“You learn so much about a business in the months before launch, but your education really begins on the day that you open the doors to customers.” — Richard Branson
A CEO excitedly informed me that they had just fulfilled an order from a large customer. It was a small order but he was confident that they would get more business from this customer.
I congratulated him and asked him to collect feedback from the customer. This point always miffed the CEO. He believed that customers don’t know what they want “because Steve Jobs said so.”
We went back and forth until I asked him to speak to the customer just to prove me wrong. After a week of dragging his feet, the CEO got someone to complete the task.
Turns out that while the company had sent the right item, it didn’t solve the customer ‘s purpose. The customer didn’t bother to inform them and instead, placed an order with another vendor. My client didn’t receive an order from the customer ever again.
Such a scenario plays out over and over again in the business world. Once sellers fulfill orders, they never hear from the customer again despite not doing anything wrong.
Considering that human beings are good problem solvers, one would assume that we would’ve fixed this by now. Then why are customers so finicky with their purchase decisions?
The “Faster Horse” Syndrome
“If I had asked customers what they wanted, they would’ve asked for a faster horse.” — Henry Ford
This quote has turned into an aphorism for the business community. Steve Jobs allegedly echoed the sentiment when he said that customers don’t know what they want until you show it to them.
Leaders claim to know everything about their customers. But in reality, there exists a gulf the size of the Grand Canyon between what leaders think they know and what they really know because they’re busy spying on their competition.
In all this, the silent (and profitable) customers get neglected. Brands’ marketing material and sales pitches brim with jargon like “pioneers,” “synergistic approach” and “wholesome experience.” But no one talks about how they solve their customers’ pressing problems.
Customers compromise until they find a better alternative. When they find one, they take their business away without a word. (And we call customers finicky.)
The proof lies in the facts. Globally, businesses lose out on a whopping $98 billion annually because they don’t stay simple enough to retain customers. Also, innovative new business models are disrupting publicly listed companies. Yet, ironically, “no market need” continues to remain the single largest reason for the failure of startups.
But doesn’t listening to customers also push businesses down the wrong rabbit hole?
The Wrong Way to Listen to Customers
Listening to customers doesn’t mean asking them what they want. This is because customers often can just think of “more for less”. Plus, we could get tempted to listen to our loudest and latest customers who might unknowingly point us in the wrong direction.
For instance, a business owner stocked inventory with items that he didn’t sell just because a few customers asked for them. Eventually, his dead stock equaled two months’ turnover and lay in his warehouse for over a year. The waste of funds and space!
Customers cannot give you solutions. If they knew, they would’ve applied the solutions themselves. Customers know their problems. You can learn and grow by solving them.
Staying connected with customers aligns your goals with theirs. You can build a customer-centric business model instead of a competition-centric one.
It also makes it easier to sell what you offer. You don’t just know your customers’ problem but also how they describe it in their own words, which works wonders in your marketing content and sales pitches.
Finally, staying connected with your customers keeps you informed about customer behavior and changing trends. This means you can ship innovative products out the door faster than your competitors. It helps you engage your customers and turn them into loyal advocates.
Henry Ford might not have asked his customers what they wanted. But he gave them a faster horse, though not in the conventional sense.
Steve Jobs didn’t conduct market research before launching the iPhone. But he refused a deal with AT&T because his product managers insisted on talking directly to customers and collecting feedback.
Search engine and social media algorithms are listening to conversations — how humans engage with content — to become more intelligent.
Use Customers’ Data to Solve Their Problems
Don’t listen to Dogbert. Follow this simple 3-step process instead.
Step# 1. Reach out to your most profitable and highest volume customers (they might not be the same). Ask them why they buy what you sell and what their expectations are. This will highlight the problems that your product solves and also what customer expect from you.
When a client and I carried out this exercise, we asked their top 15 percentile what they prioritized while purchasing the product.
Unanimously, their answer in descending order of importance was: speed of delivery, customization, quality, and professionalism. Price ranked a distant fifth. (My client, on the other hand, believed price mattered most to all his customers.)
If you’re a startup that doesn’t have customers, connect with your target audience and ask them their problems.
Step# 2. Refine your business model to prioritize your customers’ expectations. If you’re a startup, create a mockup of a solution, share it with your target audience, and document their feedback.
No business can thrive if it merely sells products today. If you want a larger share of your customers’ wallet and the market, you must get into the business of selling solutions.
The client in the above point mentioned that he had casually asked a large customer why they didn’t buy from him. The customer said, “Your product is better. But my vendor gives me what I need.”
The University of California in Irvine remains my favorite example of doing what customers need. When they built the university, they just put the buildings in the grass. No sidewalks. The next year, they came back and put the sidewalk where the trails in the grass were.
Step# 3. Apply this business model to the sector that your customer is a part of.
By ethically accessing customer data, you can fulfill the core reason for a business to exist: to add value to its customers. Thus, while your competition will fight price wars, you’ll transcend into a league of your own when it comes to revenue, profitability, and customer loyalty.
Leaders commit a huge mistake when they ignore customer needs in favor of acquiring new customers, running daily operations, and spying on their competition. If you don’t care about your customers, they won’t care about your business. Without customers, there is no business.
Invest enough resources in to make your business keep its promise of improving your customers’ lives. They are your biggest source of learning.