We continue now with why customer discovery matters in this series focusing on how to perform customer discovery in Australia and New Zealand. Ultimately landing on a process for identifying customer pain points and designing products and services customers want and are willing to pay for. If you missed week one, you can check it out here.
In this article, I’m going to chat through a critically important concept that sits at the heart of the customer discovery process: having the right mindset.
I’ll share a story to highlight what we typically see when coming onto the scene of a customer discovery battlefield. Angela works for a large, well-established national organisation with 32% market share across Australia. She’s looking out over a declining market, and she knows she needs to start creating new products and break into a new market or continue to give up margin on her core product range. And she correctly recognises that there is an external constraint that’s limiting her company’s revenue growth, which, if left unaddressed, will give way to cost-out pressure in the near term.
But then she makes a fatal mistake. She assumes that she can deploy the same strategies and tactics that she’s used several times before where she launched new products into an existing market in Sydney, Melbourne, and Brisbane.
Unfortunately, this is where things go woefully wrong for her. Because this time she wants to establish a new market, not simply launch new products into the same market that she knows so well. Her mistake is she’s using the same approach that she’s used in the past and assuming that she’ll create the same outcome. The problem, is, one major variable has changed. This time, she doesn’t know who the customer is, what their problem is, how well the product solves that problem, and whether anyone is willing to pay for it.
Whether you’re from a small business, a large corporation, or a startup, working through the customer discovery process can be daunting. You’re dealing with unknowns. The customer segments and channels aren’t known, the customer pain points aren’t known, and of course the value propositions or solutions aren’t known.
Let’s talk about an optimal way to approach this learning process. If you’re trying to attack a new market, you have go out and discover new customers. After you’ve identified your customers, you have to figure out what their pain points are and which of those pain points bother them enough to do something about it. And hopefully that something that they do involves reaching for their pocketbook to pay for your new product.
Chances are, if you think you already know what’s going on, you probably don’t. There is no data to support you, there is no report you can read, and there is certainly no consultant you can ring up for her sage advice. I always get a strange look from clients when they ask me a product/market fit question related to a new product in a new market and my answer is “I don’t know.”
Not too long ago, I was standing in the middle of an open plan office chatting with a client about what process they could follow to start generating some knowledge about their potential customers and the pain points those customers are experiencing.
When she asked me what the customer archetypes looked like and what problems these groups might be trying to solve, I said I didn’t know. She reworded the question and asked me again. To which I again responded, “I don’t know.” This went on at least 4–5 times until she raised her voice and said, “Why do you keep saying you don’t know? Why don’t you know?”
I explained that no one knows—not at this moment, anyway. This is the work of the customer discovery phase of the initiative: going outside and talking to people who you think are future customers and testing your guesses about their needs and wants. There is simply no substitute for this. Whether it’s a consultant or an internal team member that performs this process, it must be performed. The very last thing you want is for someone to tell you they know who your new customers are and what their pain points are and then have those presumptions turn out to be patently false. This will result in a completely useless product being designed, built, and marketed to a group of people who don’t care about your product and aren’t willing to pay for it.
Many people, especially small business owners or corporate executives, are not comfortable with not knowing. Their managers are very well conditioned to always have an answer. Faking it works fine in large corporations where outcomes aren’t measured, or the feedback loop is too protracted to matter, or if no one is held accountable for their ambiguous course of action.
But this is the big difference in the startup world: there simply isn’t anything to fake. Either the sales come through the door or they do not. The VC or the Angel who is funding the venture motivates the founding team by replacing the CEO with someone who doesn’t claim to have all the answers but is willing to personally get outside and get those answers—and then test them rigorously—herself.
And therein lies the rub. How can you know what a customer wants and is willing to pay for if you haven’t done the customer discovery? When dealing with new products in a new market, steer clear of anyone telling you they know what your customers want. Better to get an answer of “I don’t know” and then figure it out than to walk blindly out into the storm. You have to discover what your customers want by using the good old scientific method, where hypotheses are asserted, tested, and then either invalidated or not. This is why it’s called customer discovery.
Back to the point about the mindset, it’s important to understand that at the outset you don’t need to know who the customer is or what her pain point is. You don’t need to know what is going to solve her problem, when, where, with who, and how well—or even whether or not she cares enough to pay for it. Because, frankly, you can’t know. The purpose of the customer discovery process is to form a hypothesis—a guess—and then get out of the building to generate some data points and test it. When those ideas leave the building, the discovery team will find out soon enough just how little everyone knows. And then get on with building a product that solves a real problem, not one that was manufacturing in a meeting room.
Be comfortable dealing with ambiguity here and resist the urge to fall back into your old comfort zone. Being wrong, making mistakes, and failing forward fast is a positive course of action (where learning is involved) in this early phase of customer discovery, and it is potentially the only one that works. This is a large part of the mindset that successful leaders have as they move through this process of discovering a new group of customers and the products and services those customers are willing to pay for.
If you’re finding this helpful, then stick around. Next week we are going to dive straight into the approach for customer discovery here in Australia and New Zealand where we’ll start framing up our hypotheses and getting our plan of action together.
Until next time –