Understanding Your Customer

Understanding your customers involves analysing and validating a complex set of interactions. Just who is it that we are after, what do they look like, what needs and behaviours do they have and where do their problems come from? These are all questions that need to be answered. The way to do that is to make assumptions and then to validate them by testing with real customers. Customers in effect turn our assumptions into facts.

First of all, where do problems come from? There are several sources:

  1. Outdated Business models or working practices. If something has been done the same way for many years, it is probably ripe for disruption. Think Uber and Airbnb.
  2. Some form of change occurs, either in technology, regulation, economics or social attitudes. Concern for the environment, for example, has had a profound effect.
  3. Successful businesses in other sectors or geographies. Look for problems that have been solved elsewhere that could be applied here.

Having identified a problem, you probably already have an idea who it is that has it, but this needs to be validated too. Then there are other factors to consider in problem definition:

  1. Why does it need solving? Just because it’s a problem, it doesn’t follow that it needs solving. Maybe it doesn’t occur frequently enough for anyone to care
  2. How is it being solved already? If it is a real problem it probably is being solved somehow already, just not very effectively. How then will your solution fit in?
  3. What will solving it look like? This is the “before and after”, what will your solution change, how will it be better?

Having identified who it is that has the problem you need to build a customer profile for them. What does your customer look like? Knowing their characteristics means you will know them when you see them. You will recognise them. We need to consider:

  1. What are their needs?
  2. How do they buy products like yours? Do they buy direct or indirect, purchase order or credit card? Use methods that are familiar to them.
  3. Where will we find them? What events do they attend, what trade bodies are they members of? Be where your customers are.
  4. How do they get information? What publications do they read, what social media are they on? Use channels that are familiar to them.

Now, what do we mean by “needs”? Everyone has certain needs that must be met in any purchase, but it’s important to understand that humans make decisions emotionally first and rationally second. A purchase therefore has to satisfy Emotional, Social and Functional needs to work. The most important of these is Emotional, the “need to experience a particular emotion”. Next is Social, the “need to be perceived by others” and finally Functional, the “need to solve a particular problem”. This may seem counterintuitive as many companies believe what the product actually does is the most important thing, but it is not. You have to make an emotional connection first.

Testing and Validation

Getting a meeting

Before you can do any testing, you need to get a meeting, so how do you that? The crucial thing is to ask for their help. People like to help; they don’t like to be sold to. You need to give them context, just enough to understand what this is about but no detail and definitely not about your product. Be humble in your request, after all if you know all the answers already why do need to talk to them? You need to also explain why them, why is it that they can help you? Finally, ask if they can give you 30 minutes to discuss; you’ll probably get much longer but, don’t ask for it up front. When you have the meeting remember, it’s not about you; it’s about them so you should talk less and listen more.

Learning not selling

Testing and validation are about learning, not selling. What you are after is rapid, cheap and efficient learning. Before you start, know what you want to know. Write down the 5 or 6 most important things you want to know and how you will test them.

Test the customer first

You should try to validate the customer first. Do they look like we thought, do they have the needs we thought, and crucially do they recognise the problem? If they don’t recognise the problem, you’re dead. No one is going to buy a solution to a non-existent problem but, sometimes you have to educate the customer about the problem.

Testing the solution

Once you have validated the problem and customer you can move onto your solution. Remember, it’s learning we are after, so you don’t need a finished product, a sketch, a power point or a wireframe are sufficient if they elicit the learning you need. When it comes to the solution, do they get it, will they adopt it and importantly are they prepared to pay for it? The point here is to prove you have a fit between your solution and the problem.

What makes a good meeting?

Facts are what you want, not opinion. Facts are based on past experience; opinions are about the future, but no one can tell the future.

Commitment. There are only 3 types of commitment: their time, their reputation and their money so, always try to get time or reputation; money comes later. Before you leave get the next meeting in the diary and ask, “who else should I be talking to about this?”. If you get either or both of these, that’s commitment. Without them, you’ll probably waste time on someone who is never going to buy from you.

Sales Process Advancement. Try to make sure each meeting moves you further along your sales funnel and use them to refine the steps required to do that.

Understanding your customer is crucial for success, without it you will waste time on people that are never going to be customers. With understanding you can be sure you are selling to someone that wants what you’ve got and will help you to develop your business.

Understanding Your Customer