two girls unhappy with each other, one pushing the other away

The customer is not always right

business model customers product strategy Feb 01, 2022

The US 2020 election was stressful. We know this because data released this week showed a 30% rise in mental wellness app installs between 3rd and 5th November. Like many people, we maintained an hourly vigil for the best part of week, wondering which states would flip and whether Trump would, well, flip. We weren’t disappointed on either score.

The election was always going to be decided by swing states and by swing voters within them. Five of the seven swing states had winning margins of less than 1%. As it came to the wire, what were those votes worth to each candidate?

In his bid for the White House, Joe Biden broke all spending records. $6.6bn was spent on the presidential campaigns, much of it in battleground states. How much will the next presidential candidates set aside for Pennsylvania, Georgia and Wisconsin? How much less will be spent per head in states like California or Wyoming, that remain solidly Democratic or Republican year after year? Some votes are more equal than others.

The same is true of customers, every founder’s constituency. Business owners should know how many customers they have, how much they spend and how often they buy. Some have segmentations or lifetime customer value analysis. Customers who spend the most are valuable. You want people who will vote for your cause.

But what about your swing voters? Business is similar to politics in its competitive pursuit for the hearts and minds of the undecided. How valuable are they to your business? And what happens if your best customers turn out to be the wrong base? Too small to make a difference, like a Democratic caucus in Wyoming?

These questions are not far-fetched. We see them in business after business. Imagine Founder X has a great idea for a product. It solves a real customer need. They launch and achieve traction with early adopters. They run experiments and iterate the product in response to feedback. Yet they never achieve the holy grail of Product Market Fit. What went wrong?

It could be many things, but the most likely cause is they listened to the customers they had rather than the ones they needed. Most founders are aware of customer discovery and the importance of finding people who have the problem you are solving. HCD, customer centricity and personas are all commonplace. But the reality is there are usually several different types of customers who can be convinced to buy what you are selling. Only one of those will be key to your future growth and prosperity. Do you know which it is?

Most businesses grow aggressively and are not choosy who their customers are. Early adopters can be fickle and move on to the next big thing, taking your traction with them. Tom Eisenmann calls these ‘false positives’, encouraging market signals that mask a darker reality.

If you have ambitions to survive and become profitable, you must have customers who are happy to pay for your service. Ideally, they will pay for the premium services your business case is predicated upon. If too many of your customers fall outside of this category, even if they are generating revenue, you are damaging your business. These customers are like the Bolivian bot fly larvae that eat their host’s flesh before flying away.

The customer is not always right. Right for a particular business, that is.

What is to be done?

Firstly, if you haven’t done so already, you need to work out who the customer target group is that you need to own. Who is the future of your business? They will have the need and desire, the money to spend, exist in large numbers to fuel your growth appetite, and you will be able to cost effectively reach them. This is the strategic viewpoint that is often missing from customer discovery efforts.

Secondly, you need to listen to them. Find early adopter customers you already have that fit the profile. Talk more to targets about what they need to become customers. If your strategic discovery is correct, these are the only voices that matter. Your future fans can be much more important than your current ones.

Thirdly, base your experiments and iterations on your target group’s needs. The only PMF that will work for your business is that with the customers that are of the greatest value to you. So commit to creating an experience that will win them over and keep them. The sooner you do, the closer you are to your end goal. Existing customers of other kinds will gain if they have shared needs and desires. If not, they were never going to be your base, and you shouldn’t be too sad to say farewell.  

We will be posting more about customer discovery, market assessment and blending strategy with experimentation. In the meantime, we have another free tool for you. It’s a spot the difference game, enabling you to compare your customer profile today with your ideal future target. Get in touch if you would like it. It will give you a good idea of who you need to flip in the future. Just please don’t take us to the US Supreme Court if you don’t like the result...


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