Know Your Customer Better Than Anyone Else

In today’s market there are three ways to make money in your business.  The first way is to have a lower cost of capital than anyone else. This is difficult to accomplish unless you are really experienced.  Cost of capital for a startup can range from 35-70%. The second route is the MIT way, be smarter than anyone else. Not an option for most of us. And the third way is to know your customer better than anyone else.  In order to know them, you must get closer than anyone else.

One of the main reasons that businesses fail is that they never achieve product market fit.   Lack of product market fit is directly related to how well you know your customer. What is the #1 problem that your customer faces and how does your solution add measurable value?  How urgent is your customer to solve their #1 problem. Without a significant sense of pain and urgency, your customer will not be motivated to overcome the status quo (your greatest competition) and make a change to purchase and use your product or solution.

In order to better understand your customer, you have to get out of the building and talk to them.  And you have to LISTEN! What is the real problem that keeps them awake at night? There is nothing worse than having the right solution to the wrong problem.  Don’t make the mistake of providing an 80% solution. If you don’t know your customer well enough you will provide an 80% solution to their problem. They will like your solution, and talk about it, but they won’t buy it.  Customers must LOVE your solution. It must address their sense of pain and urgency.

There are a number of ways to conduct primary market research and get to know your customers on the cheap.  General categories include both qualitative and quantitative methods.

For qualitative research you can either talk to your customers or “walk a mile in their shoes”.  When talking with your customers you want to be in an inquiry mode, not an advocacy mode. You want to understand their motivations and emotions.  You want to listen carefully to what they say and watch what they do for clues to their greatest concerns. You can also gain significant understanding and empathy by “walking a mile in their shoes” and actually doing what they do for short period of time. There’s nothing like immersing yourself in your customer’s shoes to gain insights into their pain and sense of urgency.

For quantitative research you can observe your customer in action or conduct digital experimentation.  When observing your customers, you are looking for opportunities to see them taking action when and where their behaviors are unhindered.  What decisions are they making and what types of input are they using to make those decisions? You can increase your understanding by talking with them after they’ve taken action to learn more about their decision-making process.  In conducting digital experimentation, you can try various A/B landing pages and click-through opportunities to explore different interests and gauge response levels.

What are the most important questions to ask when conducting customer interviews? Focus on questions that provide insight to the most important and risky assumptions for your startup.  This could include things like:

• What problems keep your customer up at night?
• If they could solve any issue about this problem, what would it be?
• Why can’t they solve the problem?
• How does the customer make decisions and who is involved?
• What is the measureable improvement your customer is looking for?
• What assumptions have you made, that if wrong, could cause your business to fail?

Finally, when you do primary market research on your beachhead market by talking to customers and observing them, making sure to be open to new information and not just try to sell them on your solution at this stage. Shoot for 50-100 interviews and look for patterns in customer response. You want to clearly understand their pain points and where they want immediate relief. Customer intimacy is critical to finding product market fit.

A few things to consider:

• Many people come up with an idea or innovation (user innovation) and then go and try to find a market for their product.  When you do your primary market research, don’t try to sell your idea, instead try to listen to your potential customer for their primary pain points and sense of urgency.
• If you have a new innovation, you can’t do a Google search to understand your customer. You must conduct first hand primary market research.
• Customer intimacy is critical to product market fit.  To find product-market fit, you must know your customer better than anyone else.

5 Steps to Customer Intimacy  

1. Get out of the building and talk to your customers. There is NO substitute for first hand primary market research.
2. When asking questions…
   • Inquiry NOT Advocacy – You are trying to understand their need
   • Don’t lead the customer
   • Don’t talk about your solution
3. Try using words like these to run the interview.
   • “Tell me the story of…”
   • “You said X. Tell me more…”
   • “Why?” or “Why not?”
   • “Tell me about the last time…”
4. Identify the top two pain points of your customer.
5. Identify their sense of urgency and what activates their acquisition process.