Customer Understanding — What’s In A Pain Point?
Introduction
In venture building, the identification and understanding of customer pain points is critical. These pain points are not merely challenges that customers face; they represent opportunities for businesses to innovate and create value. Addressing these effectively can set a venture apart, ensuring its offerings are not only relevant but also highly sought after in competitive markets.
While Merriam-Webster defines “pain point” (as related to business) as “a persistent or recurring problem when it relates to a product or service that frequently inconveniences or annoys customers,” we find that this definition does not give us what we need to build a venture.
We usually define a pain point as a problem that, once solved, will unlock significant value for the stakeholder for whom the problem is solved (i.e., the customer). If it unlocks enough of a sustainable value, the venture can capture some of that value, allowing for the creation of a venture.
By focusing on these pain points, ventures can develop solutions that directly address real and pressing issues, thereby creating a customer for their solution, customer satisfaction, and driving business success.
In this context, we’ll explore the significance of pain points in the venture-building process, highlighting their role as catalysts for innovation and customer-centric development. Understanding these pain points allows ventures to align their offerings more closely with market needs and customer expectations, laying a solid foundation for sustainable growth and competitive advantage.
Identifying and Articulating Customer Pain Points
Identification Methods
To comprehensively identify customer pain points, a multifaceted research approach is necessary. This can include some of the following (or other) methods:
- Market Research: Conduct thorough market research to identify trends, challenges, and opportunities within a sector. This can include analysis of industry reports, market forecasts, and competitor strategies to understand the broader market landscape and pinpoint prevalent pain points.
- Expert Interviews: Engage with industry experts to gather in-depth insights into the specific challenges. These interviews can reveal nuanced technological, business, policy, market dynamics, and more pain points.
- Customer Interviews: Direct conversations with potential customers provide valuable perspectives on individual and organizational challenges. These interviews can uncover pain points related to costs, operational disruptions, technology adoption, and the need for new skills or knowledge.
- Observational Studies: Observe operational environments to identify practical challenges in real-time. Observing workflows, maintenance routines, and operational bottlenecks can highlight pain points that users may not explicitly articulate.
- Piloting: Often, we find that piloting a process (e.g., seaweed farming) can identify, validate, or cancel pain points for that specific process.
Articulating Pain Points
When articulating complex pain points it’s crucial to unpack and clearly define each aspect:
Comprehensiveness: Identify all dimensions of the pain point. For example, transitioning from coal-powered equipment isn’t just about replacing machinery; it involves cost, regulatory compliance, operational downtime, training for new systems, and logistical challenges of disposal or recycling old equipment.
Specificity and Context: Detail each facet with context. For instance, articulate not just the high cost of transition but also specific financial burdens like initial investment, potential operational savings, and long-term economic impacts.
Quantifiable Impact: Measure the pain points in dollar terms where possible. For example, “Companies face an average upfront transition cost of $X, with ongoing operational costs reducing by Y% post-transition, balanced against potential regulatory fines of $Z for non-compliance by [date].”
Actionable Implications: Break down the pain point into actionable segments. For instance, the financial burden can be addressed through phased investments, seeking subsidies, or implementing cost-saving operational efficiencies alongside the transition.
Stakeholder Perspectives: Recognize that different stakeholders may experience varied aspects of the pain point. For instance, operational staff may be more concerned with training and logistics, while executives focus on costs and regulatory compliance.
Ability for the solution to extract value: For example, if you create a shallow discovery marketplace (where there is a current lack of transparency but very few players with low costs of transactions), you risk allowing for the discovery but not capturing the transaction on the platform; hence not capturing the value created from introducing the players
Evaluating the value chain: By understanding revenue and profit pools, it is possible to see where the significant opportunities and gaps are.
By articulating pain points in this manner, ventures can develop targeted strategies that address the multifaceted challenges of transitioning from coal-powered equipment, ensuring solutions are relevant, actionable, and measurable in financial terms.
Prioritizing Pain Points and Translating Them into Venture Opportunities
Once customer pain points are identified and clearly articulated, the next critical steps are prioritization and translation into actionable venture opportunities.
Prioritizing Pain Points
It’s essential to prioritize pain points based on their impact on the customer and the business, as well as their alignment with your venture’s strategic goals:
- Impact Assessment: Evaluate the severity of each pain point and its impact on the customer’s operations or satisfaction. Pain points with higher negative impacts on customers’ efficiency, costs, or compliance should be prioritized.
- Strategic Alignment: Align pain points with the venture’s strategic objectives. Prioritize issues that, when addressed, propel the venture closer to its long-term goals, such as market leadership.
- Feasibility and Scalability: Consider the feasibility of addressing each pain point and the scalability of potential solutions. Prioritize pain points where solutions can be effectively implemented and scaled within the target market. Also, again, it is important to consider the ability to extract value from the solution.
Translating Pain Points into Venture Opportunities
The transition from identifying pain points to conceptualizing venture ideas is a crucial process that requires a deep understanding of the complete job-to-be-done, ensuring a comprehensive solution.
- Unpacking the Pain Point: Delve into each prioritized pain point to understand its various dimensions. This includes not only the direct issue but also its underlying causes, associated challenges, and the broader context within which it exists.
- Job-to-be-Done Framework: Apply the Job-to-be-Done (JTBD) framework to fully comprehend what the customer is trying to achieve in the context of the energy transition. This helps identify not just a single product or feature but a holistic solution that addresses the entire scope of the customer’s needs and challenges.
- Comprehensive Solution Conceptualization: Develop a solution concept that addresses all aspects of the identified pain point. This involves considering how the solution will alleviate the immediate issue, how it integrates into the customer’s existing processes or systems, and how it enhances the customer’s overall operational efficiency or compliance with regulations.
- Interdisciplinary Collaboration: Involve experts from various fields — technology, finance, regulatory, etc. — in the solution development process. Their insights can ensure that the proposed venture idea is robust, viable, and comprehensively addresses the identified pain points.
- Customer-Centric Validation: Engage with customers to validate the proposed solution concept, ensuring it resonates with their needs and preferences. This feedback loop is crucial for refining the concept and aligning it closely with the customer’s job-to-be-done.
- Piloting (if it was not done before): A key element within the WPML framework that enables the identification of the right solution and venture to be built. If it has been done before, it is a good opportunity to get the implications from the pilot in order to build the venture better.
By meticulously unpacking the pain point and employing the JTBD framework, ventures can develop solution concepts that are not just reactive to a specific problem but are proactive, holistic responses to the customer’s broader objectives and challenges.
Conclusion and Call to Action
Identifying, articulating, and transforming customer pain points into actionable venture opportunities is a core element of corporate venture building. This approach transcends merely solving problems, delving into a deep understanding and response to customers’ broader challenges and objectives.
The process begins with identifying pain points through comprehensive market research, expert and customer interviews, and observational studies, progressing to articulate these points with clarity and measurable metrics. Prioritizing these pain points based on their impact, strategic alignment, and scalability is crucial for focusing on areas with the highest potential for value creation.
Transitioning from identifying pain points to developing venture opportunities involves an in-depth analysis to unpack the full extent of customers’ challenges. Applying the Job-to-be-Done framework allows ventures to create holistic solutions that resonate with the customers’ overarching goals, ensuring impactful and enduring solutions.
Writer:
Sebastian Mueller, COO @ Ming Labs
With the support of Ziv Ragowsky, Partner @ Wright Partners
This article is written as part of Singapore Economic Development Board (EDB)’s Corporate Venture Launchpad 2.0 programme — an expanded S$20m programme by EDB New Ventures, designed to enable companies to incubate and launch a new venture from Singapore, supported by venture studios experienced in corporate venture building.
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