August 4, 2012
It is a well-known fact that more start-ups fail than succeed. As I’ve started my own consulting firm serving clients in small to midsize companies, I find myself thinking a lot about this fact. As I’ve observed (a few times through painful personal experience) companies and products that have not had the success one would have expected, I’ve begun to create a list of root causes for failure. Many of these root causes are tied to a lack of understanding of our customers, not a poorly performing product or an unneeded service.
Talking and listening to customers early and often are critical to the success of any venture. Yet, how often do we as small-business owners say, “I can’t wait for market research. I have to move now, and I know what my customers need.” Or, “I don’t have the financial or human resources to talk to my customers.” I contend that talking to one’s customers does not have to be an expensive, time-consuming activity. In fact, it should happen with regularity and through the normal course of business. How often have you looked at one of the following aspects of a business plan and said, if I only knew then what I know now:
- revenue projections
- customer experience: user interface with a product or process
- distribution channels
- market positioning and messaging
The root causes I have identified manifest themselves frequently in these traditional marketing activities. If we just take a bit more time to understand our customers and how our new product or service will address a critical need they have, we will be on our way to minimizing the root causes that account for a disproportionate share of company and product failures. These include:
- unrealistic revenue projections/expectations
- poor user interface and/or one that is difficult to use (does not integrate into user’s life/work flow)
- lack of understanding as to how customers access similar products today
- lack of understanding of value delivered; thus, price customer will pay
- communication that does not speak to the customer; thus, they don’t understand why they should use such a product or service
A major step in the right direction is to think about regular interactions you are having with customers today – training, service center, billing, etc. – and identify information that you could learn during these conversations that will fill in gaps you currently have in understanding your customers. It’s easier than you might think, so why not give it a try. You may just create a new business process that will dramatically increase your future success.