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The Importance of Listening to Your CustomersDavid Cancel #MTPCON London
About David Cancel
• 5x Founder / 2x CEO
• CEO/Co-Founder, Drift
• Chief Product Officer, HubSpot IPO: HUBS
• CEO/Co-Founder, Performable acquired by HubSpot
• Owner/Founder, Ghostery acquired by Evidon
• CTO/Co-Founder, Compete acquired by WPP
• Investor/Advisor/Director to Various Companies and VC Funds
Why do we need to listen to our customers?
Here’s why.
EMV cards were rolled out in the US to solve one problem (security), but ultimately they created an entirely new problem …
Ugh.
The US’s transition to chip cards has been an utter disaster. They’re confusing to use, painstakingly slow, less secure than the alternatives, and aren’t even the best solution for consumers. (Quartz)
“
What went wrong?
The businesses involved — banks, credit card companies, retailers, etc. — weren’t listening to their customers.
… nearly four times as many consumers are more worried about speedy processing times rather than chip card security. (CNN)
“
If they had been listening, they would’ve realized that a 10-second processing time was a deal-breaker.
Their “solution” was decided upon behind closed doors, without any customer input.
This was the outcome.
But … what about that Henry Ford quote?
If I had asked people what they wanted, they would have said faster horses.
-Henry Ford
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Consider this: In 1921, the Ford Motor Company sold more than 60% of all the cars it manufactured.
By 1927, that figure had dropped to 15%.
Here’s what happened: Ford was laser-focused on creating a single, inexpensive, mass-produced car (the Model T).
And while that car was initially a huge success, Ford failed to listen to the changing needs and tastes of his customers.
That opened the door for competitors who were listening to customers, like GM.
In the 1920s, GM recognized that people were looking for something new, something that fit their lifestyle They didn’t want a one-size-fits-all car.
So GM focused on manufacturing cars “for every purse and purpose,” and soon began stealing customers away from Ford.
In response to his company’s dwindling market share, Ford finally retired the Model T in 1927.
It had been in production since 1908.
So the next time you see this quote …
If I had asked people what they wanted, they would have said faster horses.
-Henry Ford
“
Remember this rebuttal …
It was clear what people wanted, and it wasn’t faster horses. It was better cars, with better financing options.
-Patrick Vlaskovits (via HBR)
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If Ford had been listening to his customers, the company likely could have avoided that massive loss of market share in the 1920s.
LEGO had a similar experience in the 2000s …
In 2003, LEGO lost $300 million. Their prediction for the following year?
A loss of $400 million.
Unlike Ford, who failed to innovate when customer expectations shifted, LEGO had the opposite problem …
They innovated too much.
In the ‘80s and ‘90s, LEGO replaced many of its veteran designers with recent graduates from top design schools.
These new designers took LEGO in a new direction — away from the simple bricks that made the company famous.
The number of unique LEGO parts soon skyrocketed from around 6,000 to more than 12,000, and the designs got way more complex.
These things are LEGOs?
Meanwhile, sales plummeted.
The LEGO execs were confused: These designs were cutting edge, way more advanced than the older ones. Why weren’t they selling?
Finally, LEGO asked its customers: “What do you want?”
And LEGO’s customers answered …
We want to build! “
LEGO’s new direction had shifted the focus away from building and creativity, which is what people had loved about LEGO in the first place.
So when Jorgen Vig Knudstorp stepped in as LEGO’s new CEO in 2004, he acted on this feedback and made a radical decision:
Customers would have a say in all new LEGO designs moving forward. (And in 2006, LEGO held its first design workshop to start making this idea a reality.)
Knudstorp led a charge to put creative control into the hands of hardcore fans of the brand rather than in those of top designers who had skills but lacked a real understanding of Lego's history. (Business Insider)
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In 2010, LEGO reported annual sales of $2.3 billion.
In 2015, annual sales reached $5.2 billion.
This is why we need to listen to our customers.
And today, there is no excuse not to be listening.
Why build a product in an internet-connected world and not lean into the advantages of that ecosystem?
With the rise of messaging software, customers can now easily give you 1:1 feedback in real-time.
One issue that does arise, however, is knowing what to do with customer feedback once you get it.
With so many suggestions to sort through, it can be hard to prioritize feedback and make it actionable.
The Spotlight Framework
I like to think about customer feedback as falling into three buckets:
1. User Experience Issues
• How do I …
• What happens when …
• I tried to …
2. Product Marketing Issues
• Can you/I …
• How do you compare to …
• How are you different than …
• Why should I use you for/to …
3. Positioning Issues
• I’m probably not your target customer …
• I’m sure I’m wrong but I thought …
Spotlight Framework Cheat Sheet
Product Marketing PositioningUser Experience
What happens when …
How do I …
I tried to …
Can you/I …
How do you compare to …
How are you different than …
Why should I use you for/to …
I’m probably not your target customer …
I’m sure I’m wrong but I thought …
The Spotlight Framework addresses a key problem I’ve noticed:
People tend to focus on the wrong part of customer feedback.
They focus on the subject of the feedback instead of the root cause.
So when they hear customers asking, “How do I do X?” they become fixated on the “X” and assume their X feature needs a major overhaul.
Using the framework, however, you can quickly identity that the most important part of that feedback isn’t “X,” but the phrase “How do I …”
“How do I do X?”Focus on this. Not this.
Spotlight Framework Cheat Sheet
Product Marketing PositioningUser Experience
What happens when …
How do I …
I tried to …
Can you/I …
How do you compare to …
How are you different than …
Why should I use you for/to …
I’m probably not your target customer …
I’m sure I’m wrong but I thought …
The best thing about this framework: it’s simple to implement.
You can use a Google Sheet or an Excel doc to write things down as you're hearing them and put them into the right categories.
Then, every week/month you can identify the top user experience, product marketing, and positioning issues that you’ve categorized.
By separating customer feedback into these buckets, you can ensure you’re crafting solutions that address the root causes of the issues at hand.
Without a framework, it can be easy to get lost in weeks and weeks of conversations and lose sight of what’s important.
For example, people often make the mistake of only focusing on feedback that relates to features and major improvements.
But that approach can lead to big, sweeping product changes that end up driving existing customers away.
Remember these things?
While innovation is important, the key to showing customers you’re listening isn’t making big, sweeping changes every so often …
It’s making little updates and fixes all the time in response to what customers are saying.
I’ve found that customers appreciate this type of incremental approach.
It shows customers that you’re not just listening, but also taking action based on what you hear.
From updating a broken link that someone noticed, to changing a design element that people found confusing, every little action counts.
And all of these little actions and customer conversations add up to produce the overall experience people have with your company.
By using an incremental approach, you’re not just making your product better, you’re also strengthening your brand.
In today’s world, helping is the new selling and customer experience is the new marketing.
Companies that fail to adapt—and that fail to listen to & communicate with their customers—will inevitably lose out.
So don’t be like Ford in the 1920s, or LEGO in the 1990s …
Keep your ears open.
Need help becoming a better listener?
