One of the most under-appreciated aspects of the global economy’s Digital Transformation may be surprising at first blush: Customers have a lot more power now. While lax antitrust enforcement and the erosion of consumer protections might suggest otherwise, generally, consumers’ needs, desires, and whims are addressed in a multitude of ways, such that the customer gets to choose.
Globalization and the efficiency of creating multiple product models in multiple styles speaks to this phenomenon. The rise of online ratings and reviews, social media where product stories are shared (both good and bad), and the overwhelming amount of information means that grabbing attention in this endless fight for eyeballs is a daunting task.
In order to compete based on creating value for customers, it’s more imperative than ever that companies be truly customer-centric.
Forget Traditional Research
Dominance of traditional market research is one of the biggest obstacles in achieving “customer centricity.” Focus groups and complex multiple-choice survey questions might provide you with vague indications of sentiment, useful, perhaps, in massive marketing campaigns, but nearly useless in determining what you need to deliver to be competitive.
The first rule of customer discovery ought to be, “Don’t ask people to predict their future.” People are terrible at predicting their own future. They say they won’t buy, but then they do. Oftentimes, when people say they will buy, they don’t.
To further emphasize this, I recently filled out a lengthy survey that compared various credit card scenarios – several pages of 3 column, 12 row options. They tried to get me to imagine the scenario that I was shopping for a new card. However, it’s absurd to think that what I answered would have anything to do with what I would decide if someone called me on the phone and made me an offer. Humans just don’t work that way.
We do things all the time that we know go against our best interests with respect to health, financial well-being, or even our happiness at the moment.
Engage with Your Customers Differently
The way businesses engage with customers, and understand them, has to be different. Being customer-centric is not sitting around a conference room table, imagining what you would do if you were the customer. You must talk to them, seek to understand their motivations; observe them. Run experiments that elicit behavior from potential customers which indicates whether an idea has a chance in the market or not.
Remember, the mission of any company is to create value for customers in such a way that the business makes money. Steve Blank used to say that founders need to do the customer development work, because the only way they’ll believe something that goes against their vision is to hear it first hand. This is perhaps true in startups, but doesn’t scale. Leaders have to learn to delegate such decisions to the people spending time with customers.
If you’re going to hire people to do customer discovery work, I think that’s okay. But you need to understand what their methodology is, what they’re actually doing, and what the assumptions are that are being tested. The more you understand, the better you’re able to evaluate if you’re getting the truth.
The first rule of customer discovery ought to be, “Don’t ask people to predict their future.” People are terrible at predicting their own future. People say they won’t buy, but then they do. Oftentimes, when people say they will buy, they don’t.
Years ago we were working with a massive retail franchise, teaching them how to run experiments. We were preceded by one of the biggest design firms in the world that had created customer personas based on traditional market research methods. Their personas looked suspicious to me, composed of a strange breakdown of various demographics by percentage, topped off with a stock image photograph.
I asked our client, “Do these people really exist? If you had to, could you go to one of your stores and find them?” The answer was a sheepish “No.”
The “consumer has power” change in the world means you’re faced with uncertainty. What you knew to be true last year, maybe isn’t true today. Some things you knew to be true pre-COVID, aren’t true now. What is the need you’re addressing? Who are the people that have that need, that are ideal for you to go after? Do these people represent a large enough market segment for you to go after?
So the big question is: How do we get organizations to truly talk with customers? You likely already have some: account managers, product managers, customer service people? Form a cross-functional team that includes some of these people.
Conduct regular exploration days where you bring customers on site, and you allow anybody inside the company to interview them or to run experiments.
More on Experiments
Running experiments is a disciplined process of eliciting behavior that indicates whether an assumption is right or wrong. Intuit, the multi-billion dollar software company, has for a long time been a leader in running experiments. They might visit a small businesses, and say, “We’ve got all of this customer data for you about buying trends we think would be useful for you. We’re happy to run an analysis for you.” They would try to get the business to pay then and there. (In the end they would NOT take the money and would run the analysis anyway, always leaving the customer happy.) This is called a dry wallet experiment.
In conclusion, we need to double down on understanding our customers deeply in order to build products that provide value. Old market research techniques just aren’t effective in the face of massive uncertainty. Product managers should be out doing this. Designers should be out doing this. Engineers should be going along for the ride. Build exploration into your regular work to improve efficiency of execution.
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