Customer Discovery and Insight for Startups and Business
We live in the age of the customer. In developed markets like the United States, Singapore, or Germany people are always connected, have an abundance of choice and unending sources of information via Google, their social networks and whatever they consider their ‘trusted sources’.
The pressure has never been greater for brands to have close and insightful understanding of their customer. Startups need to design products and services that meet real customer needs and desires, or they falter or fail. Consumer businesses need to understand what their customers face in their daily lives that may lead to a purchase. Business-to-business marketers need to understand the decision journey for buyers, who the ‘buying committee’ includes, and what the emotional drivers for an equipment purchase might be.
Customer discovery is the art of understanding people’s needs and what solutions for them really look like. It always involves listening and engaging with people. Customer research requires time, effort, openness and empathy.
Unlike many other parts of the marketing supply chain, research has not been completely turned on its head by innovation. Small innovations like online surveys or the way people can test digital products have added some insight. Rather than ‘tech’, it has been technique that has improved customer research. Design thinking and human-centered design – two sides of a coin – have given us a toolbox of techniques to get information from would-be-customers. You can get a decent “playbook” of useful techniques from the Luma Institute’s Innovating for People: Handbook of Human-Centered Design Methods. These disciplines introduce creative ways to reveal pain points - both the emotional and rational drivers and barriers. They can engage customers in co-creation exercises. People sketch what the solution looks like – not to deputize them as product designers but, rather, to get better ideas for what a product, service or marketing program ought to do.
You don’t need to be a big brand or a big market research firm to get a lot out of customer discovery. Here are three research approaches for startups and small business to gain the customer insight needed to consistently make great products and services and deliver marketing with impact.
A note about Qualitative vs. Quantitative Research: Research pros will often balk at using insights gathered through qualitative means only – asking a small number of people for input – unless they are backed up by statistically-relevant, quantitative research – asking a cohort of a certain size that represents your customer audience. Often, it is this quantitative process of assembling and incenting a panel, delivering surveys and expert analysis that costs an arm and a leg. Firstly, yes, qualitative and quantitative both serve a purpose. Still, inexpensive Facebook surveys can help reach a lot of people or their opinion. But even if quantitative is out of reach, qualitative research can be used “directionally” to great purpose. Some research is better than no research.
Discovering Customer Needs and Solutions
Finding opportunities for new products and services to meet unmet needs
Revealing disruptive, new ways to solve a customer problem
Understanding the most urgent and important pain points or positive opportunities
We call this “formative research” since it is helping form your ideas for a solution. It suggests the business or marketing leader walk into the process with an open mind. You genuinely want to hear from customers and are willing to change your solution.
Customer Journey Mapping – What is the process a customer goes through from experiencing a need, researching and then acquiring a solution? That can be described as a journey organized around the customer experience. Customer Journey Mapping is a method of inquiry and recording the results. It can often reveal the most painful or rewarding part of a process. Structured well, business leaders can learn the rational and emotional drivers. We all know that emotion drives many purchase decisions above the purely rational. You don’t have to be an anthropologist to pull it off. If this sounds too big, it isn’t.
Jay Ashcroft, Growth Manager, put it this way, “The aim is to look for quick wins and to think about what friction exists at each stage.”
Online Focus Groups – Getting a group of 4-10 customers or stakeholders together and thoughtfully asking their thoughts is easy and hugely valuable. It’s now easier than ever with Zoom and new tools like Miro which help you moderate a discussion in a way that gets everyone talking.
1x1 or 1x2 Interviews – Often it makes sense to go deep in a conversation with an individual. You can learn more about their particular journey. Interviewing two people has the added benefits of two perspectives and that they will build on each other’s comments.
Market-Sizing and Opportunity
Defining how large the customer target opportunity is
Deciding which geographic markets to pursue and prioritizing
Ratifying your business model against the potential to scale
One of my pet peeves in a startup investment pitch is the slide that states there are 328.2 million people in the U.S. and 123 million households. As if your market potential is defined by everyone. We were lucky to have Lisa Wellington, a data and analytics leader from Coca Cola speak to our Next Gen Digital Marketer students at CNM Ingenuity. She stressed the importance of starting with target customer audience sizing first. Business leaders and marketers must know what the potential audience/customer reach is to design and evaluate any marketing program. At the startup phase, this same logic goes for understanding the potential market size. How many customers likely to buy your product or service are out there?
Lisa’s second great point was to leverage secondary data. There is more publicly available data about populations and markets than ever before. Whether that is public data from local, state and federal government to academic data or private data from some arcane source. She was able to uncover a database of household (HH) budget allocation for about forty-five types of foods. That type of resource can be invaluable for any food or beverage startup. Here's a list of data sets for the City of Albuquerque via University of New Mexico - everything from Wifi spots to Route 66 signs. Being creative with data sets is more possible today - even on a shoestring - than ever.
Improving or Innovating Customer Experience
Improving customer retention and spend
Reducing pain points in your own customer experience (or discovering moments of delight)
Prioritizing an innovation path for your products and services
One of the keys to an enduringly successful business is to always stay close to your customer. My mother owned a clothing store back in the seventies. She walked the floor and chatted up customers. She met with manufacturers who had their own direct line to customer input. Small businesspeople often have this close relationship with their customers. It’s not enough anymore. With so much customer experience and discovery happening digitally, businesses must take extra steps to continuously gain insight. What do customers like or dislike about doing business with you? What part of the digital loyalty program delights or discourages? What product or service innovation would trigger them to gush about your business to their friends and family?
Voice of the Customer-lite – Many big businesses have “voice of the customer” programs within their customer experience teams. You can think of this as a mosaic of short surveys that ask customers what they think about the onboarding process, the service call, the installation experience – in short, all the customer touchpoints. So, maybe hundreds of surveys whose results are artfully ingested in a database to reveal insights. How about you simplify this down to 2-3 surveys around the most important touchpoints in your business?
Continuous A/B testing – What’s the best product page to drive online sales? Which email design and content drives the most repeat purchases or social sharing from customers? Which menu leads to more customer visits? Being able to test one product page with 100 online shoppers and another with a different 100 shoppers has never been easier. Still, the habit and simple infrastructure to do that evades many smaller businesses. A true customer-centricity starts with the humility to acknowledge that we cannot know that works best for our customer. Always be testing.
Co-creation with Customers – What is your next product innovation? How can you make a good service, great? Inviting a group of customers together in a moderated workshop to have them “co-create” new solutions can be hugely efficient. DHL ran some 6,000 customer engagements in their innovation centers to uncover next services like “Maintenance on demand” using sensors to anticipate vehicle maintenance needs. They use scenario planning which is a specific engagement technique – one tool from the design thinking toolbox.
“DHL’s approach takes customers on a time journey which showcases a four-quadrant view of what the world could look like in 2050. The quadrants are radically different from each other; one quadrant is always a doomsday scenario and its opposite is a perfect world. The power of scenario planning is that it breaks mindset.”
Even startups can use customer co-creation techniques. Budweiser held a brewmaster competition in tandem with consumer tastings to create a new golden-amber lager, Black Crown. I am going to go out on a limb here and bet the best Albuquerque breweries - Bosque, LaCumbre, Bow and Arrow and more - have done a bit of this co-creating in their time.
Overcome the Obstacles
The three big obstacles for startups and small businesses in discovery and insight remain:
Personal passion – entrepreneurs and small businesspeople bring their own ‘smarts’ and passion to their business. They can often confuse their belief and conviction in their business to knowledge of their customer. In short, they think they know enough.
Lack of familiarity – research takes care and skill that is often foreign to many business people. They simply don’t know how to do it and fear it’s a costly option.
Belief in the value – related to the other points, they can see this as a ‘nice-to-have’ vs. the key to enduring success.
Embracing customer discovery and insight in the age of the connected customer is critical to your business and a prerequisite to most investments in your startup.