Too Big to See : Part Three

“What do I wish I knew about my customers that I don't know how to find out?”

Without the technology tools to capture valuable customer information, are businesses forced to make blind assumptions about customer sentiment? In most cases, the answer is yes.

Are brick-and-mortar retailers aware of the percentage of visitors who walk out empty-handed compared with those who make purchases? Most of the time, the answer is no.

Businesses with basic tracking tools know the average purchase amount by dividing sales by gross receipts for the day. However, if only 35-40% of store traffic makes a purchase, the company does not realize the lost opportunity cost it incurs daily. Consider the impact on revenue if that 35% was raised to 60%. The business has a better chance of converting non-buyers into buyers if they recognize how much no-sales traffic there is.

It leads to one basic realization, which is that if a company knew more about its customers, it would better understand what they want. Why wouldn’t a company want to know this information? Is it that they don’t know what they don’t know? Unless they have a bottom-up approach to corporate culture and management, they are unlikely to learn anything new.

Prolific author Michael Lewis, writer of Big Short, Moneyball, and other popular books, recorded a podcast series on a theme titled “Against the Rules”. Season three focused on experts, and how businesses often look in the wrong places to find the expertise they need to improve operations and solve problems.

"Six Levels Down" is the title of the first episode, which refers to just what you are thinking. In a large organization, the person who best knows what a procedure is and whether it works as intended might be six levels below the C-suite.

That was the case in this story. An individual who was most knowledgeable about billing procedures, which, as we all know, is mostly what insurance companies do, worked six levels below the top in a large insurance company. This is typical of most large organizations.

There is less knowledge of what is really happening on the ground the higher one climbs the organizational ladder. The truth is, they don't know what they don't know, but they usually think they do.