Customers Lie -- So Stop Taking Their Bad Advice
Your customers can put your business on the map, but that will happen only if you get the real scoop before you launch.
Are you a "passionary"? Not sure what that means? You're in good company.
When Boston-based startup Besomebody peddled its app on Shark Tank, the company's proposal sounded overly simple: Get all the "passionaries" together in one place to share amazing experiences.
Besomebody started as a trending hashtag before growing to become a website. An ongoing swell of positive feedback pushed CEO Kash Shaikh to launch an app devoted to the burgeoning community.Unfortunately for Shaikh, the startup never took off; he ended up shutting it down after about a year. (On the upside, Shaikh lucked out -- Utivity Holdings purchased Besomebody early this year, ostensibly for its inherent database opportunities.)
Shaikh's error? He made the all-too-common mistake of taking customers at their word. It's easy for potential patrons to adore something when it's theoretical; it's tougher to get them to open their wallets when they're faced with a buying decision. "I love it!" sounds wonderful, but actions speak louder than words.
Talk is cheap.
Entrepreneurs expect to make mistakes. But what they don't want to do is damn their companies by making two fatal errors at the beginning of the journey. Those blunders fall into the categories of selective hearing and impulsivity.
Entrepreneurs are naturally passionate about their ideas or products, often to such a degree that they hear only what they want. Instead of trying to quantify market demand, they place greater weight on comments that echo their own opinions. This is known as confirmation bias, and it happens in everyday experiences.
Entrepreneurs must be willing to rid themselves of confirmation bias by seeking falsification rather than corroboration. Like smart scientists, entrepreneurs should work to debunk their theories rather than bolster them with biased kudos.
The second error? Entrepreneurs have a habit of not doing proper planning and legwork before jumping headfirst into the pool. They're risk takers, who tend to rush into situations without first considering their implementation plans. This premature execution ends up wasting time and money.
These two costly errors have brought down many entrepreneurial ventures. Both problems lead back to the fact that customers aren't always right -- or honest -- in the early stages of a business. Entrepreneurs must look beyond lip service to get an accurate assessment of their odds of success.
You can't handle the truth.
On House, the eponymous genius doctor had a familiar motto: "Everyone lies." Cynical? You bet. Correct? Definitely.
Customers aren't always truthful, but they also don't realize they're lying to your face. That's why bold entrepreneurs must be ready to move past the role of armchair philosopher, to engage in hands-on research and testing. The only way to get accurate results is to dig deep beneath the surface.
Take focus groups, for instance. Some entrepreneurs might think focus groups should be made up of the people closest to them -- friends, family members and anyone else within two degrees of separation. These are not your ideal customers, though; they're your social club. They're not the right people to ask whether your product sucks because they'll likely sugarcoat the answer.
Ironically, strangers will probably also be less than forthcoming. People are generally kind and don't want to mess with someone else for the fun of it. They'll probably shower you with compliments and avoid pointing out the blatant shortcomings of your product in an effort to spare your feelings.
Should you ditch feedback altogether? Nope. But you should be careful to observe how focus group members are saying what they're saying instead of only recording their words.
Oh, and please ask real questions. "Would you buy this for $100, $10 or 10 cents?" isn't a valid question because you're dealing with imaginary money. People are incredibly generous when it comes to hypothetical dollars, but they tighten their purse strings faster than Ebenezer Scrooge when it's time to spend hard-earned money on something.
When your company is on the line, there's only one question you need to answer: Do you offer more value than a customer can deny?
Keep your ears and eyes open (and your mouth shut).
Unsure how to listen to opinions without interjecting natural biases? Don't feel bad, as it's a common ailment among entrepreneurs. These three strategies can help you keep your distance and avoid eliciting false praise:
1. Observe potential customers in action. It's incredibly helpful to observe potential customers and note how they behave with respect to your product or service. But don't stop there. Take a close look at those same behaviors when it comes to your competitors. This will help you determine whether you're offering value -- and, remember, people pay for value.
Gather possible customers and provide them with your product and competitors' offerings. Data from SurveyGizmo indicates that almost three-quarters of people in surveys said they are willing to give specific feedback, but you have to ask for it.
You might want to sit in a different room to avoid contaminating the experiment. You can listen to them talk, watch them play with the goods and see how they use them. What pieces of the puzzle seem to be missing? Are they misusing or misunderstanding elements of your product you never anticipated? Do they see a different product than you intended to produce? Use your analysis of the situation to improve your product or service.
2. Prod people to make comparisons. Don't ask about valuations. Customers will be pulling fictional numbers from the air, which does you no good. "What's it worth?" makes no sense. Instead, pose a hypothetical question that forces potential customers to make a real choice. Put your product and a competitor's in front of them, and ask them which product they'd be willing to spend $10 to buy. Ask questions to determine why they feel that way.
If you can figure out the reasoning behind people's preferences, you'll be knee-deep in a gold mine of valuable insights. Expect to be surprised, though. At Unilever, for example, a study discovered that social and environmental good drove 33 percent of customer purchases studied. You can bet hat that kind of knowledge subsequently changed Unilever's marketing and product development.
3. Get to the point of customer opinions. It's great to know that customers prefer one prototype over another, but that doesn't give you enough information to improve things moving forward. You have to know why they feel that way.
Give your focus group three or four prototype versions of your product (using rapid prototyping to keep costs down, if applicable) to play around with. Once they've used them, ask pointed questions to get to the heart of the matter. Which version do they value the most? Why would they pick option B over option C? What do they see as the benefits?
Hold your tongue and think like a lawyer at a deposition: Ask the basics, and let them give you the whole story. At the same time, be aware that you're getting more than strings of words; you're getting an in-depth look at their thought processes.
Flattery might feel great, but listening to sycophants and yes-men won't get you far in the entrepreneurship game. Monitor people's comments, but spend just as much time observing their behavior. Your customers can put your business on the map, but that will only happen if you get the real scoop before you launch your venture.
Entrepreneur Leadership Network Contributor