A business venture is nothing without customers. Yet, too many entrepreneurs lose sight of the importance of their target audience’s needs. Thus, using a customer-centric strategy sets you up for reaching the highest successes.
For the EWOR Academy, Alexander Grots gave a lecture on why customer centricity is so important for entrepreneurs. The founder of ProGlove and co-founder and CCO of EWOR, Alexander has spent the past 20 years in the business world. His journey has proven that understanding the customer is the key to success.
This article is complementary to Daniel Dippold’s introduction to customer centricity. We’ll teach you how to build upon that basic knowledge and use the best customer-centric strategy.
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Why Do We Need a Customer-Centric Strategy?
Entrepreneurs strive for innovation. As a founder, you are driving change and trying to improve the world. Understanding the links between customers, business, and technology creates spaces for innovation.
The Venn diagram above illustrates one definition of innovation. It shows us three main components that interact with each other: people desirability, business viability, and technology feasibility.
This component describes the need for people to want your product or service. It confirms if your target audience is willing to pay for what you offer.
Business viability is the profit side of the equation. It’s the reason why most people choose this career path. We have to earn a living and generate income from our venture.
This term concerns the building of the product. It only becomes an innovation when you’re able to build it. If it’s impossible to build, it’s merely a fictional idea.
Spaces to Innovate
The overlap between these three principles forms innovation spaces. In turn, these spaces and relationships create three different types of innovation.
Emotional innovation is the connection between a brand and people. It turns customers into fans that promote your product.
Functional innovation is the practical aspect of building a product. A chair is functional as it creates a sitting surface, for example.
Process innovation describes the improvement of processes through innovations to make them more effective.
All three innovation types together form experience innovation for the customer. Unique experiences cannot be copied, which gives you an edge in the market and builds strong customer relationships.
Everything you build as an entrepreneur serves to create these unique experiences for customers, making them your top priority. A customer-centric strategy ensures that you stay on the right track and innovate in ways that work for both your business and your customers.
How Does This Work in Practice?
A small example will illustrate how this definition of innovation works in tandem with your customer-centric approach.
Alexander consulted The Bank of America Corporation at one point in his career. Their main goal was to help Americans save money, but they had no idea why their customers struggled to track their spending.
Customer interviews and research showed that average Americans struggled with keeping track of small numbers due to psychological factors. When they bought an item for $16.50, for example, they would round up to the nearest dollar and collect the change in a jar at home. No one wants to deal with small change.
In response, Alexander’s team suggested the online transaction initiative “Keep the Change.” With every purchase, the feature would round up to the nearest dollar and the change would be transferred to a savings account. At the end of the month, customers saw how much money they had collected simply by saving small amounts with every purchase.
This idea was technologically workable, it saved Bank of America lots of money, and customers loved it. They didn’t have to put in any effort after signing up for the programme and still benefited from it. Thus, the three innovations created an experience that customers talked about and promoted.
Where Do You Even Start?
Most companies start with the technology side of this innovation principle. They focus on product development and then test if people like it. It’s a risky approach that could backfire if customers don’t respond well to it.
How do you increase your chances of success?
Start with the people. Understand how they interact with the world and use those insights to inform the technology side. This method increases your chances of success, as you involve customers in the designing process.
This approach is the epitome of customer centricity. By making them your priority, you’ll reap the benefits when they respond well to the products they want. Save money and time, while simultaneously pleasing your customers.
Tips From an Experienced Entrepreneur and Investor
Focusing on customer needs and feedback means you’ll have to engage with them in interviews and research processes.
During his entrepreneurial career, Alexander has learned many valuable lessons and behavioural patterns. Study the following tips and use these guidelines to improve your approach to customer centricity:
See What’s Real, Not Ideal
Entrepreneurs aim to build the best products for their customers. It’s not a revolutionary approach in itself. However, many companies develop their products for perfect circumstances.
Don’t make the mistake of assuming people will buy your products under ideal conditions. Conduct research and product development with the reality of life in mind. For example, if you’re building a dishwasher, don’t assume customers will rinse their plates before loading the dishwasher. If your product can’t handle realistic use by customers, they won’t enjoy and buy it.
Talk to People in Their Environment
This tip goes hand in hand with the previous one about realistic circumstances. Use your customers’ environment to inform your technology. During interviews, ask them to show you how and where they use the product.
An example will illustrate why this is important. Alexander conducted research on arthritis medication for a pharmaceutical company. He found that while the medication itself worked well for older people with arthritis, their illness and age made it difficult for them to open the product.
Alexander’s team only realised this problem when one customer used an electric bread slicer to open the bottle. In hindsight, the packaging issue should have been obvious given the topic of painful arthritis that often affects people’s finger joints. Yet, only customer research in their own homes delivered practical feedback.
Changing the packaging gave the company a great advantage, even though it’s so simple.
Look out for False Self-Perception
Some customers will have an opinion on their habits or needs that doesn’t match reality. Don’t only focus on what they tell you, but also what they do.
For example, Alexander interviewed someone who claimed to have a perfect overview of their credit cards and bank account balance. He asked them to explain the plethora of cards in their wallet and found increasing confusion in this customer.
Another example is a woman who wanted to save money and claimed to prefer cheap food over fresh products. On a trip to the grocery store, however, this woman reached for the fresher options in the back. She made an active effort to buy fresh products, despite claiming that it’s not a priority for her.
In short, people will contradict themselves and it’s your job to find out what they actually want and need as part of a customer-centric strategy.
Context Is Key
Building a product for a specific purpose is only half of the equation. Without context, you risk missing the mark and people not buying your product. By considering the context in a creative way, you can improve sales and grab the customers’ attention.
What does this mean in practice? Take one of Alexander’s clients, for example. His task was to research how a washing powder manufacturer could target three different markets at the same time. Different washing habits across cultures make this goal more difficult.
After conducting customer research and interviews, Alexander took inspiration from a Mexican woman who washed her family’s clothes outside near the flowers she sells at farmer’s markets. He suggested a second value for one product: repurposing the washing powder boxes.
The company added labels with ideas for different uses of empty washing powder boxes to the packaging. The suggestions were unique among standardised packaging in stores. Customers enjoyed the creative ways they could get a second value out of one product.
This simple and cheap change increased the company’s market share and worked across different cultures.
Open Your Eyes and Observe
Before embarking on interview and survey quests, conduct research by observing your surroundings. Walk around your environment with open eyes and watch how people build their own workarounds for problems.
If a laptop charger is too heavy for an electric outlet, people will build small mounts out of random objects. When they can’t find the keyhole in the dark, they will use the screen light from their phones to increase vision. If they want to keep their motorcycle seat dry, they will place an umbrella over it in the hopes that no one will steal it.
These everyday inventions show you how people are solving these problems in unconventional and practical ways. Use these observations that are relevant to your product and market.
Make it your mission to understand human behaviour and copy it or develop a better solution. Implementing that knowledge into your customer-centric strategy will save you time and money.
For an in-depth guide to the best customer research methods, check out this article.
Instead of generating ideas and testing them on users, switch the two approaches. Observe the behaviour of possible users to inform the development of an idea.
Keep Alexander’s examples in mind when planning your customer research. Create experiences that your customers need and inspire fascination in them. Remember to listen to what people say, but also look at what they do. That discrepancy is where innovation is born.
With these basic principles and tips, use a customer-centric strategy to turn your start-up into a success story.