Customer discovery: the starting point of your marketing plan.
When thinking about marketing, for many small business owners the things that come to mind are advertising, social media marketing, and maybe packaging and pricing. While all important, these are just some of the elements of an effective marketing strategy.
A great marketing strategy starts long before these topics come up – ideally even before a product or service exists.
At its most fundamental, marketing is about meeting the needs of people and businesses profitably. To be able to achieve this, it is necessary to understand what these needs are to determine how they can be met. This is the discipline of customer discovery.
Whether you are developing a new product or service, or improving the communication of an existing one, this process can greatly improve your business performance.
Answering the following five questions will help you ensure a focused and effective marketing plan. This is not an activity that can be completed in a boardroom – you need to get out and engage with your customers for it to have any real value.
Even very large businesses with dedicated marketing departments fall into the trap of believing they have an accurate understanding of who their customers are and what their needs are. As long as these are based on assumptions, there is a real risk that this understanding is superficial, flawed, incomplete or straight wrong. Don’t assume you know your customers until your beliefs have been explicitly validated through customer feedback.
“Don’t assume you know your customers until your beliefs have been explicitly validated through customer feedback.”
A customer might be a consumer, a small business, a government agency or a large corporation. Each of these segments may have many sub-segments with very different characteristics and needs. To further complicate this, an organisation may have many different internal customers (a buying centre) each with different priorities. This is particularly true in government and large corporations. You might even have more than one customer, as is the case for producers selling through retailers (customer #1) to end consumers (customer #2).
To be able to understand the needs you are satisfying, you need to know who your customers are. A practical approach to this is mapping out the process that must be followed to reach your end customer, including your suppliers, logistics and sales and marketing channels. You can achieve this by mapping this journey from the end consumer back to where your business fits in. Interview the consumers or businesses that buy what you are selling to ensure their buying criteria are appropriately satisfied.
A customer will only buy your product if they believe you satisfy at least one of their needs. This may be:
A tool such as the Value Proposition Canvas (free from Strategyzer) can be very helpful to achieve this. Feedback should be sought from each of the customer groups you have identified as potential customers for your product through interviews, surveys and observations. The important aspect is that these are true insights into your customers and not based on your assumptions.
The three parts of a customer profile to be clarified are:
Not all jobs, pains and gains are equal. Some of these will be absolutely critical to your customer, while others are relatively minor. As no
Once you understand what is most important to your customer, the next step is to ensure you can provide a product or service that meets that need. This product or service (the value proposition) may be a new offering you are creating to meet an identified customer need, or from your assessment of customer jobs, pains and gains you may be refining your target customer base for an existing value proposition.
The three parts of a value proposition are:
The best value propositions address one or more of the most critical pains and gains experienced by customers. Often the less important pains and gains cost more to provide than the value they generate for customers, and as such should be eliminated where possible. One of the benefits of a great customer discovery exercise is that you can potentially increase value for your customers and reduce your costs at the same time, by increasing features that are high value to customers and low cost to you while eliminating features that are low value to customers but high cost to you.
For example, a digital marketing agency might determine that their customers’ greatest desire is to boost online sales of their product. This customer is concerned that this will consume too much of their time, and that it will be expensive. A value proposition could be a search engine optimisation (SEO) tool that ensures their website comes in the top of search rankings (gain creator), and because it is automated the tool is great value for money, bringing in many times more profit than it costs to purchase (pain relievers).
It is of no worth to create a product or service that people love and need if you can’t make money by providing it. Your value proposition fits within a business model that determines the resources, capabilities and partnerships required, your channels to reach your customers and the relationship you have with them, your revenue model and your cost structure.
A tool such as the Business Model Canvas (free from Strategyzer) is very helpful to map out how all of these elements work together in a way such that they reinforce each other, so that you can service your customers profitably. If your model indicates that you cannot make a profit, some iteration between your business model and value proposition may be required.
With this solid foundation, you are finally ready for the elements of your marketing strategy that most business owners are familiar with. These include selecting channels (eg, through retail outlets, e-commerce, direct B2B sales, etc), packaging and aesthetic design, where you advertise, and what you communicate in your advertising.
Trying to skip from one to five is a true fool’s economy. Before you consider spending money on an expensive advertising agency, make the effort to ensure you understand who your customers are, what they care about, and that your products and services address their needs in the most effective way possible – your business’s bottom line will thank you for it.
James Baker, director, Ars Imperatoria Consulting
This story first appeared in issue 30 of the Inside Small Business quarterly magazine