Understanding Your Customers
Understanding customer problems and customer needs are crucial to any business. But where do you start? And what do I talk to my customers or potential customers about exactly?
To-Do Market Research or Not?
You’ve probably heard the saying from Henry Ford where you know someone asked if he would have asked the people what they wanted, they would have said faster horses. Rather than an automobile and obviously we know what happened with the automobile and the Model T. This is a valid point about understanding the market and that uneducated consumers may articulate the solution versus the problem.
With that, a misinterpretation occurs where people assume that there’s no need to talk to customers. Instead, the thought process is “I’m just gonna go build something really great and people will come.” Another example is Steve Jobs who is famously known for not doing market research. Unfortunately, this idea of not doing market research often gets misunderstood and twisted. It is much easier in the near term to ignore what potential users and the market needs. At the end of the day, you still have to understand the customers’ problems.
Henry Ford didn’t just go build an automobile because he was like ah this might work. No, he understood that the problem was getting places faster. While he didn’t go ask them what they wanted, because most wouldn’t have understood his vision of automobiles, he still understood the market’s need. Ford really focused on the problem of creating a better mode of transport to get people places faster.
Understand Your Customers Problems. Not Their Idea of a Solution
The key thing to take away and it’s something I’ve been trying to apply in my own startup is understanding customers’ real problems. In order to accomplish this, I’ve set up calls with potential users diving into their needs. I’m really looking to understand what their problems and unmet needs are when it comes to personal finance without leading them to what I want their answers to be. Questions I focus on are around how they make investment, saving, and debt reduction decisions.
What is the real challenge they have? How do you currently do what you’re doing? What are some of the pain points? Your frustrations? And not focusing too much on the “Oh it would be cool if X Y & Z happened” feature feedback. While that information is valuable and something to take note of, what you really need to do is understand what’s the core challenge/problem that your customer is facing. Then looking across a large group of folks to see commonalities. Versus one person said X and another said Y we should build all those features.
One person wants a fancy dashboard. Another person wants personalized recommendations for investment. Yet someone else wants automated in-app debt reduction techniques. All of those are all really interesting ideas. But if you boil it down there’s actually one or two actual challenges or overlaps. That is where you need to focus your attention. Determine what are the features that will solve those problems.
Problems Translate Into Feature Prioritization
Ultimately that’s what I’ve been doing early on in my startup journey is really trying to understand what are the key problems and the features that will solve them. Understanding your customers is a crucial step as you build out the first iteration of the product. Especially since it most likely won’t have all the bells and whistles. Likely it won’t be the prettiest thing either. One goal of the first product you ship is to be functional and solve the problem.
My advice is to figure out which problem you need to solve. I encourage you if you are building a company or an entrepreneur is it to really focus on the problem versus the solution. This will inform which features you prioritize or how you decide to build your product.
Go Beyond Understanding Your Customers’ Problem – Find a Motivation to Change
Additionally just identifying a problem doesn’t mean you’ll have the next big business. We can go all go out and pretty easily identify some big problems out there in the world. The other question you need to ask yourself is: “Is there a want to change?”
I was speaking with someone that has a ton of startup experience. He has started and been involved in starting over a dozen different companies. He took 3 of the companies public through an initial public offering and had the rest acquired. One of the things that he noted was that just identifying a problem doesn’t mean you’ll have success.
For example, you might have a friend that is a smoker. We all know that smoking causes cancer and is bad for you. You probably shouldn’t do it or you probably should stop smoking. But just because someone knows that doesn’t mean that that the person is motivated to quit. So You may have a friend who is a smoker that doesn’t care to change. They enjoy smoking, it is what it is. It’s their addiction and they are more worried about other things. They say “I’m going to keep smoking.” Then trying to sell them on how to stop smoking isn’t necessarily going to work. That was his analogy of saying you want to find a problem but also you want to find a motivation to change.
Now that you’ve identified your customers’ problem. Can you identify the want to change? Are they motivated to take action or are you going to have to spend tons of time and money educating your consumer? Neither answer is wrong, but it is much easier to build a successful business when an intrinsic motivator exists.
Next Steps
Now you need to determine how you will go about understanding your customers. Will it be through 1:1 interviews, phone calls, social media gathering, surveys, or focus groups? There are lots of ways to gather intel. How you do it will depend on your product, resources, and potential customers. Be sure to focus on the problem versus possible solutions. Also, ensure to ask questions around wanting and needing to change.
Once you’ve got that information then you can focus on building your product, go-to-market, sales/marketing, and all of the other important details. Good luck and keep grinding!