Jan Bosch is a research center director, professor, consultant and angel investor in startups. You can contact him at jan@janbosch.com.

Opinion

There’s no such thing as “the customer”

Leestijd: 6 minuten

No matter whether we’re in B2C or B2B, there’s no “customer” as a single, identifiable being. We need to understand the drivers and key priorities for each of the relevant (f)actors.

If there’s one person I’d love to meet, it’s this “customer” virtually all the companies I work with refer to. In many businesses, the customer is this mythical individual who has all the answers, who is the only reason why we can’t or must do certain things and whom everyone must appease for the company to be successful.

It’s obvious that for any company to exist, there need to be customers to pay for the work. Also, most research suggests that customer-centric companies are more successful. The challenge in most cases is that no individual can be considered “the customer.” In B2C companies, the number of customers is typically quite significant and tends to be in the thousands or millions. Talking about “the customer” is quite irrelevant as there are so many of them.

In such cases, companies need to resort to other techniques to determine the functionality they should prioritize. Some use personas in an attempt to put a face on “the customer.” Others use customer segmentation and use these customer segments for prioritizing functionality that best serves the most valuable segments. Often, various forms of statistical analysis are employed to make sense of the oceans of data most B2C companies have available to determine what “the customer wants.”

In B2B companies, the typical number of customer businesses tends to be much lower. For a company building airplanes, it’s a few hundred. The same is true for telecom operators and many other industries. The challenge for B2B companies is that their customer businesses tend to have many employees and functions. Several of these functions interact with the company and within these functions, there typically are multiple individuals interacting with the company.

For B2B companies, it’s tempting to treat “the customer” as a single entity with a single voice, but this is far from the truth in virtually all cases. Instead, we need to understand the drivers and key priorities for each of these functions, the internal politics and the strategic priorities that the C-suite has established. In most companies, for a deal to go through, it requires all the key functions and key decision-makers to approve or at least not veto the decision. A single no or veto can break the deal.

This is why so many companies seek to establish strategic partnerships, invest in collaborative innovation efforts, wine and dine key decision-makers and use many other tactics to overcome the inertia caused by those in the company not in favor of the value proposition made. A typical tactic is to build close relationships with a key champion in the department that will apply the solution offered by the company and use this individual to overcome the hurdles the procurement department tends to put in place. Having someone on the inside negotiating on your behalf is an incredibly powerful asset.

In my discussions with companies, I use, among others, three strategies to address the challenges when talking about “the customer”: clarification, experimentation and confrontation.

First, whenever someone claims the customer demands something, I start to ask clarifying questions about the specifics. These include questions about the role of the person making the claim, the context in which it was made, what the individual’s decision authority is, how this might play into the politics at the customer company, to what extent socially desirable behavior might have been a factor, and so on. This allows me, the others in the group as well as the individual making the statement to reflect on the accuracy and validity of the statement.

Of course, as I’m typically in the role of an outsider, either as a consultant or a researcher, it’s easier for me to challenge someone in the company than for an employee, especially when the individual making the claim has a senior role. However, in my experience, most company cultures allow for genuine, authentic clarification questions by anyone.

Second, whenever there’s an opportunity, I look for ways to translate claims and statements by individuals in the workshop or meeting that I’m part of into testable hypotheses. Once I’ve succeeded in doing so, the next step is to formulate one or more experiments to quantitatively test the hypotheses. The challenge is that what customers say and what they actually do in practice can be, and often is, quite different. As we should base our decisions on what they do rather than what they say they do, this allows us to overcome an important hurdle in improving the effectiveness of our R&D.

In practice, experiments that answer hypotheses in a complete, statistically validated fashion can be quite expensive. Alternatively, we can run a series of experiments where we increase the validity and trustworthiness of the hypothesis with increasingly expensive experiments. That allows us to disprove the least successful ideas early and spend little resources on them.

Third, especially in companies that consider themselves particularly customer focused, there’s very little in terms of ideas and hypotheses of what customers might want that doesn’t originate from a customer asking for it. The challenge is that it’s our job to identify new customer needs before the customers are even able to verbalize them. It’s between the need appearing and customers being able to verbalize them that companies get disrupted. By the time an incumbent realizes what customers really want, a new entrant may already have built up a lead that’s no longer feasible to catch up with.

To quote Henry T. Ford, if I’d asked my customers what they wanted, they’d have asked for a faster horse. Rather than asking what customers want, focus on what you believe will add the most value. This requires an opinionated product management team that follows the principle of “strong opinions, loosely held” to create a creative tension in the team that allows for ideation and hypothesis development based on the company’s domain knowledge.

In this context, it’s important to note that in many companies, “the customer” is used as an excuse to avoid the creative conflict that’s necessary for companies to identify novel and innovative concepts to better serve customers. It feels uncomfortable and difficult to express that you disagree with your colleagues and believe that there are specific ideas that need to be tested and experimented with. This is where leadership needs to be proactive and create a culture where teams can have constructive disagreements and maximize their learning together.

In virtually all companies I work with, there’s a frequent reference to “the customer,” a mythical being that needs to be appeased at all cost to ensure the continued success of the company. No matter whether we’re in B2C or B2B, there’s no “customer” as a single, identifiable being. To address this, three tactics are helpful: clarification, experimentation and confrontation. Although we’re not the customer, it’s our job to build empathy and understanding to the point that we can identify the needs of customers before they can formulate these themselves. Or, as Steve Jobs said, “Get closer than ever to your customer. So close, in fact, that you tell them what they need before they realize it themselves.”

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