selling Price (Average price of an item each customer purchase)
4. Frequency of Purchase (Average times of purchase by each customer during a standard measure of time)

If you multiply the numerical result of each component you would have the sales turnover of the business. 

The research around understanding why the customers of a business choose to buy from the particular business could be designed around these four components so that the study could drive actionable tasks that would result business growth and staying relevant with the customers.