How well do you know your customers?

The heart of every business is your customer. It is their needs, desires and aspirations that your business serves, and they pay your bills. However, few businesses have a structured process to understand what drives their customers to do business with them, and instead rely on untested assumptions.

An incomplete understanding of your customers can at worst end in disaster for your business, and at best result in falling short of your businesses’ potential. If you feel that your business is in a rut, often the root of your problem is misalignment between your product or service and the customers that you are serving.

Take for example the Segway PT (personal transporter). The Segway was one of the most hyped releases of our generation. It was a technological marvel that received critical acclaim. The famous Silicon Valley investor John Doerr predicted that it would be the fastest company ever to reach $1 billion in annual sales, and Steve jobs predicted that it would be “as big a deal as the PC” (later retracting and saying it “sucked”). The Segway was predicted to sell over 10,000 units per week.

In reality, over the next 6 years only 30,000 units were sold. The Segway was discontinued this year.

Had Segway undertaken a structured customer discovery process they almost surely wouldn’t have got so carried away with the technology and realised that there were many barriers to widespread adoption. Law enforcement agencies didn’t now how to police its use, it couldn’t handle stairs, it made the user look dorky and lazy and generally invited ridciule upon the user. To top it off, it came with a $5,000 price tag.

While Segway is an extreme example - a hugely hyped company that failed dismally - the pains encountered by Segway are felt by many businesses.

Some simple steps can help ensure that your business achieves its potential:

1. Use a framework like the Value Proposition Canvas from Strategyzer (free to download from https://www.strategyzer.com/canvas/value-proposition-canvas). Map out your customer’s Jobs (the things in your customers personal or professional life that they are trying to achieve with your product or service), Pains (the undesirable situations that they wish to avoid) and Gains (the desirable outcomes that they hope to achieve). This should be done with a diverse team from within your company, covering functions including operations, technical, marketing, creative and customer-facing staff.
2. While many businesses (such as Segway) treat internal strategy as fact, this should be treated as an educated guess to be validated or rejected by potential customers. Identify everything that needs to be true for this business to be massively successful.
3. Rank each hypothesis in terms of criticality (if you are wrong with a non-critical hypothesis it might be an inconvenience, if you are wrong with a critical hypothesis it will likely kill your business) and amount of evidence you have to support your hypothesis.
4. Focus on hypotheses that are critical but you lack evidence to support.
5. Engage with your customers in meaningful ways to address these. Some simple methods include customer interviews, surveys, reviewing data and running business tests.
6. With this information from actual customers you should update your strategy documents. Replace your initial assumptions with validated customer feedback.

This is the process of customer discovery in a nutshell. This should not be considered as a one-off event, but rather as a journey of deepening your understanding of your customer and adapting as they and your business environment evolve over time.

Customer discovery takes humility to recognise that you are not the expert in your customer, and to seek this information directly from them to serve them better. Get this right and you will have more loyal customers and a more profitable and sustainable business. Ignore your customers and you are leaving a wide open door to your competitors.

This is an article for Business Blindspots Tasmania. To ensure you receive our regular updates from expert business advisers across a range of areas follow our LinkedIn group.