Building a Customer-Driven Data Culture.

A guide for product-focused, software startups.

With the rise of the Lean Startup and the availability of powerful web analytics, data-driven product development has been widely adopted. This has enabled startups to move faster than ever before and create more value for their customers.

I’m a big proponent of this approach, but using data-driven language (e.g. Activation, Retention, etc) to focus your organization can have its challenges.

First, it’s speaking the language of the business, not the customer and that makes it harder to embed customer empathy into the organization.

Second, discussions start to revolve more around improving numbers, than improving customer lives. This creates distance between the company mission and day-to-day initiatives.

Third, it can create silos within the organization, as teams focus mainly on their product metrics. This impacts cross-team communication and as a result, the number of opportunities for collaboration.

To solve these challenges, I believe companies must change their language to be more customer-focused, in the way they talk about initiatives and goals.

Laying a Customer-Driven Foundation

At its core, being customer-driven is about understanding and articulating the primary customer goal for each product and the stages they go through in pursuit of that goal; and layering that on top of the product funnel and metrics. Here’s a guide of how to approach it.

Step 1: Product Value

This is something that has probably been defined in some sense whether it’s on a marketing page or internally. A product’s value is the customer’s answer to the question, “What is the single greatest benefit of [product x]?”.

For example, if a software platform is focused on back-office solutions, a particular product could help customers “untangle their accounting, easily” or “get paid faster”.

Step 2: Customer Lifecycle

With the product value proposition defined, it’s much easier to look at the stages customers go through in pursuit of that goal.

For simplicity, I recommend breaking down the customer lifecycle into three stages. Here are questions that can help do that:

1. What is the goal of the user when they first enter the product? This provides the answer to the first stage of the customer lifecycle and should map neatly against your activation metric.
2. What will the customer be able to do once they’ve completed the initial goal? The answers here should equate to why customers would continue to find value in the product and they should fill out the last two stages.

As an example, if we were again talking about a back-office solution, the initial goal of an accounting customer would be to organize their finances (stage 1). Doing this enables the customer to understand their business’ health (stage 2) and prepare for tax time (stage 3).

Step 3: Goal-setting and Application

In laying this foundation, the stages of the customer lifecycle must bubble up to the goals of each team.

Building on Ben Yoskovitz & Alistair Croll’s One Metric That Matters, each team should have a single stage of the lifecycle that they focus on at any given time. It’s by encouraging that focus on the customer, that the conversation starts to change.

Organizational Benefits of being Customer-Driven

First, there is power in using consistent, clear language across an organization. This is enhanced by using the language of the customer as it is most easy to identify with, for all team members. It also embeds the customer mission into daily conversation.

Second, applying this framework uncovers common customer goals across products and features and puts a spotlight on natural opportunities for cross-team collaboration and helps produce a more seamless platform.

Third, it instills customer empathy and long term thinking into the organization. By focusing on the entirety of the customer lifecycle, teams are not only considering what’s going to drive customer retention once but what’s going to get customers to come back as their needs change. It’s more of a well-rounded way of looking at solving customer problems.

To summarize, adopting a customer-driven culture transforms how teams think about the business they’re helping build.