From Harvard Business Review · Vikas Mittal · · 2m
What Customers Really Value
Executives prioritize wrong customer needs due to behavioral biases, cutting costs and boosting revenue with data-driven focus.
In brief
Executives prioritize wrong customer needs due to behavioral biases, cutting costs and boosting revenue with data-driven focus. Companies using statistical models to identify key customer value drivers improve sales by 9.8% and margins by 43%. Originally reported by Harvard Business Review.
The Problem
Most executives think they understand customer needs but rely on intuition instead of data.
Executive Confidence
CEOs claim they meet customers monthly and monitor competitors closely to stay ahead.
“Our sales team meets with key accounts monthly and responds immediately to their needs.”
The Study
Researchers studied 72 companies across industries with $10m to $20bn revenue over seven years.
What Executives Get Wrong
93% of companies spend 4-12 hours weekly gathering customer feedback but misinterpret it.
Customer Priorities
Employees list quality, service, sustainability, and competitive price as top customer values.
“quality (100%), service (100%), sustainability (100%), competitive price (98%)”
Executive Missteps
Executives prioritize wrong drivers, leading to shifting strategies and poor customer outcomes.
The Fix
Use statistical models to identify high-impact customer value drivers and align strategy around them.
Step 1: Surface Misalignment
ITI Manufacturing cut initiatives from 65+ phrases to focus on two key customer value drivers.
Step 2: Determine Lift Potential
ITI found communication and ongoing support drove 9.8% sales growth potential.
Step 3: Incorporate Daily Work
ITI integrated weekly customer updates into every employee’s job description.
Step 4: Cut Non-Value Activities
ITI reduced sales per employee time from 17% to 19.3% above industry peers in four years.
Step 5: Market After Execution
ITI waited to market its strategy until it achieved weekly updates and issue resolution.
Results
ITI increased sales by 19.3% above industry peers and margins by 43% in four years.
S-SET Case
S-SET cut quoting time from 18 hours to under five hours through focused initiatives.
The Science
Statistical models outperform intuition in identifying what truly drives customer value.
The Bottom Line
Companies using data-driven strategies see 9.8% sales growth and 43% margin improvements.
The key point
Companies using statistical models to identify key customer value drivers improve sales by 9.8% and margins by 43%.
