I want to talk about a very simple idea, but one that plagues the success of entrepreneurs the world over and inhibits their ability to successfully commercialize ideas. It is based on this one premise, “Entrepreneurs love to talk about their solution, but hate to talk about the customer’s problem(s).” This leads immediately to a situation where a new solution is based on the entrepreneur’s view of the problem (usually shaped by their specific experiences) and not customer needs.
The reality most entrepreneurs never hear is that customers already have solutions to the problems. Of course, that doesn’t mean customers like you and I wouldn’t benefit from a better solution. It just means the entrepreneur better have a precise understanding of my needs to have a chance of winning me over.
Think of yourself in the position of the customer – how many inconvenient items (problems) and things that could be even better (opportunities) come up in your day? I’m sure it’s hundreds, possibly thousands. Realistically, you will only ever consider changing just a handful. No one has time to research all the options to improve, even though inventors are busy working on improvements to nearly everything. What entrepreneurs do really well is get in front of customers, tell them what their problem is and then launch into why they need the entrepreneur’s solution. Meanwhile the customer is (usually) thinking about nearly anything else.
How does the market deal with this? The true test of a new business is not “can you build it” (usually yes), but “whether people will buy it” (frequently no.) Investors understand that most risk is concentrated in making the sale, not making the product. That’s why they place hugely lower valuations on pre-revenue companies than on those achieving sales. Revenue is validation of the riskiest part of the proposition. The top reason for new businesses failure is lack of sufficient market uptake, not failure to offer the goods or service.
Talking to customers, strangers and people on the street is not comfortable for most of us and entrepreneurs are no exception. After all customers might tell us something we don’t want to hear about our ideas, (for some reason, entrepreneurs think hearing problems later or not at all, is better than hearing them early.)
Here are 5 factors to encourage entrepreneurs to talk to customers sooner.
1. Investment
A new venture’s ability to raise money is directly related to a demonstrated understanding of the customer. I can count on one hand the number of investment pitches I ever heard where an entrepreneur said “… and we talked to 100 (or more) customers in our development phase, learned from them what was needed to close their sale and also to tweak the product.”
2. Insights
When I send out a class of entrepreneurs to (reluctantly) talk with even ten customers each, at least a third come back with new learning that results in a fundamental adjustment to their business model. That is after just 5-10 hours invested time! The good news is that demonstrating these valuable learnings is a great way to turn entrepreneurs into believers in customer contact. Getting them to start the process is the hard part.
3. Training
There are a large number of resources available to help simplify the customer interview process whether in person (always recommended at the very beginning), or by phone or online surveys. Most entrepreneurs find interviewing difficult to learn. However, after just a few contact interviews, it gets much easier and more useful. Role playing can help also, but there is no substitute for actually getting out and talking to people.
4. Sales and Marketing
Time spent during development talking to customers is not wasted. It is part of sales and marketing that needs to be done anyway so why not get started early with segmenting and targeting. When Harrys’ successfully launched their new shaving system in 2013, they had a list of every person they had ever contacted about the business – nearly 100,000 email addresses. This group of interested pre-screened contacts primed the revenue pump on day one of the new product launch. Most other businesses start by launching the website and waiting to be found by customers. Talking with customers has the added benefit of allowing you to feed back their exact words when marketing to address their exact pain points building both empathy and quick comprehension.
5. Save Time and Cost
Everything you learn from customers early in the development phase, you will learn eventually anyway (if your business survives that long) and business modifications will be inevitable. Early learning means these changes can be made sooner, hopefully while products and services are still on paper, not locked in execution mode. Whatever the timing, early changes are guaranteed to be faster, cheaper and less disruptive.
I know I could add to the list, but I think these are good motivation for entrepreneurs to think more like their potential customers and get a good head-start on success.
