Monday, November 30, 2015

Will the Real Customer Please Stand Up?

I can remember as a boy watching the television game show is “To Tell The Truth” when the weather was nasty and we couldn’t play outside. The show originated in 1956 and has been produced off and on ever since, including running in syndication.  The premise of the show was that three contestants all claimed to be same individual who had some unique distinctive profession, hobby or experience.  One of the contestants was the individual. A panel questions the three contestants to try to determine who is “telling the truth” and who is making it up.   The contestant won if they could fool some members of the panel.

Have you ever felt like this when you were developing a new product or service?  There are several people or organizations who you think would benefit from using your product or service.  You are trying to get a comprehensive list of user needs and you keep getting different answers.  And soon you are wondering, “Who is the real customer?”  Unlike the game show, we can’t stop after ten minutes of questions to ask, “Will the real customer please stand up?” 

This leads us to the fundamental question of how to determine the real customer.  Is it the person who purchases the product or service?  Is the person who uses the product or service?  Is it the person who is advising the purchaser?  Is it the person who provides the money that pays for the product or service?  Is it the user’s customer who receives benefit because of how the user employs the product or service?  Granted sometimes the answer to those questions may be the same individual, but many times it is not.

Unfortunately the answer is, “All of the above.”  Which means that understanding customer needs and providing customer value can become confusing and complex.   This is one of the reasons why so many companies don’t even bother.  Instead they have the marketing organization create a “value proposition,” push the product out to the market, and see what happens. 
In another post I will talk more about discovering and understanding your customer perception of value.  For now, let’s look at a few principles that should be followed if your company decides to use the approach of just pushing something onto the market to see what happens.  The key to success with this approach is marketplace feedback and rapid production and marketing iterations.  Let’s look at five characteristics your company needs to be successful with this approach (besides luck):

  • Quick customer feedback.  Assuming you get customers, you need a mechanism to get feedback from your initial customers.  This is usually through direct contact by your sales or marketing departments.  You need more than just a “Like” on Facebook.  You need to understand why they bought your product or service, how they used it, and the result.  Knowing this will allow you to understand whether the product or service is creating value for your customers.  This will inform both your updated marketing and your product development iterations.    

  • Investigate the “no-sales.”   To the extent possible, find out why people did not select the product.  If they viewed the website or visited the store, ask them.  If they never heard about the product, find the communication barrier.  Knowing why a customer does not buy is just as important as knowing why a customer does but a product.  Again, it will inform both you updated marketing and your product upgrade iterations. 

  • Rapid product change.  The likelihood that the product or service you offer will exactly hit the market is low.  There are just too many unknowns.  So you need to be able to quickly modify the product or service to respond to the market feedback.  This has implications for both the product design and your product development process.  Your product should be modularized to allow for rapid redesign of selected modules.  In addition, you probably need to be using one of the Agile product development methodologies.

  • Tailor the value proposition.  Once you find out what is working, you can tailor your message and your marketing to better fit a target audience.  Customer testimonies are examples of the use of the product are always great advertising.  In addition, you can select your market channels that best reach the market segment you are now going after.  A clearer message of the product or service value and a more focused marketing channel should lead to more potential customer understanding the value, which will drive sales.

  • Be prepared for success or failure.  The last point is to be prepared for both success and failure.  Success can lead to a quick spike in demand.  While that is great, it requires capacity to meet the demand.  Have a plan for how you would add capacity.  Don’t cut corners when you add capacity.  Otherwise you may create a quality problem which leads to a quick loss of customers and creates a negative impression in the market about your product or service.  Of course, if the demand doesn’t materialize, you need to repurpose your capacity.  Set some clear thresholds at the time of market introduction that will indicate the need to add capacity or cut production and sales.  Set those while everyone is still thinking looking at the situation from a logical perspective, once you are into the day-to-day management, it is hard to remain unemotional about those decisions.

Following these principles can help you find and focus on your target market.  It will probably take one or two iterations, but soon the “real customer” will become clear. 

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