You Don’t Design Customers, You Understand Them
And because we think we already do, our businesses fail
42% of startups die because they seek to tackle problems that are interesting rather than those that serve an existing market need. The shocking statistics aren’t limited to startups: 72% of product launches fail to meet their revenue target.
Is incompetence the explanation for this phenomenon? No.
There are lots of examples of businesses that have fundamentally good conditions for becoming successful: businesses with great technology, great data, a great team, great expertise, great advisors, etc. These sound like bulletproof conditions for success — nothing can go wrong, right?
One of the main reasons these sorts of businesses fail is flawed innovation and entrepreneurial processes. They are too caught up in what they believe the customers want rather than what the customers actually need. In other words, their way of thinking is too product-centric rather than customer-centric. Instead of testing for the question “What does the customer want and need?” and conducting research based on desirability, many startups and corporations test feasibility: “Can we develop it?”
Established corporations are often optimized for execution and implementation and neglect the search for customer-centric value propositions. Work teams are asked by executives to make business plans, which are then funded if the plan seems attractive. Even though the plan looks attractive, it is likely to fail if there is no market need. Georg Tacke, co-CEO of Simon-Kucher, and Madhavan Ramanujam, partner at Simon-Kucher’s Silicon Valley office, both advocate that marketing and monetizing concerns should be brought much further forward in the research and development process to substantially increase the chance of success.
You Don’t Design Customers, You Understand Them
The key realization corporations need to reach to successfully innovate is that you don’t design the customers, you understand them. The value proposition is where you make choices: you point out which jobs, pains, and gains you want to address and pair them with a solution. The best way to do so is to get out of the building to understand your customers, then shape your value proposition around them.
This might sound like common sense, but it’s definitely not common practice. For many businesses, the innovation process is a hit-or-miss game, where they rely on luck. They tend to focus on the product or the service rather than the customer’s job. As visualized in the picture above, their initial focus is on 2, while Job Theory advocates that you should start by focusing on 1.
To compete against luck, you must understand the customer first and then design value with product and service accordingly. It’s vital that corporations avoid testing the solution before first developing a good and evidence-based understanding of the customer’s problem.
When you test the solution and the customer rejects it, you won’t know if the rejection is because the solution is not good enough or because the customer problem is irrelevant. This underlines the importance of generating evidence around what matters to the customers first. Furthermore, understanding the customers’ jobs, pains, and gains is the cheapest and fastest research you can do.
We Think We Know What Customers Want
There is a correlation between how smart and experienced we are and the likelihood of believing we are right. Sometimes, we become overconfident and feel so certain about what customers want that we think it isn’t necessary to test our ideas before we go to market with them. The risk of launching a product that will fail increases as we rely more on our opinion than on hard facts.
When we rely on opinions and feelings there is a risk that we might be hallucinating. The customer reality can only be disclosed through testing and customer discovery. The overlap between the ideas of the corporation and the customers’ actual needs increases proportionally the more you test and perform customer discovery. The overlap might be bigger and it might be smaller than assumed but without testing, we cannot be sure.
The Biggest Error in Customer Interviews: Mistaking Opinions for Facts
The single biggest error when interviewing a customer is to ask for opinions or assumptions rather than facts. If you’re not trained to conduct good customer discovery, you’ll most likely immediately ask questions such as “Do you like this idea?” or “Do you prefer this solution?” or “Would you acquire this?” These questions will solicit opinions. Opinions aren’t always reliable, as experience shows that people rarely do what they say.
Investigating facts mitigates the risk connected with new ideas — relying on people’s opinions doesn’t. Even though your service or product does something new, it’s preferable to pursue evidence from the past. Your job is to match new behavior with evidence from the past, as this strongly indicates future behavior.
Questions should probe for tangible facts. You shouldn’t ask, “What is the challenge, in your opinion?” Instead, you should ask, “When was the last time you met this challenge?” or “Can you describe what happened the last time you faced this challenge?” or “When is the last time you searched for a solution for this particular challenge?”
The customer discovery process is not about selling; therefore you shouldn’t lead with the solution during customer interviews — at least not until you have strong evidence of what the customers’ jobs, pains, and gains are. The interview is framed around what you’re interested in and not what the customer is interested in when you commit this mistake. You should always remember that your task is to identify and validate relevant customer jobs, pains, and gains.
Another common mistake in customer interviews, besides asking the wrong questions, is to be satisfied with superficial evidence when asking for facts. It is important to dig deep and truly understand the customer.
If the customer has revealed a challenge, then you should ask, “Why is this such a challenge?” or “How do you distinguish between success and failure regarding this challenge?” When the interviewee claims, “I need a bigger machine,” then you should instantly ask, “How much bigger?” and “What’s the minimum improvement that still qualifies as satisfying?” Bear in mind that you can’t assess if your solution creates value for the customer if you can’t quantify how the customer measures success and failure.
Customer interviews are a great technique to quickly and cheaply get early customer insights. See the following five guiding rules when conducting an in-depth interview.
Five Rules for In-Depth Interviews
The in-depth interview is a so-called open-ended interview that focuses solely on understanding the customer. To accomplish this, you should follow these five rules:
Rule 1: Adopt a beginner’s mind. Listen with a fresh pair of ears and stay curious to explore unexpected learnings about the customer.
Rule 2: Listen more than you talk. Your goal is to listen and learn, not to inform, impress, or convince the customer of anything.
Rule 3: Ask why to get real motivations. Follow-up interviewee answers with new why questions, for example, “Why is it important to receive a personal handover of your car following a maintenance visit?”
Rule 4: The goal is about learning, not selling. Don’t ask, “Would you buy our solution?” Instead, ask, “What are your decision criteria when you consider changing a supplier?”
Rule 5: Don’t mention a solution. Don’t explain that “Our solution does…” Rather ask, “What are the most important things you struggle with?”
Are Gains the Opposite of Pains?
Gains are often mistakenly perceived as the opposite of pains. In fact, a pain is something that irritates the customer or even makes him feel dread. A gain is, on the other hand, something that exceeds the customer’s expectations. For instance, when you get into your car and turn the key, it’s a pain if it doesn’t start — but if it starts, that’s expected and therefore not a gain.
Three simple hacks can help you go beyond thinking of pains and gains as polar opposites:
- Define the expectations bar. If the expectation isn’t met, that will be a clear pain for the customer.
2. Consider the continuums that pains and gains could live on.
3. Clarify the boundaries of the continuums.
Keeping these three simple hacks in mind can help you in the process of mapping the customer profile. You have to get out of the building and test your presumptions on jobs, pains, and gains with actual customers because this will lead you to much better outcomes. In the value proposition designing process, testing presumptions on customers is a crucial step — that is where you go beyond what could still be a biased and partial understanding of customers’ pains and gains.