What is customer knowledge?
Customer knowledge refers to understanding your customers, their needs, wants and aims is essential if a business is to align its processes, products and services to build real customer relationships.
Many companies do have knowledge of their customers, but frequently this is in a fragmented form and difficult to share or analyse and often it is incomplete.
Customer knowledge is becoming a big topic. One recent study of business failures concluded that often failure can be put down to complacency creating a gap between what you think customers want and will put up with, compared to what customers really want and will go to your competitors for.
Customer knowledge can be approached from two ends. Firstly, you could say that customer knowledge is the "collection of information and viewpoints that an organisation has about its customers". Using this definition, the role of customer knowledge management is to capture and organise this data to allow it to be shared and discussed throughout the organisation.
An alternative definitive of customer knowledge is that it is the "collection of information and insight that you need to have to build stronger customer relationships". From this point of view what you currently know about your customers may not be sufficient. You may need to put in processes and systems to gather more information and data about who your customers are, what they do and how they think.
For practical purposes, the truth is somewhere more towards the collection of information you have, rather than the information you should have. For example, we could go to the extremes of looking for a complete psychographic breakdown of each of our customers individually, but in practice this would be excessive. Consequently a judgement is necessary to determine what value you are getting from any customer knowledge you collect.
The aim of building up a strong body of customer knowledge is so that the company can build and manage customer relationships now and over the longer term. The information should be determining what to offer, when to offer it and how much for. In the long term the company has to design new products, offer new services, compete in new markets, but even in the short term your top salesman could go sick or be headhunted. Would you know enough to keep your accounts?
One problem with customer knowledge, is that it can be confused with CRM (customer relationship management) which is often used to describe contact management and analysis. Although there is some overlap, customer knowledge includes a wider variety of less structured information that will help build insight into customer relationships.
Ideally, customer knowledge should work at both a micro and a macro level. That is it should include information about individuals that helps explain who those individuals are, what they do and what they are looking for, and it should enable broader analysis of customer base as a whole.
Similarly, customer knowledge should include both quantitative insights such as numbers of orders placed, value of business, and qualitative insight such as the "MD's just been in post for 3 months, still finding his feet".