5 Reasons to Gut Check What Customers Say
Most recently, my business partners at Aventi Group and I helped a progressive and fast-growing SaaS company evaluate a potential market expansion opportunity and strategies for market entry. I spoke with a number of leading-edge companies in various industries globally about their key objectives, challenges, culture, current solutions, what works and what doesn’t work, their buying preferences, and more, to help inform market expansion decisions for the SaaS solution. It was easy to get swept up in the cool ideas and awesome stories. So it was important for me to remind myself not to take customer input at face value or act upon it without applying critical thinking and good judgment. I’m sharing with you five reasons to gut check customers and what to do about it:
1. Customers tend to project linearly
Many customers come from a starting point of what they have or what they have experience using. Then they look for ways to make it better in a step-function or sequential manner. They might say something like, “It would be ideal if our solution has features like enhanced analytics, a better dashboard and reports, integration with more workflow applications, etc. so that we can take action on key issues effectively.”
Although their feedback is good, we may end up developing incremental improvements for the product–a better mousetrap–and miss out on the opportunity to solve the problem in new or different ways.
As an example, the product may look totally different with the use of artificial intelligence, machine learning, and predictive analytics. Instead of taking action after the fact, the product may be able to extract data from new data sources and mitigate the occurrence of issues in the first place. The better question to ask the customer may be around the problem they’re attempting to solve rather than how they would want to solve it or what it would take to make their current solution better. Or, help them understand the new way and test the idea and hypotheses.
As with anyone, customers don’t know what they don’t know. Some rely on vendors for technology innovation. This is how we can provide an order of magnitude of improvement, help rewrite old rules, create new categories, disrupt traditional ways, and build a more sustainable and differentiated product. Innovations like virtualization, cloud, software-defined platforms, cognitive computing, hyperconvergence, and more are the result of non-linear thinking. Likewise, there are disruptive business models like freemium, on-demand, subscription, and digital marketplaces in computer software, IT and services, public transportation, retail, marketing and advertising, and other industries that have pushed traditional models aside.
2. Customers think free is a good idea
There’s an art in asking customers questions and we need to be aware of the human tendency of asking in a way that gets a response that we want to hear. There are a lot of examples but I’ll pick on testing the notion of freemiums (an offer that provides a limited product for free but charges for enhanced features, more comprehensive scope, or higher usage) which are prevalent in the software and SaaS worlds. Freemiums are generally used to build brand awareness, lower barriers to entry, reduce customer acquisition costs, and more quickly grow revenues as customers convert or upgrade to subscription-based offerings.
Unless there’s a significant downside, most customers will respond positively to a free offering when asked if they’d be open to it. This could lead us to the conclusion that freemiums work all the time. Additionally, with well known and highly publicized freemium successes from Dropbox, Spotify, MailChimp, Evernote, Trello and others, the freemium route becomes more tantalizing. However, for every successful freemium story, that are many unsuccessful ones.
We need to consider what we want to achieve, the competitive environment, types of customers we want to attract, the customers’ challenges and where they place value, what we’re offering for free, and the value of the enhanced offering when evaluating a freemium business model. For example, if our goal is conversion from free to subscription, we run the risk of attracting the wrong types of customers if our free offering is basic and not unique. These free users may not lead us any closer to the actual buyer who will value and pay premium.
Remember that customers will generally pay for what they value. If the potential customer doesn’t find value in a basic offering, the offer won’t get any traction even if it’s free. It provides no way for the customer to experience the value they want. Worse yet, we may end up attracting customers who don’t need the premium, fee-based solution and would be happy using the free service long term. This can consume an enormous amount of support resources and compromise the company’s brand creating the perception of being a low-cost, basic product vendor. Perhaps a trial of the enhanced, high-value product in key target segments may be a better approach.
This Databox blog offers insights on when to use freemiums vs trials. Also take a peek at Hubspot’s blog on freemium best practices and successful implementations.
3. Customers say it won’t work and point out every single problem with it
As we innovate, we will get feedback from skeptics and perfectionists that could potentially derail our plans or even discourage us from pursuing an idea. Some may even seem to have a problem with almost every aspect of the product. But let’s not abandon or redirect efforts too quickly when we get not-so-rosy feedback. We need to balance the feedback from both naysayers and supporters to make decisions or inform minimum viable product capabilities, product development, or roadmaps. However, naysayer opinions can be valuable in developing positioning and messaging.
The customers’ skepticism and pushback should drive us to create compelling messaging designed to defend our position, turn weaknesses into strengths, as well as anticipate and overcome objections that we may encounter in the market.
Tough feedback will better prepare us and help us be more effective in persuading potential customers, even the most reluctant ones.
Sometimes, their feedback may seem more discouraging when they point out challenges over which we feel we have very little control. I recall a potential customer saying that they’ve never done business with an unproven vendor and would never deploy a new solution that could jeopardize their production environment.
The words never, unproven, and jeopardize may be bullets for the faint of heart but shots of adrenalin for persevering and don’t-take-no-for-an-answer innovators.
So what came out of that experience was a free trial offer in a non-production environment with a satisfaction guarantee—if for any reason the customer is unsatisfied with the trial, we would pay for the first three months of monthly charges for the alternate solution they choose to deploy. We believed and we had something to prove. I’m grateful for that customer feedback because we gained an advocate and true partner with that customer, lowered barriers to entry, achieved market traction with the offer, and never had to invoke the satisfaction guarantee.
Also note that negative feedback may provide much more line of sight of adoption/deployment issues where trialware may be a dead end. So the value of this nay saying may actually be critical input in ensuring that the product is easier and faster to deploy.
4. Customers look more attractive than they are
More than likely, we’ve been in the middle of a decision to serve or a concerted effort at serving “awesome” customers that turned out not to be as awesome as we originally thought. It may be a big global customer, a well-known brand, an early adopter and fast mover, a firm with significant budget, a thought leader, etc. The customer conversations were highly collaborative, inspiring, and promising.
However, serving these customers and attempting to deliver what they want required us to step way outside of what we do best, caused friction internally, and did not align with the company’s strategy and vision. In some cases, it negatively impacted product delivery timeframes, customer satisfaction, and revenue for the mainstream business. In a highly competitive growth market, discipline in knowing who we can serve well and not well, staying in our lane, and resisting the temptation of shiny objects that are not a fit typically bode well longer term.
Knowing when to say ‘no’ is equally as important as knowing when to say ‘yes.’ It’s easier said than done. When the market is nascent with high competitive intensity, as an example, we can easily get caught up in the massive land grab opportunity and momentum. Also recall from Clayton Christensen’s Crossing the Chasm that early adopters have very different expectations than the early majority (where the real revenue opportunity is). So focusing on early adopters for whom good enough isn’t good enough could direct our precious R&D resources on the wrong features.
This is why it’s important to do the segmentation, targeting, and positioning work and continue to use it as our beacon to make decisions and execute accordingly along the way. Please feel free to refer to the section on GTM strategy and approaches to segmentation and targeting in this article.
5. Customers ask for everything but the kitchen sink
Many of us have found ourselves listening to a customer rattle off a bunch of ideas that all seem so important right there and then. To add to our stress level, the customer even points out, with ease, what competitors have that we don’t. This is the point in the conversation where we take a deep breath and be grateful for all the insights being shared. And then, remind ourselves that this isn’t a big to-do list for today. When something seems too big and complex to make heads or tails of it, breaking it down into consumable bite-sized chunks helps. Here are some follow-on questions and things to consider to make decision making easier:
- Prioritization, Value, and Timing. Get a sense from the customers of the importance of various features and timing. Asking the customers to tell us what requirements are mandatory, preferred, and nice-to-have, in conjunction with conjoint analysis is a good method to force prioritization and tradeoffs. Level of impact on the customer’s business, team, and career is a good indicator of value. Timing is also important as, oftentimes, timing constraints are not just on the vendor’s side but also the customer’s. We all know about being a bit ahead of the market or having something for which the customer is not quite ready.
- Journey Story. Listen for awareness of the problem, motivation to change, commitment to take action, and action plans. These insights provide us a basis for creating a journey narrative to tell the market, in addition to informing our product roadmaps. For example, the journey might have several phases like 1) Evaluation and Assessment, 2) Virtualization, 3) Automation, 4) Intelligence, and 5) Ongoing Optimization. We can then map the various capabilities and features in those phases and align them with our roadmap. I love journey models as companies can position to help customers wherever they are in the journey and as they go through it.
- Fit with the Business. Having a good sample size and evaluating the ideas against key criteria such as market opportunity, strategic value, ability to differentiate, fit with core competency, alignment with goals, etc. will help with prioritization.
Yes, we should always listen to customers and potential customers. Their insights are truly invaluable and powerful. However, just as they can point us in the right direction, they can also lead us astray. It’s important for us to apply our goals-and-strategy filter to gut check what we hear so that we can decide which ones we act upon and how we action them.
Please feel free to share in the comments section your thoughts, experiences, and other reasons and tips to gut check customer feedback.
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