Want Growth? Don’t Look At Your Customer Data

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Author: Andrea F Hill

Paying too much attention to today’s customers may make you blind to tomorrow’s.

It’s an easy trap to fall into.

Your company is doing well, you have a solid base of existing customers, and you want to grow your customer base.

You have a CRM system overflowing with customer data. It should be easy enough to ask an analyst to pull some reports to see which industries, company sizes, and job titles dominate your customer records, right?

Then you just need to get the folks in marketing to pull a few lists and go after customers who look like your existing customers. You’ll win again where you’ve won before, right?

Maybe. But approaching growth this way is like looking at the market through a straw.

  • You’ll be missing an ocean of non-customers you could be attracting.
  • You’ll be missing any changes in the market.
  • You’ll be missing the information you need to take your company to the next level.

Falling Prey to Survivorship Bias

Survivorship bias is where we focus on subjects that have made it past some selection process and ignore those that did not. This is typically because they’re not as easily noticed or observed.

A commonly cited example of survivorship bias harkens back to World World Two. Planes were getting shot down in droves, and a team of statisticians was hired to figure out how best to reinforce the planes without adding unnecessary weight.

The military brought in brilliant statistician Abraham Wald to review the distribution of bullet holes across various parts of the aircraft. The officers wanted to know how much to reinforce the parts of the plane that were most heavily riddled with holes to prevent more losses. Instead, Wald told them to focus on the areas of the returned planes that had fewer holes.

The missing bullet holes were on the missing planes. The reason planes were coming back with fewer hits to the engine is that planes that got hit in the engine weren’t coming back.

Indeed, the planes that had returned were the successes. The team needed to focus on what was missing and solve that problem instead. They had been operating under the belief they had complete information, which in this case was a fatal error.

North American P-51 (Mustang), “Cloud Dancer”

Why is Survivorship Bias Such a Threat?

When you do customer research, do you talk to your existing customers, or to those who didn’t come back?

A few years ago, I was working with a collaboration company with an established product and solid customer base. They started to see and hear rumblings of the benefit of video in collaboration. To add this to their product would be a huge undertaking, so they surveyed their customers. Was video important to them?

You can probably guess the answer.

The company’s existing customers — the survivors — didn’t particularly value video. So the team used that as the rationale for not doing the development.

They didn’t stop to consider that this was a self-fulfilling prophecy: customers who valued video weren’t (and at this rate, were unlikely to become) customers.

Every team faces the delicate balance of acquisition and retention, and I’m not advising you to completely dismiss the desires of your existing customer base. But you also need to consider those who aren’t yet, but you want to have become, your customers.

Identifying the missing gaps can help you ensure you get more planes to land safely.

Getting the Full Picture

So if you can’t use your existing customer base as a model of “Where you Win Today” to get to “Where You Should Focus To Win Tomorrow,” what should you use?

Jobs to be Done Theory states that people have things they are trying to accomplish, and they hire products and services to get them done.

As product organizations, it’s natural for us to focus on the solution we offer, and ignore the higher-level Job of the customer. But uncovering the Job customers are hiring our solution to do can help us understand how our product fits into his life (or not).

Understanding The Job to be Done Helps you Conduct Better Research

For one, it helps orient your research. Certainly, it’s much easier to recruit from among your existing customer base. They’re right there! You know they’re hiring your product, although you may not truly know what they’re hiring it for. But as we’ve already established, only talking to existing customers blinds you to the broader market.

Focusing on the Job lets you recruit interview subjects who aren’t current customers, but could be, based on what they’re trying to accomplish. (You can read more about non-consumers in this post from Oct 2017 ).

Better Research Leads to Market Insights

Now instead of asking customers why they hired your solution, you can look to non-customers to understand why they didn’t. This offers tremendous opportunity to make changes to your product, positioning or business model to expand your customer base.

Incidentally, recruiting for research based on the Job rather than the specific solution people have ‘hired’ is critical to tapping into non-consumers.

Non-consumers are those who could be served by a market because they have a Job to be Done, but haven’t yet found a solution that meets their needs. We often think about how to convert customers from a competitor’s solution, but tapping into non-consumers can be tremendously successful.

Non-Consumers Grow the Market — and Your Revenue

Three major benefits to going after non-consumers include:

  1. No switching costs
  2. They will be thrilled for any solution (lower expectations)
  3. Less blatant attack on competitors

If we only look to those who are already picking solutions in the market, we have trouble designing for those who aren’t.

Understanding Market Shifts

By assuming your future customers look like your existing customers, you’re assuming that market demands are static. That’s a crucial mistake.

Whether you like it or not, customer expectations will shift. Other competitors will shift. You need to shift accordingly.

Looking at current behavior can blind you to outside forces. Loss aversion and switching costs may keep people using your product, but it doesn’t mean they will never leave.

Helping Customers Get Their Jobs Done Better

The other problem with customer data is that it answers what but not why. You can observe the users’ time on a screen, or frequency of visits, but must guess at whether those are positive or negative signals.

A simple example: using the in-app chat or help desk. A company finds their help desk tickets are decreasing. Is that good or bad? We don’t know. It could be a reflection on the product, or the help desk service, or the ease to access the help desk. (Want to decrease customer support calls dramatically? Stop publishing a phone number..)

Talking to customers about the times they’re not using your product (which is likely the majority of the day) can give you critical insights into where you should focus. The critical spots that need extra reinforcement.

Going back to our WWII planes: the engine didn’t need more power. It didn’t need to be more engine-y. It needed complementary support to enable the overall system to function.

Understanding Where Existing Solutions Fall Down

To get back to our conferencing example: rather than asking “do people want to collaborate via video” (solution-centric), the team could have wondered “what are people trying to achieve when they collaborate? How do they measure success?”

At this point, rather than a yes/no answer to the solution, the team could better understand what’s important to collaborators, regardless if they’re currently hiring this company’s product or not.

In this case, an interviewer may also dig into times when the current solution is not meeting their needs. What are the other ways they choose to collaborate? One of our interviewees mentioned that when it was going to be a heated or animated discussion, she’d sooner cancel a meeting than hold it remotely. She wanted to be able to read peoples’ body language as the discussion took place.

If we asked her if she wanted video, she’d likely have said no. But were there circumstances when reading body language was important to her, and she was forced to hire a different solution? Yes.

Jobs to be Done helps you dig into how specific situations and circumstances affect a person’s desired outcomes, and break free from the trap of generic measures of success. Many great innovations arise from edge cases.

Avoiding the Current-Customer Data Trap

Referring to existing customer data can be easy and convenient. But it comes with a huge cost: taking your eye off the larger market of non-customers you could be serving.

By changing your focus from “the people who currently give us money” to “the Job we can help people get Done”, you can see and chart a path forward. The specific people may change. Their desired outcomes and expectations around the solution may change. But you won’t be blind-sided with what is happening outside your narrow view of the world.

source: thinkgrowth.org

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