“There is only one boss—the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
— Sam Walton
Hundreds of consultants pander “growth hacks” that supposedly 10x your business. These hacks are flashy, quick, and attractive. But quick rarely translates to high-impact. Most of these hacks simply don’t work. At least, not in any meaningful way.
The one research-backed tactic you can leverage to grow faster and boost revenue is to research customers and apply what you learn. Forrester found moving up just one point on their customer experience index translates into an extra $244 million in incremental revenue. ProfitWell looked at over 3,000 SaaS companies and found the ones investing in customer research grow 2-3x times faster. And Hubspot discovered, “Firms that regularly research their client markets (at least quarterly) grow more than ten times faster than firms that don't conduct research.”
The findings are clear. Learning about your customers, and applying what you learn, pays off in major ways.
But to reap those benefits, you have to actually talk with customers.
Customer research is a discovery or learning technique that helps you answer questions about your customers and make better decisions about your product.
And decisions such as:
Researching customers provides qualitative data that helps you fill in these knowledge gaps, so you can bridge what you think you know about customers and the reality they actually live in.
Customer Research: a discovery technique that helps you answer questions about your customers and make better decisions about your product.
Customer research is not monologuing about you and your product. Sales pitches, support emails, and demos may all yield valuable information about your market, but they’re fundamentally different from customer research.
In all three of those instances, you do most of the talking in order to achieve an immediate outcome for the business. In customer research, the customer does all the talking, in order for you hear about their pain points and desired outcomes.
In Competing Against Luck, Clayton Christensen asks: “How many apps do you have on your phone that seemed like a good idea to download, but you’ve more or less never used them again?” If an app vendor only tracks downloads, he argues, they’ll never know if the app is actually providing value to customers.
This is the key problem with quantitative data. It's a rearview mirror telling you what people did (download an app), but not why they did it (what progress they hoped to achieve). Even if you’re able to gather enough data points to reach statistical significance, and even if you’re able to do that fast enough for the data to be relevant, quantitative data won’t give you insight into why. And it’s the why that unlocks building better products.
What can why help you do? Benji Hyam, now co-founder at Grow & Convert, made big improvements when he applied customer research techniques at ThinkApps, a software design and development company. He said, “I started seeing patterns in people’s answers to our questions, I learned about the pains people had with software development...and learned how we could position ourselves in the market to one-up our competition.” Hyam used the qualitative data he gathered to strategically optimize messaging, ad copy, and landing pages. As a direct result, ThinkApps grew by 4x revenue in one year.
It’s the why of qualitative data that unlocks growth.
Qualitative customer data not only helps you optimize existing products and services, it helps you launch them too.
Hiten Shah discovered the opportunity for KISSInsights through customer development interviews for another product, KISSmetrics. As he continued interviewing customers, he formed a hypothesis for a new survey tool product: “If you can send users a survey question that’s super relevant to what they’re already doing on your site, and it’s easy to complete without interrupting their workflow, then they’ll actually answer it.” Additional interviews and tests validated this hypothesis, and Shah pursued the product. Within a year, Sean Ellis acquired KISSInsights and renamed it Qualaroo. Today, the product “collects more insights than the number of burgers McDonald’s makes daily.”
Shah has used similar, customer research approaches, to build his other companies, including FYI and QuickSprout. He says, “You’ll create the best product if you know more about customers than your competitors and you act on that knowledge.”
Henry Ford allegedly said, “If I had asked people what they wanted, they would have said faster horses.” Some founders use this as an excuse to not do research. Innovation, they imagine, doesn’t require customer input.
But customer research isn’t asking customers to build your product for you. As Erika Hall points out in Just Enough Research, the first rule of user research is, “never ask anyone what they want.”
Steve Jobs, too, scoffed at the idea of asking what customers wanted. He said, “People don't know what they want until you show it to them. That’s why I never rely on market research.” But while Jobs may have been against the prevailing market research methods of his time, he was certainly pro-customer. Jobs also advocated, “Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.”
And that’s what customer research is about. When you talk with customers, you’re not asking them to hand you a roadmap. You’re looking to learn more about their reality, so you can make better decisions. You’re still innovating the solution—you’re just doing it more effectively and more successfully with customer research. That’s why, when User Interviews asked professionals what they love most about research, they said the “ability to make decisions based on better evidence.”
By the way, Ford might never have asked customers what they wanted, but he certainly understood why they wanted his cars. He advertised his motor car to:
Men who are constantly complaining of shortage of time and lamenting the fewness of days in the week—men to whom every five minutes wasted means a dollar thrown away—men to whom five minutes' delay sometimes means the loss of many dollars—will yet depend on the haphazard, uncomfortable, and limited means of transportation afforded by street cars, etc., when the investment of an exceedingly moderate sum in the purchase of a perfected, efficient, high-grade automobile would cut out anxiety and unpunctuality and provide a luxurious means of travel ever at your beck and call.
Like his fellow businessmen, Ford believed, “The man who has the largest capacity for work and thought is the man who is bound to succeed.” So he delivered more capacity (why men wanted to go faster) via the affordable Model T.
Unlike those phony growth hacks, there’s no silver bullet here. There isn’t one customer question you can ask that will solve all your startup’s problems, and there’s not one specific technique that’s guaranteed to earn you millions.
Rather, effective customer research (the kind that does drive results) depends on repetition and a solid understanding of approaches like Jobs to be Done, user interviews, web research, and democratizing insights. Understanding and applying these takes more time than phony hacks, but they’re not as intensive as you’d guess.
If you want to actually grow faster and stop guessing what to build, here’s what you need to know and do.