Red and Yellow Strategy
Sense The World Through Your Customers’ Eyes
How to find out what your customers really want
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A CEO opened the discussion about strategy with the following words:
“Our goal is to quadruple the value of our business in five years. We’ll do it by satisfying our clients’ needs for attractive prices, fast delivery service and a wide range of products.”
If you want to undermine your strategy from the very beginning, do what this CEO did.
But there is a better way.
A great idea that no one needed
Some years ago, I joined the board of a logistics company as an independent director and the strategy committee chairman. Let’s call it XYZ.
XYZ had a strategy, but the founders believed it needed a fresh look.
One of the bedrocks of the strategy was customer service. XYZ did its best to be customer-centric.
XYZ’s clients were big international businesses, and XYZ managed their supply chains. If a NYC retail chain needed a new batch of sneakers from its Chinese factory, XYZ organized and controlled the whole shipping process.
“You sell — we ship,” the sales reps said to the clients.
Of course, XYZ’s clients wanted to know every nook and cranny of their shipments. They needed to see where every container or truck was at any given moment and when it would be unloaded in the clients’ warehouses.
So, XYZ leaders decided to create user dashboards on its website so that customers could trace their orders online.
When I joined the team, they had just received the first feedback from clients about the dashboards. And it was as warm as a snowman’s hug. There were few details that clients didn’t criticize.
The IT team made a list of improvements based on customer feedback, but I suggested talking to customers first. So we did and discovered that technical flaws weren’t the main issue.
The clients didn’t need dashboards — at all.
Customer research and strategy
The CEO I mentioned at the beginning of the article made two mistakes:
1. He started with goals (I call this approach ‘me-goals’ or ‘me-strategy’). You can read more about it here, here, or in my new book.
2. He said that his customers needed “attractive prices, fast delivery and a wide range of products” based on his own worldviews, not on customer research.
Saying so, he does not look more conclusive than a 17-year-old saying they want to take on the world and know what to do.
Strategy starts with customers and their needs. Customers are the only stakeholders who bring money into a business.
We need to answer the three following questions first:
1. Who will be our future customers, and why?
2. What are their needs?
3. Which of them we will focus on, and why?
And only then will we be able to think about goals.
We need to conduct customer interviews to find the answers to those questions.
Customer interviews
There are professional agencies that offer customer interviews, focus groups, and other types of customer research. But even if you resort to such services, I recommend that you also go out of the office and talk to your current and potential customers yourself.
Make sure that all your key team members conduct customer interviews, too.
Nothing can improve customer-centricity in your business more than a customer who says to your face that your product sucks.
Team members should learn about customer needs not from marketing reports but from their own experience.
Here are some tips on how to make your customer interviews more fruitful.
1. Don’t ask questions about your products. People don’t like to talk about you and your solutions; they want to talk about themselves and their problems. Ask them how they live and work, what their difficulties are, etc.
2. Never ask them questions like, “What product do you need?” It is not their job to build products; it is yours. Moreover, when people are asked such questions, their brains switch to the ‘expert mode.’ They want to make an impression, to look smart, so they will offer you ideas that will never work.
3. Don’t ask for their opinions; ask for facts. For instance, “What was your best and worst experience ever when buying and using such a product?” is much better than the question, “What do you like and dislike about a product?”
4. Observe more, ask less. If possible, observe your clients perform routine tasks related to the problem you’d like to solve. Use CJMs if necessary. How could you make performing these tasks easier, cheaper, faster, or more convenient?
5. If possible, visit your clients at home or at work. It is called ethnographic research. Let your clients feel relaxed and do things as they do them daily.
6. Read the book The Mom Test by Rob Fitzpatrick if you’d like to delve deeper into customer interviews.
When we visited XYZ’s clients in their offices, we understood why they hated the dashboards.
If a client’s employee needed to get info about a shipment, they had to:
1. Go to XYZ’s website.
2. Enter their login and password.
3. Find the shipment and the relevant data.
4. Copy-paste the data or write it down by hand.
5. Enter it in their ERP manually.
It was a nightmare. The solution was obvious: XYZ had to integrate its database with the clients’ databases so that the programs could exchange data directly.
Sometimes, no solution is the best solution.
What’s next?
So, you and your team have conducted dozens of customer interviews. Your notepad, as well as theirs, is full of notes and insights. How do you turn them into a strategy?
1. Create a database of your insights. By ‘insights,’ I mean either statements from clients you’ve heard in the interviews, like “We don’t want to use a mobile app for this task”, or your own ideas that crossed your mind during the interviews.
2. Cluster them. Group them based on certain criteria, such as ‘insights about delivery time’ or ‘insights about product cost. ‘
3. Visualize each group as a tag cloud or word cloud. Use free online services to create word clouds like this, this, or this one. Highlight the most common insights with a larger font. Print this in a large format and use it for brainstorming sessions.
Create a few ‘customer personas’ — anonymized profiles of typical customers. You can use a free template I created for you. I use it myself to conduct brainstorming sessions.
1. Imagine a fictional character. Never use real people’s data for this exercise.
2. Come up with the name, age, and trait.
3. Answer as many questions about the character from the template as you can based on your previous insights.
4. Add your own questions, if necessary.
Remember that your customers have only 16 basic needs, which dictate their purchasing decisions. They don’t have the need for “attractive prices, fast delivery and a wide range of products.” They want to feel safe, comfortable, and accepted. They want to strengthen their status. They want to live in a better world. Attractive prices or fast delivery aren’t needs, they are only the ways to fulfil them.
Answer the questions:
1. Which customers are most preferable for us, and why, based on what we know about them?
2. What their needs should we focus on, and why?
Use the techniques of lateral thinking we’ve discussed earlier to find new ideas for your future products and solutions. Choose customer needs for which you can create significantly more value with your future products and solutions than your competitors can.
So what?
If you conduct enough customer interviews, cluster the insights, brainstorm about your customer’s basic needs, and try to find fresh ideas for your future product, you’ll be able to answer the critical strategic questions:
1. Who will be our future customers, and why?
2. What are their needs?
3. Which of them we will focus on, and why?
4. What solutions will we offer to them?
Only then will you be able to set ambitious goals and ‘dream big.’
Dreaming big before you’ve done all the groundwork is like setting a goal to win a Nobel Prize by a specific date without even knowing how to read or write.
If you need my help with the aforementioned tasks, do not hesitate to comment on this article. We’ll find a solution.
Bonus tip
Today’s term translated into the most essential language in business — the language of needs and values, is brand.
A brand is not just a well-known name. Behind a brand stands a product that meets customer needs so well that they are willing to forgo using other products, even at a financial cost to themselves.
The book
You can download the book Red and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism for free by subscribing to my free newsletter by 15th of July.
Read also: Does your head know what your fingers do? The strategic meaning of feedback loops
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