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Welcome
to the first edition of the Leadership eNotes for 2009.
Best wishes for a New Year
of Health, Happiness and Prosperity
As we begin
the new year, this month’s article is about determining what the customer
wants. It presents a view based on the idea that contrary to popular
wisdom, the customer isn’t always right. Enjoy!
Sam |
Dedicated to
increasing the
effectiveness and enhancing
the lives of company
leaders since 1957
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How to Determine What Your Customer Wants
By David
Wanetick, Managing Director, IncreMental Advantage
When people
are free to do as they please, they usually imitate each other.
– Eric Hoffer, author and philosopher.
Customers
don’t know what they want. Their buying decisions are more a function of
persuasion, influence, and social pressure than internalized desires.
Contrary to popular wisdom, the customer isn’t always right.
Because of
the huge gulf between what customers say they want and what they buy, basing
product development decisions on what they say they want is risky. It’s a
futile exercise to encourage customers to dream up possibilities untethered
to the practicality of delivering such products to the market. What’s more,
customers are particularly bad at providing insight into new product
initiatives. Henry Ford said that had he surveyed the population about what
they wanted in transportation, they would have lobbied for “faster horses.”
Why you
should not survey customers
Relying heavily on customer surveys is a mistake for many reasons.
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Conducting
customer surveys is expensive and time-consuming.
While most professional surveys are outsourced, the sponsoring company
still must dedicate substantial resources to providing direction into
survey design, desired learnings and interpretation of collected data.
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Obtaining
an accurate perception of customers’ thoughts is nearly impossible.
Customers’ responses are often swayed by a single word or by the order in
which questions are asked. The integrity of customer surveys can also be
compromised when the wrong people are surveyed as well as when the right
people are surveyed in the wrong setting. Asking the same people the same
question at different times of the day— or even before or after a
meal!—can yield different responses.
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Customers
don’t want to be bothered answering surveys.
Being asked to complete a survey that takes longer than the delivery of
the service in question is annoying. Simply receiving a survey can so
greatly annoy some customers that the company risks diminishing its brand.
Customers will often race through surveys just to get them over with;
their haphazard responses can cause collateral damage when decisions are
made based on such hasty feedback.
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Being
overly solicitous of feedback will inevitably result in criticism.
Unwarranted criticism is most likely to be generated when people in a
group believe that their ability to criticize is a sign of their
intelligence. This criticism can then can cause problems in employee
morale and motivation.
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Some
customers aren’t worth having and neither is their opinion.
The peril in soliciting extensive feedback is that the most critical and
demanding suggestions are likely to come from customers who offer the
company diminishing prospects for profitable returns.
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Customers
who are only moderately disappointed with a company become irate when
their concerns aren’t addressed.
Thus, companies that rely on extensive surveys are faced with a dilemma:
either bend to the customers’ wishes or suffer their wrath when failing to
do so.
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Focus
groups have issues as well.
Focus
groups suffer from many of the same issues that cripple customer surveys.
In many cases, a dominant personality discourages others from expressing
opinions that deviate from their own. When well-run companies want to know
what’s on their customers’ minds, they shouldn’t put them in a sterile
room with a two-way mirror.
All of this
is not to say that there is no merit in conducting customer surveys. One
often- overlooked use of customer surveys is that they can be used to
justify terminating employees (e.g. when customers are consistently
disappointed with a specific customer service representative’s service).
Some of the
most revealing customer surveys can be quite simple. There’s considerable
merit in Fred Reichheld’s idea that customer surveys designed to measure
satisfaction with an existing product or service can be distilled down to
one question: “Would you recommend our service to your friends and
colleagues?” This powerful question gauges whether or not customers like
your product enough to put their own reputations on the line with their
friends and colleagues.
How to
Determine What Customers Want
It’s far
better for a business to assess what its current and potential customers are
actually doing. This information can be collected from a variety of touch
points—e.g., the sales team, blogs, reviews or the customer service
department. Beyond knowing what your customers are doing, here are some
general principles to keep in mind when determining what your customers
want.
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Know what
problem the product solves.
New products need to 1) address a problem indentified by consumers, 2)
offer utility and 3) provide relief to sensitive customer pressure points.
The more a new product fills these needs, the more success it should have.
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Use value
and innovation as the guiding parameters.
Innovation should lead to truly consequential improvements in your product
or service.
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Monitor
what your customers are doing, not what they say they will do.
If the majority of people participating in surveys say that losing weight
is of paramount importance, but they’re still buying large amounts of
unhealthy foods, a new dessert will face a large target market. On a
similar note, companies are now hiring anthropologists to follow customers
around and observe how products are actually used. For example, Microsoft
hired an anthropologist to monitor how computer users typically access
their files. These findings were incorporated into Windows’ new graphical
user interface.
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Harness
statistics and probability to determine the likelihood of appeal of new
products.
By employing modeling software, businesses can decipher non-obvious
correlations. For instance, analytical programs have discovered that fans
of romantic movies are good targets for car rental companies offering
weekend deals. These customers are lured by the appeal of an “escape”
similar to what’s depicted in the romantic movies.
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Advertise
and market your product intelligently.
People are highly malleable and persuadable by advertising. Get
influential people to embrace your product. Many new products are given to
visible people and celebrities in the hopes of having media stars
photographed with the newly-released product. Red Bull was clever in its
attempts to convince people that it had already captured a coterie of hip
consumers; it placed crushed cans of Red Bull in the restrooms of popular
nightclubs.
While there
is no sure-fire method for determining what new products customers will
embrace, these principles will help companies launch new products that win
wide acceptance.
David
Wanetick is a Managing Director at IncreMental Advantage, a research
boutique based in Princeton, NJ. Representatives from more than 850 Fortune
1000 companies have participated in programs produced by IncreMental
Advantage. David is the author of three books that have achieved world-wide
acclaim, the most recent of which is
The Power of
Incremental Advantage: How Incremental Improvements Produce Dramatically
Disproportionate Results.
David can be
reached at marketing@bdacademy.com.
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