Customer Discovery for New Markets in AU/NZ

Mike IarossiCustomer Discovery

BY MICHAEL IAROSSI

Successfully designing products and services customers want and are willing to pay for isn’t all that difficult—at least, it doesn’t have to be.

But if you’ve ever considered the failure rate for product and service launches by established Australian and New Zealand organisations, you’d think you had better odds of winning the raffle at your local RSL. From our own consulting experience working with Australian and New Zealand small to medium enterprises (SMEs) over the last 10 years, we estimate nearly 93% of all product launches fail to generate a positive return on investment within the first 12 months. That’s a sobering statistic.

And yet the recipe for positive customer discovery leading to a successful product market fit has already been very well documented by thought leaders from across the startup world like Steve Blank, Eric Reis, Clayton Christensen, Geoffrey Moore, and many others. They’ve set out a clear path to achieving a successful outcome.

But let’s face it, Australia isn’t the United States of America, and neither is New Zealand for that matter. And no matter how much people might like to believe they can treat Aussies and Kiwis like they’re your typical American consumer, I’m sorry, it’s just not the case. Just think tall poppy syndrome.

In my next series on customer discovery, I’ll share some tips and tricks that will allow you to discover a product market fit for your new product or service here in Australia or New Zealand. Most importantly, they’ll have you making money on your product—not walking around in the land of the living dead like the other 93% who are either returning a loss or just barely breaking even.

Many organisations develop strategies that focus on the creation of new products for new markets because they correctly recognise the threat of disruption by product or process innovations. But successful execution is an entirely different story. Close to 66% of SMEs in Australia experienced barriers to innovation within the last 12 months. As a result, most of the calls I get are from executives of established organisations who are completely and utterly exhausted with the results of their organisation’s customer discovery efforts. They’re not able to understand why the discovery process for a new product in a new market should be so different from their current process of launching new products into well-known, well-established markets.

Let’s take it from the angle of a startup. Don’t get me wrong, the failure rate for startups is staggeringly high. But there is a fundamental reason why startups succeed where established organisations fail with respect to customer discovery. In the very early days of a startup’s life, the entrepreneur both understands and accepts the fact that she doesn’t have the answers. As such, she is comfortable in dealing with the ambiguity of not knowing. Not knowing where and how her idea might be used, who it might be used by, when and how it could be used, and whether or not someone would actually pay for it. She knows these are all things she will have to discover.

And it’s not just that high tolerance for ambiguity that helps determine her course of action, it’s also her internal locus of control. Successful founders recognise that while they don’t have the answers, they can go outside and get those answers. And that is precisely what they do. The management teams of successful startups are the ones who have directed their efforts to going outside where the customers are and discovering those customers’ wants and needs. And when a startup’s product doesn’t fit, as is almost always the case in the early stages of discovery, a decision is made to iterate or pivot.

Contrast this against the actions taking place within many established Australian and New Zealand organisations, and you‘ll see a very different approach: knee-jerk reactions to customer requests, an army of staff creating rework due to prioritising and de-prioritising jobs, zero learning taking place from one mistake to the next, and leaders using a “watch-and-hope” approach to growing their business, including launching new products into the market that not a single customer has ever seen before and probably doesn’t need.

And executives wonder why their product efforts for new markets are ending in an abysmal failure. The bottom line is that if you want to design and launch a new product for a new market that customers will actually pay for, then you cannot keep using the same approach you’ve been using for the last 20 years with established markets. You are almost guaranteed to deliver an anaemic, underwhelming result.

Throughout this series I’ll explain why customer discovery matters and then give you a foundational method for taking the first steps towards customer discovery. I’ll share some discovery examples and take you through the actual questions I ask when I’m out conducting customer discovery—and equally importantly, I’ll talk about why I’m asking people what I’m asking them. We will look at freely available tools your teams can use for winnowing away a large feature list and getting down to the critical must-haves in your customer’s world. I’ll explain why forming a hypothesis and maintaining a falsifiable position will improve the quality and fit of the end product. We will look at turning your hypothesis and your understanding of the customer’s pain point into an actionable, achievable, value proposition. And finally, we’ll step through the prototyping process, where I’ll share some tips and tricks for building low- and hi-fidelity prototypes before you greenlight that minimum viable product (MVP).

These approaches will help keep your organisation out of the weeds and delivering meaningful bottom line results instead of merely keeping busy for activity’s sake.

Until next time—