Staying close to your customers: simple in theory, challenging in practice
New Zealand started 2025 in an economic recession. The local market is starting to turn a corner and leaders are feeling optimistic about the economy ramping up in the second half of the year, as shared by the Mood of The Sales Leader NZ 2025 Report issued by Indicator, however, leaders are not feeling quite ready to make big bets just yet. Our discussions with clients and peers tell us that there’s a general sense of caution and nervousness to ‘go big’ amongst leaders.
Chief among these bets are those in the area of Customer goals. We have witnessed organisations grappling with this for decades and we have had many discussions and run many workshops that indicate the challenge remains today.
In our experience, customer-based strategic goals are commonly wrought with "logical leaps" to things leaders believe customers want without acknowledging the research, measurement and investment that is required to understand their customers before making these claims with confidence. From what we’ve seen, customer-based strategic goals are complex and require many home truths about the current understanding of an organisation's current state of understanding. We have observed this across organisations large and small.
Customers' needs keep evolving nonetheless. According to a McKinsey 2024 report on consumer trends, consumers are still looking for experiences that are hyper-focused on them and they want the least friction possible whilst having them. Traditional approaches to brand interactions are not as effective anymore and there’s a need for leaders to step up and adapt to these changing trends.
It’s in times like these that leaders speak of staying close to their customers as the bullet-proof solution and we agree, it’s a no-brainer: customer needs are forever-changing and are more challenging to serve, old methods are becoming ineffective noise, there’s less resources to invest, and customers are generally, more willing to leave their current brands to try others that meet their needs better.
Staying close to one’s customers is no groundbreaking concept, but it can be a challenging one to actually execute, even for modern companies. Here’s some food for thought on what we’ve seen, and our two cents about what really makes a difference.
What have we seen as a result of not leaning into it
Haste makes waste
In the pursuit of velocity, organisations often spend insufficient time with their customers to understand them. Relying on ‘good-enough’ assumptions that are proxy to in-depth understanding can seem faster, but it can also bring proxy results that do not impact the bottom line or people’s engagement in delivering them.
Bureaucracy and risk aversion
Setting up touch-points and customer interactions can seem like it requires an almost surgical approach, especially for big brands with big reputations. Lengthy approval processes and over-engineering interactions with customers once or twice a year can be less effective than more unstructured and frequent interactions throughout whatever process, campaign, product we’re designing for them.
It is also often that Risk Management is considered a blunt object where everything gets treated the same as the highest risk element. Clear understanding of risk vs risk appetite can enable you to take more care where it's needed, but loosen the reins where you can in return for greater speed to market. Investing in detailed risk management understanding can pay off, not just in penalty avoidance but in ROI too.
Taking the longer, more expensive road
Investing heavily in initiatives of scale that have proven effective in other markets or industries (i.e. acquisitions or partnerships with other industry players) whilst neglecting customer research and their involvement in the process of making that decision. This well known approach not only requires a longer timeframe to implement, it can also bring low ROI given the investment is so high but without a clear line of sight to how it’ll serve customers. Organisations consistently under-estimate the task of understanding their customers let alone deliver personalised experiences - when was the last time Instagram or Google pitched a product you already have or are not interested in - and they are MASSIVELY more resourced in the two key resources required; data and capital.
What has worked well for us, and also globally
Iterative co-design for product development
Proximity in the process of product development that means building things with customers and not only for them. Involving them in the definition stage of what they need, testing early pretotypes to validate or debunk assumptions about what they think they need versus what happens when they actually get the thing they asked for, think of the good old ‘build me a traffic light vs fix traffic for me’ scenario.
Methodic learning with reflection combining human and machine
With AI now in the picture, it seems we can easily get a great amount of synthesised information and answers with just a few prompts, and this is a great lever to keep your learning muscle active. But it has to be used in tandem with people’s real-life experiences and reflections to actually capture what is happening here and now, in your market, to your customer base.
Reach out outside of your bubble
Seek to learn from others, outside of your customer base, that can bring new perspectives into your offering to develop value for them. Focus groups, interviews, events, conferences are some of the avenues you can use to start a conversation that can lead to more learning. List the burning questions you have about your product or service and get out there and find out.
Combine conversations, interviews with delivery and on the ground learning and you can get the best of both worlds. At X is Y, we help clients improve their data analytics practices and execute their strategy on a daily basis, and we want to combine practical lessons learnt with insights and reflections from leaders from other industries and markets to enrich what we’re capturing in our day to day job. We’re now working on a whitepaper that aims to get some collective insight on just that. If you want to participate in this whitepaper or receive it when it’s published, contact us so we can keep you in the loop.
Measure what matters
Be very clear and honest about what your goals are in the context of customers. Develop high quality metrics that represent progress and continually evaluate against this. Be specific about what comprises a good experience and for who. Is it look and feel? Is it speed? Is it price? Specific metrics will enable you to take specific action. Aggregated or multi-mode metrics like NPS, might give you a warm fuzzy when it's high or anxiety when it's low, but can be completely useless when it comes to understanding what and what you can do about it...
Time spent defining these things up front will eliminate a lot of wasted effort in the long run chasing fireflies...
A matter of mindset over methods
Last but definitely not least, your organisation’s emotional intelligence (EQ) matters. Bringing customers into the journey of developing a product or service for them can be an unknown or uncomfortable experience. Your teams might feel exposed, vulnerable or inadequate, and your customers might feel the same way. Although this might happen, spoiler alert, they will definitely feel curious, empowered and on the right track towards creating value for others, which will most definitely bring good things for your people and customers.
But this doesn’t happen without the right conditions in place. Building a culture of psychological safety through practices like Radical Candor, to acknowledge and normalise those feelings in the workplace, is paramount. Building real connections that allow us to be open and bring our humanity to our work will make all the difference in your delivery.
The more we put ourselves out there to learn from our customers (whoever that might be), the more likely we’ll be to understand the problems in depth enough to create valuable solutions for others in an iterative fashion that creates a virtuous cycle of value for all of those involved.
