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Management
Learning from your customers: Why Bob matters
Your customers can tell you everything you need to know to build your business, says Professor Frédéric Dalsace of IMD provided you pick the right ones to learn from.
As every businessperson knows, the customer is always right. But how often do businesses take the time to find out what their customers really think? Those that make this effort will be well rewarded. Customers offer more than just spending power; they can also provide vital insight into which direction the business should be taking.
Indeed, customer insights could be just as valuable to you as their cash, if not more so, certainly over the long term. The money that a customer spends on your products or services is naturally welcome at point of sale, but even more welcome is the piece of advice that has the potential to drive value for years to come.
Why you need Bob
That’s why every company need a customer called Bobbs – or Bob, for short. In fact, Bob comprises a collection of your “best of business but small” (a phrase we will unpack in this article) customers – the ones from whom you’ll learn the most.
Bob is the voice of reason. They’ll tell you whether a new product, or even a new business model, is as good as you think it is – and what you could do to improve it. Bob will stress-test your ideas for you, so you can see whether they translate from the drawing board to the marketplace. And Bob is tireless; they will help you iterate the idea, testing out each newly tweaked version to see if it gets better results.
This is important. While most businesses devote time and money to differentiating their value proposition – developing new products, new transaction platforms, and new ways of interacting with the customer – they limit their chances of success if they do that work in isolation. The proof of the pudding is in the eating; that is, the true value of a proposition is only known when it is launched in the real world. In which case, working with a handful of carefully selected customers to test your ideas in a commercial “sandbox” makes more sense than launching to the whole market on a wing and a prayer.
Taking your time to learn from Bob
Learning from customers is a three-stage process. In the first instance, talking to them, hearing their ideas, and asking for feedback on yours, will help put you on the right track. Then, observing how they interact with your business in general – and your new initiatives in particular – will provide further insight. Finally, experimenting with them and iterating the proposition according to each round of feedback will enable you to fine-tune your proposition.
For Bob to be effective in each of these roles, they need to have two attributes above all else. First, Bob has to be trustworthy – someone who is willing to engage with you openly and honestly. This is not a given. Some customers may feel obliged to tell you what you want to hear, purely out of politeness or not wanting to cause a fuss – to praise a service unequivocally, even if they wouldn’t dream of paying for it. Others may be deliberately disingenuous; they might underplay their willingness to pay a high price for a valuable product, say, in the hope of securing it more cheaply.
Trust also enables you to collaborate with goodwill. For example, in B2B settings you may be asking Bob to sell a product on your behalf that they suspect may not connect with the ultimate target audience. In these cases, does Bob trust your expertise and commitment to help maximise market penetration and ensure they won’t lose out over the medium to longer term?
Speed is the second characteristic Bob should possess. Every evolving business is, by default, engaged in a race against their competition. If you have a new idea with real merit, you need to get it to market before your rivals come up with something similar. That means moving as quickly as possible.
Bob, therefore, must be willing and able to work with you in this race – to try out new ideas and moderations as you come up with them, and to provide feedback quickly.
Where to find Bob
To locate your Bob, focus on those customers with whom you have developed strong long-term relationships. But steer clear of your biggest customers – the larger companies with which you transact (hence “best of business but small”).
There are several reasons for this. For one thing, big customers are unlikely to have the agility you need Bob to display – the risk is that your proposals will get tied up in red tape as they pass from one desk to another for sign-off after sign-off. More fundamentally, these customers are unlikely to be especially interested in your invention and innovation; indeed, since they already own a large chunk of the market, they will probably actively dislike the possibility of disruption.
Smaller customers, by contrast, are constantly looking for ways to grow. They’re delighted to try out your new ideas if there is a potential benefit for them. They’re also pleased to be asked; they know you have larger customers that spend more money with you, so the fact you’ve come to them is flattering.
There’s also the question of practicality. If you’re trying to collaborate with a large customer with multiple distribution points, complicated supply chains and an extended network, the complexity of their business is likely to undermine the learning process. Much better to start small and simple.
Of cause, not all smaller customers will meet the bill. While it may be tempting to work with the companies you know best, your relationship with Bob shouldn’t be too cozy. They need to be the kind of customer that will ask challenging questions and confront you with issues you need to resolve. Bob need not be your best friend – just a friend who is good enough to tell it to you straight.
Equally, Bob should be ready to try new things – keen to learn from you as well as provide feedback, and ready to embrace new technologies, innovations, and ways of working. You won’t learn anything from a customer who is unwilling to budge from the status quo.
Build your own Bob
In practice, every salesperson in your business should be able to identify a handful of customers with the potential to be your Bob. That creates an opportunity to build a nursery of Bobs – a group of customers with whom you can collaborate over time, increasing the learning you get from them as the relationships develop.
It takes commitment to build that kind of relationship. In most businesses, the natural tendency is to divide your attention between your customers in proportion with the amount of money they spend with you. Your group of Bobs, however, will be the exception to this rule: you’ll need to spend significant time getting to know them well, regardless of their spending power.
Finally, think about who owns the relationship with Bob. While your sales team may currently know Bob best, are they the right people to manage the learning process? It may be better for your sales director to manage the relationship, acting as a conduit between Bob and functions such as product development and marketing, where learnings from the customer will be most useful.
The power of Bob
Keep your eyes and your ears open. Business-school textbooks are full of examples of products that customers either inspired or dreamed up themselves, from the mountain bikes of the 1970s, first developed as modified road bikes by off-road enthusiasts, to sports drinks, produced in response to athletes’ demand for a beverage to replace the body fluids they were losing during sport.
Bob is more than just a sounding board; these customers could provide the concept for the next transformative product or service your business develops. Innovation very often begins with customer aspiration – it’s your job to recognize the value in that and take them on a journey to realize their idea.
In other words, your relationship with Bob could be the most important one your business ever cultivates.
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