Choosing the Lesser of Two Evils
Giving customers what they need or what they want?
It was one of the worst moments in my professional life.
My company sold equipment through a distributor network. Price wars shook the market. Discounts, discounts, discounts – this was the only word sales reps chanted like a mantra, the sole weapon in the competitive battle.
Tired of paper-thin margins, I decided to flip our approach to sales. Our new program for distributors called ‘Value For Money’ was meant to be a game-changer.
Our rationale was quite straightforward. We charged clients and partners more for more value.
One September morning, I was presenting the program to a significant distributor’s CEO.
I put my heart and soul into the presentation.
I showed the client the dizzying prospects. I emphasized how much his company would benefit from it.
I peppered my speech with numbers and facts to infect him with my enthusiasm.
When I finished, he kept silent for a minute and asked: “So, can I get a discount?”
The weapon of mass distraction
In this alarming article, Ted Gioia raised a very important issue. Youngsters and adults become addicted to meaningless distractions like scrolling the TikTok feed. In his subsequent article, he said he received many messages from readers who confirmed his concerns.
This is very unfortunate.
However, TikTok and the like do what most books on business strategy advise. They identify customer needs and create customer value. People crave distraction, and these apps provide them with it.
They are not educational institutions, so they don’t have to teach math or geography. They make profits – as much as they can. Many call it unethical, but they just shrug it off.
“We don’t need your software”
The TikTok case is relatively easy to discuss – but very hard to solve though. Social platforms and their questionable practices are a sitting duck for criticism.
But imagine another situation: you come to a potential client to present your brand new enterprise software. It can boost the client’s productivity. You know that the company needs it.
You present it to the executives. They nod politely but say that although your software is great, they don’t need it right now. What they need is something way cheaper and simpler. They ask for a painkiller, not a cure.
You know this is a huge mistake. The band-aid solution they’re asking for will save them for a few months. But in the long run, it’ll bring them a host of problems.
Snake oil salespeople are successful not because they are geniuses but because the demand is always high.
You have three options:
Try to persuade them, but it doesn’t seem feasible.
Call them dumb and go look for smarter prospects – if there are any.
Provide them with what they ask for.
What would be your choice?
“Customers don’t have a vote”
In the “Steve Jobs” biopic, 2015, Steve Wozniak tries to convince his partner that “serious customers want to customize” the computers, so they need ports.
“They don’t get a vote,” replies Steve Jobs, played by Michael Fassbender. “When Dylan wrote ‘Shelter from the Storm,’ he didn’t ask people to contribute to the lyrics. Plays don’t stop so the playwright can ask the audience what scene they’d like to see next.”
Jeff Bezos once said: “Market research doesn’t help. If you had gone to a customer in 2013 and said, ‘Would you like a black, always-on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions, that also turns on your lights and plays music?’ I guarantee you they’d have looked at you strangely and said, ‘No, thank you.”
So, we’re facing an ethical and strategic dilemma: should we give consumers what they know they want, or what we think they need and are not yet aware of?
Customers often don’t know what they need. But it doesn’t necessarily mean they will like what you believe they need.
Customers can’t want what they haven’t seen.
“Man can believe the impossible, but man can never believe the improbable,” Oscar Wilde.
Some psychologists use a test – they ask patients to draw a non-existent animal. All the creatures patients draw consist of some parts of existing animals. We can’t imagine what we’ve never seen.
So, in most cases, it doesn’t make sense to ask customers questions like “Would you like to have a couch with a built-in electric massager (a Wi-Fi-connected chandelier, or kitchen plates with adjustable diameters)?”
But sometimes, asking this kind of question could totally make sense. For instance, you can use it if your future product isn’t much different from the existing ones, and the difference is easy to visualize.
– Would you want a phone that you can put in your pocket and use wherever you want?
– Would you like your software to run ten times faster?
– Do you need a car air conditioner that works just like the one you have at home?
This approach can be effective if you contemplate incremental innovations. But it isn’t applicable to disruptive ones.
Killed by Google, Amazon or Apple
Companies like Amazon or Google are renowned for their innovation culture. In fact, they throw many ideas at the wall and see what sticks. You can find the lists of their failed products here and here.
But this is an expensive game. Apple recently canceled its decade-long electric car project. We don’t know how much they have to write off in losses. But the fact that Project Titan employed around 5,000 people means we are talking about billions.
Can you afford it?
If you can’t, you have to be more careful. Many businesses die after their first unsuccessful attempt. For example, I’m sure that Humane’s AI Pin will share their fate.
Brain functions
Many conflicting programs work in our brains simultaneously. For instance, curiosity motivates us to try new things, while safety makes us stick to the familiar. And safety is a more powerful force.
Centuries ago, our ancestors’s curiosity helped them establish civilisation. But those who were too curious to enter the dark caves were eaten by predators.
When office workers were forced to give up typewriters in favor of computers, they weren’t excited; they freaked out.
It has taken computers, the Internet, smartphones, online shopping, and social media decades to enter our lives. And according to some numbers, EVs won’t replace conventional cars in the near future.
Even if a new product or technology has many advantages – which means customers need it even if they don’t know it yet – consumers need time to get used to it.
You can try to persuade them with a cost-benefit analysis. However, cost-benefit analysis is complicated for customers. When it comes to new products, they have to compare tangible costs with imagined benefits or risks.
Pro Tips
When I work on strategy with startups or mature businesses, I use a simple tool that helps us anticipate the challenges they’ll face in selling innovative products.
A company creates a product to solve one or several customer problems. So, we research how customers solve the problems today – in detail.
We build a CJM, Customer Journey Map. The CJM represents how customers interact with the products they use now.
We identify critical touchpoints.
We discuss how many touchpoints will change if customers switch to our product.
If more than 20% of touchpoints change, this product is highly innovative. It can be both good and bad news. It can help us beat the competition or scare away potential customers.
If you aim to satisfy your customers’ Wants, you can develop a product that is slightly better than the others. And it isn’t always a bad strategy.
But if you strive for innovation, you should focus on customer Needs. Read more on the sixteen basic human needs here.
Wants are conscious Needs.
An industrial designer, Raymond Loewy (1893-1986), coined the term MAYA.
MAYA = Most Advanced. Yet Acceptable.
It can be a formula for success in innovations.
Read also: Business As The Art of Breathing Underwater.
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Plenty of great points in this article. One should think through a combination of approaches. Focusing on the problem to be solved or goal to be accomplished rather than features is a good first step.