“Every company in the world will tell you they are customer-driven...But after spending 20 years in my career building and leading SaaS companies, I’ve learned that none of that means anything unless you actually make the structural decisions to ensure it.”
— David Cancel
Customer-driven means you put customer success at the center of everything you do. Not the periphery, the center. To do this, you have to understand your customers’ needs, wants, and motivations. Oftentimes, you have to understand their customers too.
Customer-driven means you put customer success at the center of everything you do.
Let’s say you’re building an email tool. Being customer-driven means you know:
A customer-driven company starts with this kind of information, not a feature brainstorm list, to figure out what goes in the product next.
Customer-driven: putting customer success and value-to-customer at the center of your business.
Unfortunately, most businesses still believe, “if you build it, they will come” and push the customer to the side. They opt for the Google Helpouts route.
Helpouts was a video chat service that connected consumers with experts. Google worked on this for over a year, and maintained it for a while afterwards, without ever figuring out who the customer was or how Helpouts made them successful. The product launched to crickets, and Google pulled the plug on it in 2015.
By necessity, software businesses interact with their customers. They send emails, make sales, and provide support. Founders of these businesses look at this activity and say, “We put customers first.”
But having conversations with customers doesn’t make your business customer-driven. Those conversations simply make your business, well, a business.
Having conversations with customers doesn’t make your business customer-driven.
Why don’t those conversations count? Sales, support, and marketing conversations all happen in a specific context. 99% of the time, the point of these conversations isn’t to learn about the customer—it’s to achieve an immediate positive outcome for the business.
What’s more, the individuals having these conversations aren’t incentivized to learn about the customer. Rather, they have performance metrics such as tickets closed, sprints completed, hours spent, and amount of data collected. Metrics misaligned with the customer.
Other companies may argue, “Oh we’re customer driven; we’re data driven.”
You can’t A/B test your way to qualitative customer insights.
This, too, is not the same thing as customer-driven. Data may give you valuable information about what customers are doing and how. But abstract metrics aren’t enough; you can’t A/B test your way to qualitative customer insights. As Marty Cagan, Partner at Silicon Valley Product Group, puts it, “the quantitative data will tell us what’s happening or not happening; but it can’t tell us why something’s happening or not happening.”
Truly customer-driven businesses do several things well. They:
There is a huge knowledge gap between you and your customers. You have a lot of knowledge about your product and industry. Your customers have a lot of knowledge about their needs and behavior.
There is a huge knowledge gap between you and your customers.
Customer-driven companies acknowledge this gap and fill it with customer research, instead of biased founder assumptions.
Knowledge Gap: the chasm between what you know about your product and what customers know about their needs
Hubspot found 42% of companies don’t survey customers or ask them for feedback. ProftWell’s research indicates 7 out of 10 organizations, “are speaking to less than 10 prospects or customers in a non-sales research capacity per month.”
42% of companies don’t even survey customers or ask them for feedback.
In contrast, truly customer-driven companies do a lot of customer research. Not only do they have a high frequency of customer conversations, they have a high frequency of customer conversations where the goal is to learn more about the customer. The point is the conversation is, “how can we make your life better?”
Learning-based Conversation: a conversation with the customer where the goal is to learn more about the customer, not resolve a ticket or make a sales pitch
Customer insights are most effective when they’re out of silos and into every team in the company. Drift, a company that acquired 70k active users in 4 years, knows and acts on this. To democratize insights, the CEO, David Cancel, requires every team at Drift do customer support for one hour, once a month. An alternative is ensuring everyone in the company has direct access to voice of the customer data.
Customer expectations are higher than ever. Over the next several years, 89% of companies expect to compete on customer experience. As the barrier to building software gets lower, delighting—and knowing how to delight—customers will become an increasingly valuable differentiator.
Bernadette Jiwa famously said, “whoever gets closest to their customer wins.” See Apple vs. Sony or AirBnb vs. Hilton.
Jiwa’s saying is true, but it’s incomplete. In the next decade, the most successful companies won’t simply be the ones closest to their customer; they’ll be the ones most adaptive to their customer.
In the next decade, the most successful companies will be the ones most adaptive to their customer.
So why aren’t more businesses honing in on customers? A few reasons:
Many businesses think the effort it takes to be customer-driven and do good customer research simply isn’t worth the cost. This is a dangerous mindset, and it has killed many products.
Without customer insights, you won’t understand your customers’ goals, what’s standing in their way, or how to make them successful. Like Google and Helpouts, you’ll create the wrong product and then struggle to sell it.
And this will be very, very expensive.
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