Customers’ needs and a b2b-portal
Know your customers
An expensive business mistake
Know your customers
About ten years ago, I was a CEO of a plant. We sold our products to distributors, and there were more than 90 of them in several countries. They sent us orders the way they preferred — by email, fax (yes, we had to keep an old fax machine in the office), phone, or even SMS. A small army of clerks worked in the spacious open space in our office. They received the orders, registered them, and converted them into the form fitted for our ERP system. They also kept the distributors informed about everything concerning their orders. Every time I signed an annual payroll, my heart bled — so much work without any visible added value!
And then our IT department built up a b2b online portal for the distributors. Since then, they could log in to their personal account and see the statuses of the placed orders, place a new one, reconcile their debts, receive additional information on the products, etc. We presented this hi-tech solution to the distributors in a solemn ceremony, with champaign and oysters, and it seemed to me that they were impressed — at least, they nodded and shook my hand. I felt like an advanced CEO keeping up with progress.
The next day I, feeling excitement and anticipation, opened the statistic dashboard of the portal and was unpleasantly surprised by a zero figure in the “number of orders placed” column. I called the IT department and asked if the system worked correctly. They assured me that they double-checked it and that everything was all right — the distributors received their logins and passwords, and all of them had visited the portal at least once. I decided to wait for a couple of days. All the new things require some time to get used to them, after all. But the week passed, and the same zero figure coolly watched me from the screen. And meanwhile, the army of clerks in the open space was overloaded with work.
I gave up and called several distributors. Some of them said it was “somehow more comfortable to place the way they were accustomed to”. But two of them told me straightforwardly that they were not particularly enthusiastic about my idea to shift the work my clerks did to their employees for free. It became a good lesson for me. I created a value (the portal) for myself, but not for my partners. This value met my need (to save money on the wage fund), but not theirs.
Henry Ford was wrong
We all love to remember Henry Ford’s quote: “If I had asked my customers what they wanted, they would have said a faster horse”. We believe that “innovation” equals “pure creation”, that geniuses like Jobs, Ford, Musk, or Bezos build up new products or business models just somehow “inventing” them. But even if they do it proves nothing. Some sources claim that there are 582 million entrepreneurs globally (it is more than the entire population of the USA), and many of them are also successful. Drawing any conclusions based on the experience of four of five of them is statistically incorrect.
Asking customers direct questions is useless. They often don’t realize what they need, and, moreover, it is not their job to identify their needs. But there are a lot of indirect ways to learn more about their wishes, and the best one is to observe them as they live their lives or do their work. A careful observer will notice a lot of small but significant details. For example, what do they like to do and what do they not? What obstacles do they face while doing their chores? What can be painlessly removed from the process? What can be added? This kind of research is called “ethnographic” because a researcher interacts with customers in their real-life environment.
The more curious you are about your customers’ life and work, the more you know about them. The more you know, the more fruitful ideas and insights you get. Go study your customers!
This is a chapter of upcoming books "Red and Yellow Strategies". Subscribe to my blog to read more strategic stories.