How Leaders Can Create Successful Products For Their Customers
The things I learned from leading TU20
In Dec 2018 I realized that we needed to have a stronger succession plan for TU20. From that emerged the TU20 leadership series, a 12 week set of readings and exercises that helped to prepare the next group of TU20 leaders. This is chapter 7, originally written in Feb of 2019.
Leadership Principles from Amazon’s Website
Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.
The Customer is always right … kind of
We’ve heard the saying that the customer is always right, and many companies have take on some variation of this mantra.
This quote is probably giving you mixed feelings right now; customers are important but, they can be annoying, manipulative and sometimes … wrong?
Don’t ask the customer what they want
One of the mistakes people make in startups and large companies is asking how a customer will solve a problem they have. This can be a poor approach for a couple of reasons:
1) People would have solved a pressing problem if they had a good solution.
2) Thinking about the problem under pressure often does not yield very good solutions.
3) Customers might forget other more important problems at the time of questioning and tell you one that was most recently on their minds.
4) Asking may give you a symptom rather than a root cause and then you become overly focused on building rather than further exploring.
There are scenarios where these rules should be ignored:
1) The customer may need to solve this problem, but has even more important problems or lacks knowledge, people or ability to hire in a short term capacity. This is often why companies bring in consultants. The issue might also be with execution of the idea.
2) Sometimes the solution is obvious and as you are exploring the customers needs, this becomes clear. If you are solving a problem for a manufacturing company and certain machines keep overheating, asking a worker onsight why this happens and what they’ve tried in the past may be helpful. You’d be surprised how many times management does not talk to their employees, or cuts costs for critical things: “Oh we can get a fan half the size, it will save us 20%!” Brilliant! Until the machine overheats.
3) As in the case above, this problem may really be limiting the workers/companies productivity. Getting another perspective from an outside source might be helpful to actual take action.
4) This is more of a mental barrier. During one of my internships, I was asked to integrate a feature into an app. I built a Proof of Concept (POC) that worked in a day and then spent the next month trying to reliably integrate it. Turns out for this problem my POC would have worked well, so I basically wasted a month by asking for the solution and not the problem.
People don’t tell you everything you need to know
An easy example is a doctors visit, where in Ontario you may be accompanied by a parent until the age of 16. Say you are 15 and unfortunately started smoking, and as a result have developed a bad cough. Your doctor asks you if you have smoked or consumed alcohol and you say no, because your parents are in the room and you’d be in big trouble if you say yes. Hopefully the doctor doesn’t take this for granted and does a thorough lung examination. But as a result of your (under pressure) answer, the doctor may focus more on a bruise or rash you had, rather than a breathing problem.
This is an obvious example, and in many cases of business, the misdirection of customers may not be as obvious. Some common
Just like when you meet new people who you are trying to become friends with, you don’t tell them all your deepest, darkest secrets on day one or five or ten. Maybe on meeting 100. But how many times will you meet with a customer, and if your job is to solve their deepest, darkest problem, how can you do so?
Some common issues people won’t tell you about that cloud their judgement:
- Of the unknown,
- Of losing their job,
- Of being unable to learn
- Of judgement
- Of admitting being wrong/guilty
- Of losing status
- Sounding silly
- Discussing issues on a team
- Personal circumstances
- Personal history
Key things to do:
Make the customer feel comfortable and let the customer lead the discussion.
This includes explaining how their data will be used.
Figure out the pressure that the customer faces and their background. Be wary of stereotypes.
Exercises for the meeting: We will take turns being a customer and asking each other questions on a topic. The topic for tonight: Homework management.
Reflection point: Many of the points related to interviewing customers are similar to working with teams.
If you can help someone with a problem (work or personal) -> be there to support.
If you need help (work or personal) -> reach out.
How do we take the philosophy of customer obsession and apply it?
We learned about Design thinking as part of the TU20 Cup, and it applies very much to leading an organization.
There are a couple of things missing from design thinking that we need to consider.
Preparing to research
You need a spark to do research, some creative idea, some problem you see. This will guide your Understanding stage and make it more effective. It takes a lot of time to be well prepared for an interview.
Caution: Don’t over prepare to the point of stagnation, have a bias for action.
Finding People to Interview
The diagram curiously avoids how to find potential customers/testers. This is hard. First knowing who to interview, second getting them to agree to interview, third coordinating interviews. This is a huge time sink!
So what can we do about it:
1) Network — When I was thinking about launching an HR product last summer, I reached out to 10 people I knew in HR, but only had two conversations.
One person was too busy to provide a lot of feedback and did not offer to be the first customer.
The second person told me they thought it was a cool idea and would connect me to some new people (it didn’t happen).
No customers = No startup. So I refocused on TU20.
Meetup Socials, Meetups, Warm Intros, Conferences, Cold Emails, seem to be most effective for meeting people in a specific area.
2) Find Paying Customers — Ideally, your customer research also yields some potential customers. If someone is ready to put down money for a project, take it and build it. This means the problem you are solving is significant likely replicable.
3) Create Personas — You will find that people that typically share some characteristics, and these form personas. After conducting a number of interviews you will see patterns emerge. With enough data, you can have a computer do it for you.
For this survey we are conducting, we probably don’t have enough data to really leverage data science tools, but we can certainly do some data visualizations.
4) Balancing referrals. If you need 100 customers for a product, finding similar customers to your existing ones is a good strategy. If you are trying to do research, try to go a little wider so you don’t over focus.
5) Let them find you. A website, social media, content marketing. SEO.
6) Get good at emails and cold calls. Did I mention emails?
Keeping a pulse on your org
As an organizational leader, you always want to have a pulse on how your customers feel and how systems affect how your customers will interact with your organization.
The first point is easier to understand, but you need to make time. Many successful executives specifically block out times during their day to listen to customer calls to understand their pain points, with Jeff Bezos being one of the more famous ones. Live calls, surveys, online reviews are all tools to keep track on how you’re doing.
You may be thinking, these are all interesting techniques, but “Why would I respond to a customer complaint when I can just read a summary report? I’m a busy executive!”
The answer is a little silly because its so simple: these are the people paying you money. You Should care about what they are saying or thinking!
With that in mind, its useful to look at aggregated metrics to get a wholistic perspective, such as looking at your SEO rankings.
TU20 was doing well in some ways, not in others (Circa 2019)
The Enterprise Sales Roles
There are a lot… https://www.thebalancecareers.com/sales-job-titles-2061545
Lead generation — Figure out who to reach out, blends with marketing
Sales Development — Take leads and set up first meetings, get the potential customer ready.
Sales ops — Support your team with tech, coordination and strategy
Account Executive — Manage existing relationships, build new ones from Sales Development Reps
(Pre) Sales Engineer — Be the technical person clients can talk to, build a proof of concepts.
Business Development — No one knows … something about trying to create new markets, approaches and partnerships. Usually ends up being sales development.
When you have a small team you do everything. But eventually, you need a process. The first useful things are called a CRM (Customer Relation Management) … these systems are the life and death of any company. It’s basically an enhanced contact book. Who is this person, what do they do, how many times have you talked with them, when should you follow up, etc. At some point, it becomes hard to remember, especially with a multiple person sales team. A spreadsheet works, but usually, you need something more sophisticated.
Top three skills in sales:
- Listening — What does your customer actually need?
2. Organization — You are managing many things at once, can you be efficient with your time?
3. Resilience — People ignore you, sales people have bad reputations, people reject you, you miss quotas.
You need processes: Email templates, Contact Types, Brand guidelines, Email timing, Training processes, Calendar Invites (!!!).
Without these, you forget stuff, are fragmented and not cohesive.
How do I incorporate my own ideas with customer wants?
The easiest way to start a company is in a space you know. If you built gadgets for forestry companies, you probably know the problems, while most people don’t.
Worked in Re-Insurance? No one knows how that works, so you can probably fix some stuff. Your own ideas spark creativity, your credibility gives you access to interviews and you can sometimes be your own brand ambassador (image us trying to run TU20 if we were 50 … hello fellow kids).
Understanding types of customers (LTV)
Companies survive using a couple simple equations one of which is customer value.
Life Time Customer Value (LTV) — Cost of Customer Acquisition (CAC) > 0
If you spend 100 dollars to acquire a customer that will spend 1000 dollars over the course of being a customer, great! Even if they may only spend a little bit at a time.
I remember hearing Walmart’s Customer LTV on average is $250,000 (!!!) So one bad experience and … oh … that’s why the customer is always right.
Customers vs Users
Many times customers and users are not the same thing given the business model.
One guy I know runs a Data Science Mentorship/Hiring company. There are three key stakeholders: mentors, companies looking for Data Scientists and mentees. Your business model has 8 options in this case (2³) depending on who you charge to make money. In this case, the company charges Mentees a fee that goes to the mentors after they get a job. The startup takes a cut. Companies join for free (!!!).
Many companies are marketplaces, so they have to subsidize one or more players to initially acquire them.
Reflection: Who does TU20 “subsidize”, what is the current business model.
Current TU20 Users/Customers/Stakeholders
Reflection point: How many TU20’s pay for their own tickets?
We run into a chicken or egg problem:
No sponsors, no event. No event, no sponsors.
No Companies Hiring, No Students. No students, No Companies Hiring.
Why be customer obsessed?
Customers buy your product/service because they have a problem, and you solve it. If you stop solving it, it becomes …
“That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.
Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” — Jeff Bezos
- This year is the first year we have done a student survey on student needs, why is this a problem? What limitations has this given us? What opportunities did this present?
- We have a bunch of potential customer data, what are some interesting trends? Possible limitations?
3. What are our next steps?
4. Have you ever worked in retail/fast food? What was the policy for treating customers?
5. What was a time you created something for someone (ex cookies) but then they ended up wanting something else? What did you learn?
6. What part of the sales cycle excites you the most? Which one stresses you the most?
7. What kind of domain knowledge do you have, that you could combine with customer feedback?