Do You Hear What I Hear? [Part 1]

In my last post I wrote about how “compete is a verb” is one of my favorite business sayings.  The bottom line is that if you are not competing every day your business is going to be left behind.

So how do we find out what we need to do to stay competitive?  My answer is that we need to listen to three groups – our customers, our employees, and our competition.

Our customers will tell us what they want.  Strangely enough, they won’t always be able to tell you what they want when you ask them. Don’t get me wrong, asking customers questions is important and can be done through surveys, interviews, and suggestion forums.  But if you ask someone “What do you want us to do for you?” the chances are that you won’t get a valid answer because the customer doesn’t know what you are able to do for them.  In most cases, it is like asking someone who has never had a pizza to describe one to you.

I think that there are two good ways of finding out what customers want. The first way is to offer them options to consider.  For example, you observe that the customer has bought a widget.  You ask “what do you think is the better idea? Widget plus X or widget plus Y?  What else would you add to the widget?”

By positioning the question in this manner you provide a context for the customer to create and visualize alternatives.  This is a much better approach to getting useful information than asking open-ended questions.  The customer can evaluate the options in front of him and then extrapolate options.

Something that I would always recommend is to have determined the retail price of the widget plus X or Y before you start the interview process so you can ask the customer whether they would pay that kind of money for the product.  There are a lot of things people think are cool and would like to have but would not be willing to pay what it costs to obtain it.  It doesn’t do you, or the customer, any good to develop and carry a product that no one is willing to pay money for.

The downside to this approach is that it usually focuses only on incremental changes. You are taking a basic product and adding a component or tweaking a feature to create something that is gradually transformed.  This methodology won’t help you to introduce products that are a completely new innovative.  The best example of this that I can think of is the Apple iPad.  The customer said that they didn’t see a need for another personal computing device that was bigger than a phone and less functional than a laptop computer.  That was over 200 million iPads ago.

Having said that, incremental improvements to product and service offerings tend to be a better way to go. The risks are not as high as with a transformative product launch (think: adding a day spa to a c-store) whereas incremental changes can generate an ongoing cycle of promotions and excitement in a store (think: new coffee combo offerings).  A cycle of offerings keeps the store’s offer fresh and customers coming back to see what is new.

Next post I’ll discuss the second type of customer listening.