Do Customers Know What They Want?

By Michael Kanazawa, Guest Author

A lot of people like to say that customers don’t know what they want and then come to the conclusion, why ask? Companies that deeply understand their customers’ needs gain the ability to lead markets and stay a step ahead of competitors by generating new big ideas that produce big results. That doesn’t mean that if a few years ago you had asked an average end user customer if they needed an IEEE 802.11-enabled router that they would have even know how to respond or what you meant. But a few years back if you looked at the way, for example, a home office person was working with a mess of cables in their office and the lack of flexibility of working on a laptop anywhere in the home, the need for wireless networking was clear.

People have come to the conclusion that customers don’t know what they want because they have tried to conduct various forms of customer research studies or focus groups in the past and the results were possibly counter-intuitive, inconclusive, or confusing. The real challenge is in knowing how to gain an understanding of your customer’s life from their perspective and then figure out yourself how to best fulfill those needs with technologies and products.

Common Scenario

Without calling out names, here is an all too common scenario. A company wants to set their strategy based on customer needs. Sales speaks up first and says they know exactly what customers want. Lower price and better quality on the existing products. Market research, who has been tracking input from customers who have sent in registration cards on products purchased agrees and adds that overall, people love the feature sets currently, but want a couple more. They also add that a recent focus group of existing top customers showed that customers aren’t ready for “next-generation” products yet, because nobody asked for that in the focus groups. So, the company creates a strategy to lower it’s manufacturing and operating costs, adds a couple of minor new features, and launches that as their new product. Then, when sales flatten, they wonder why new competitors selling next-generation products are outpacing their growth and eventually stealing their customers.

A Better Way

An excerpt from our recent book, BIG Ideas to BIG Results, highlights how this can play out differently in a way that produces deep customer insights that drive next-generation strategies. At one high-tech company, there seemed to be no shortage of issues being raised as the new CEO arrived. It was crisis mode and there were lots of opinions on what was wrong. The sales team, in particular, had significant complaints about the product team’s slow pace of new product development. In their view, that was the reason they had lost one of the company’s largest customers, which, in turn, had driven the tailspin in revenue. The sales team claimed to be the voice of the customer and expected that view to be given heavy weight in the reality top management took into consideration when making key strategic decisions.

Sensing that the issue wasn’t as simple as that of recent delays in product launches, the CEO embarked on a global tour to meet the company’s customers himself. Salespeople around the world geared up by preparing presentations for the CEO to make to their customers and setting up briefing meetings with them for the CEO. However, the CEO quickly put a stop to that activity and let the sales team know that the purpose of the conversations was not to pitch, but to listen.

One of the first visits was to a very large customer they had just lost. The CEO went in with no computer presentation and no hard agenda—only with an agenda to find out what had gone wrong. The CEO had the sales relationship manager bring only a blank tablet to take notes. They were definitely uncomfortable in that role. By the time the meeting was over, they had heard about many issues, not the least of which were problems with the sales team’s handling of some serious product quality issues. They also heard that the company’s core technology was hard to work with and that new products from competitors were easier to integrate into designs.

In addition to talking with all customers, the CEO and his sales reps also conducted interviews with non-customers, or companies who bought exclusively from competitors. Often, it is uncomfortable to go talk with potential customers with whom you have not been successful with your sales efforts. However, they are quite often great sources of reality for you. They have nothing to lose by making suggestions for improvements and nothing to gain other than helping another potential vendor keep the market competitive—which is in their best interest. In this case, the non-customers had many of the same suggestions as those of the large customer that had been lost.

Customers wanted a chip that was easier to integrate and required less passive parts surrounding the chip. Nobody asked specifically for a pHEMT chip in an integrated package. However, armed with an understanding of needs, the company launched that product line, made a generational jump in their technology, and revived the company.

Tips for Understanding Customer Needs:

It is possible to understand customer needs, but not always as simple as going to existing customers and asking if they will buy your new product idea if you were to make it. Here are some thoughts to help you in guiding strategy based on customer needs:

– Talk with customers and non-customers outside of just the sales relationship.

– Observe the customer’s working environment and challenges from their perspective. Don’t just present new product ideas and ask if they would buy it.

– Develop your strategy by translating your understanding of customers into the technologies, products and services that will improve their lives or their business.