The Power of Customer Research: Why Startups Need to Listen to Their Customers
Startup companies are often lauded for their innovation and creativity. But 9 out of 10 startup companies fail - why? Because they don't listen to their customers. I've seen it multiple times - founder has a great idea, founder builds that idea into a product (or service), founder tries to sell the product or service, no one buys it.
This failure to perform is not because of lack of desire, lack of hustle, or even lack of funding. The number of startups that have tried to just "throw money" at a problem is staggering and highly disappointing.
The failure to perform is because the founder and their team get so caught up in their vision that they forget the most important aspect - customer is king.
Listening to customers is important for any business, but it's especially critical for startups. That's because the premise of starting a company is to answer an unmet need. But once the founder is in the trenches, building their company from the ground up, it is very easy to loose sight of their most valuable source of data - their customers.
Here are three things any founder can do today to make sure they are listening to their customers at every stage of starting a company.
1. Define your customer.
Most pitch deck templates and blogs talking about the best things to include in your pitch deck will tell you that you need to talk about TAM (total addressable market). The TAM of any company is the size of the prize - how big could we potentially get if we captured everyone in our market? But lofty numbers don't tell the whole story. Sure, you may be able to say that the currently market for digital marketing solutions is $56 billion a year. But that number does nothing to tell you WHO you are selling your product to.
As we are starting PuzzleLabs, the team and I have been going through this exercise regularly. We start by considering ourselves as our target customer. We need a tool to help us step up our content marketing game, and so we have a lot of experience generating content and then remixing that content for new channels and audiences. We've been through that cycle so many times it isn't funny. And so we can easily say that we know our target customer.
But that's not enough. Because 'people like us' aren't all that are in our target market. Our customers come from all walks of life - some are marketers, some are investors, some are CPAs, some are lawyers, some are media directors, some are technical product owners, and the list goes on and on and on.
So what we've taken to doing is defining each of our customers and giving them a catchy name. Some of the names we've given our customers include:
Social media maven
Lawyer for generations
You'll notice that each of our customers are singular - one person. Don't concern yourself with the size of this audience at this point. Just define them. And you can best define your customer by talking about a prototype person - that ONE individual who easily describes your group.
It's easier to talk to one person than it is to an audience. It's also easier to build something for that one person. This is especially true if you can talk to someone who fits that definition.
2. Talk to your customer.
Find your customer - that one person - and talk to them about the problem your product or service will help. The phrase "building the airplane while flying" is often used to describe the experience of starting a new business. The idea is that startup companies are constantly having to figure out new solutions to problems and adapt to changing circumstances, just like pilots have to do when flying an airplane. It's a way of saying that startup companies are constantly learning and evolving, and that they never really know what's going to happen next.
In this same way, you need to constantly be learning and evolving your product or service to meet your customer's needs and pain points. You learn what these things are by talking to them.
When you talk to your customer, you can't every ask them "why?". Why is that? Because your customer doesn't know you. YOU don't even know why people do what they do. All you can learn about is WHAT people do, HOW they do it, WHEN they do it, and WHERE they do it.
I remember sitting in a customer's home in California and asking her to spill something on her countertop - like she normally does - so I could watch her wipe up the spill with some paper towels. I then asked her how often spills like this occurred in her home. I then asked her to tell me what she did the last time a spill like this occurred.
All of this was data for me to consider usage patterns of paper towel consumers. With that information, I could then inform marketing strategy (how do we talk about spills and paper towels?), product formulation (what features do we build into the product?), and even package design (how do we showcase claims that this paper towel can do what most people want it to?).
Talking to your customers is a CRITICAL part of founding a company. Most failed startups will say that they didn't listen to their customer enough.
3. Use customer feedback to drive product development
Now that you've ensured your customers are a key part of your product development process through their feedback, you now need to incorporate that feedback into useful product features. This is really where you need to put on your 'behavioral scientist' hat.
Behavioral scientists are researchers who study human behavior. They use scientific methods to observe and analyze human behavior in order to understand why people behave the way they do. So when you put on this hat, you're essentially saying that your customers behaviors (what they do, when they do it, how they do it, and where they do it) can be analyzed in a scientific way.
Document what you learn. Not what you think - but the actual observations you have. Then sort through those notes to find trends or patterns. In building Puzzle, we've come to realize that the biggest challenge in content marketing is actually taking an existing piece of content (in this case a blog post) and then creating social media posts for that content. It is time consuming and requires a lot of feedback and input from contributors. Surprisingly it is even more complicated and time-consuming than the initial content generation/writing.
Once you've identified patterns, habits, tendencies, and consistencies, you can then make tweaks to the process (with your product or service) and see their impact. Does your tool help people save time? If so, how much? And don't forget that by making these tweaks and inserting your product or service into their regular use, what other problems arise as a result? Your behavioral scientist brain needs to consider potential ramifications of changing your customer's environment. You influence behavior through every action you take and thing you manipulate.
Customers are people too
At the end of the day, you need to simply remember that your customers are real people, with real feelings and emotions and desires and concerns. You can't eliminate the humanity of your customers. You need it. You need to ensure that humanity is incorporated into everything you build.
Starting a company is hard. Trust me. I'm living this difficulty every day right now. If you want to make things easier on yourself and your team, remember to listen to your customers.