While there is one question to ask to ensure that you can get inside the heads of your customers there are a few steps to take in the process. They are :
- Figure out who your best customers are
- Create a list of your best customers and order them appropriately (process to follow below)
- Ask the “question”
- Collect answers and look for a pattern(s)
- Leverage the great information you have gathered (suggestions below)
Knowing your customer is the single most important element that drives your strategy. Strategy is about choice – what you choose to do and more importantly what you choose not to do in order to win in the marketplace. In order to figure these choices out, you must first make sure that you are providing the highest value to your best (i.e. most profitable) customers. In order to figure that out, you have to understand what they want and value. Another way to say it is, you must understand the Job to be Done.
Short personal story
I run workshops with hundreds of CEOs each year. One of the questions I ask is, “What is your unique value proposition?”. That is, what is the value you provide that clearly differentiates you and makes you an easy choice for your best customers.
I typically get a variety of answers.
Many of them are what I have come to call the “inside out” answer. The value statement they first create almost always starts with “we” – they look inside first. That is, here is what we build, make, develop, produce, etc.. Sometimes they talk about the customer “they” but it is rare (the outside view).
I then ask them to put themselves in the shoes of the customer and re-write the statement. Too often, this next version sounds a lot like “Enough of me talking about myself, what do you think of me?”. That is, they put the customer first in the sentence by sharing how much the customer values what the company does for them which is still an inside-out perspective said in a different way.
At this point, most realize that they do not know their customers very well. Most realize that they have forgotten to keep up with the customer and his struggles to get his job done. They assume they know the customer well but are often mistaken when faced with this simple exercise.
I had this issue at one of my startups. We were a data backup company called LiveVault. When I first started as VP of Sales, I was told by the existing team that we are in the business of selling “insurance”. That is, our customers wanted an “insurance policy” in case they lost their data for some reason. They were willing to pay us a monthly fee to automatically backup their data every few minutes and store it on our servers so it could be easily and quickly retrieved should disaster strike.
During my first few weeks, I interviewed about 20 existing customers to ask them why they bought from us. I heard a completely different story during these interviews. I spoke to SMBs, our main customer segment, and most of them told me the same thing in almost exactly the same words when I asked this question. “What is the most valuable thing you derived from using our service?” -The answer – “Set it and forget it.”
Wow! We were selling insurance but they were buying time. They were super busy and this was one less thing to worry about. They valued eliminating a boring and tedious task more than whether or not they might lose data.
I think this is typical of most businesses. We think we know why our customer is buying from us so we do not bother to check with them to make sure we are continuing to provide value.
The following exercise is a simple and easy way to check back in with your customers. It should go a long way to getting a clearer understanding of what they want and value.
- Create a list of customers that have bought from you in the last year or so (or reasonable timeframe depending on your business) and order them by profit (% and/or total profit dollars). (Tip: Your list should contain names of people who would likely remember the purchase process in some detail.)
- Create two columns next to each name with the following headings:
- You REALLY like working with them – (i.e., they are easy to work with, do not haggle on price, provide proactive referrals and are happy to provide references when asked.)
- They REALLY like working with you – (i.e., they tell you how much you have helped them in their jobs, lives, businesses and talk about you often with others. You can hear their smile on the phone.)
- Re-order the list by pushing all the customers that meet both criteria above to the top. Maintain the profit order.
- Move to the one question process below.
Ask one question
Creating this list of your best customers, in and of itself, may be illuminating. However, it also is the list of whom you will ask one critical question to help you grow a larger and more profitable business. Here is what you do next:
Craft an email to the key decision maker for each of the top 10-20 names on the list and ask the following key question:
If I were to ask you to write a note to a friend or colleague and asked you to briefly describe why you are our customer, that is, how have we made things easier/better for you and/or your business, and what struggles have we helped you to address, what would you say?
When the answers start to come back, it is highly likely that you will start to see a pattern. As my LiveVault story illustrated, you may notice that it is not what you expected. Your best customers may be buying from you for quite different reasons than you thought.
From this information, you can do a number of things. Here are some suggestions:
- Modify your offering to get much better at what your best customers value.
- Decide to suck at some of the things that they do not value and are costly for you to provide.
- Use their replies as testimonials in your marketing and sales efforts.
- Create a target list of future customers that you think are much like the top names on this list including those already with competitors.
- Train your salespeople to start saying the words that you read in these notes when talking to future prospects.
- Consider firing the customers at the very bottom of the list as you may be losing money or making little to no profit from them. They could be taking time and resources away from your most profitable customers. (You may want to create this list for ALL customers for this part.)
- If not established already, have the leadership team cultivate a relationship with the key decision makers at your top customers that drive 80% or more of your profit.
If you come up with more ways that this information could be helpful, please share them with me.
Here is a simple template to help you get started.
Good luck and let me know how this goes.
Be Exceptional!Bill – Certified Premium Scaling Up Coach
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