The culture of customer tradeoffs
How you make decisions about your product with regard to your customer needs is a cultural challenge. It’s a function that is rooted in your norms and values. And with finite resources and conflicting information, it’s not always easy.
Companies guide their decisions using information from a lot of sources. Customer insights are invaluable, yes, but that doesn’t capture the full picture of your business. Some customer information will be highly actionable. Some will be misguided. Some will be confusing — or just plain wrong.
So when you look at how you operate — strategies such as how to build your product or staff your services — it falls on you to make the right tradeoffs for both your organization and the customer. This can be tough because it sometimes means saying no when you want to say yes. It can also require humility and admitting that a customer understands your business better than you do.
Further, one customer’s needs may conflict with another’s, and both customers’ needs may conflict with something you desire internally for your own team. If you are a self-serve business that wants to sell a lightweight product to the masses, you might empathize with companies asking for customizable and configurable features, while realizing that your primary customers want something that works out of the box.
Being in business is being in a state of constantly making tradeoffs. Using tools we’ve talked about previously — such as your shared decision log, proactive knowledge sharing, and optimized OODA Loops — for making informed decisions on these tradeoffs, you will have the basis for a team that will excel in this area. Below are more tips and strategies tailored specifically to this challenge.
Seek feedback — even if it’s messy
Imagine working on a product for two years before ever showing it to a customer. Sounds crazy, right? That would be a huge risk. After all that time, you might end up with something that nobody actually wants to use or buy. It’s easy to agree on the absurdity of this situation, yet it happens more often than you think.
What causes this tendency for companies to shut themselves off from their customer’s point of view?
- Customer feedback has the potential to throw a wrench in your gears. Customers may have contradicting points of view — both with each other, and with you.
- There’s a lot of information to sift through. It doesn’t always fit into nice, easy categories. And if you bet big on something, there can be a conscious or subconscious desire to see that your plans are not put in jeopardy.
- The perceived potential for many losses — power, autonomy, comfort, security — provokes resistance. Despite outwardly valuing customer feedback, there is often behavioral inertia against it. It’s much easier to say, “I’m all for listening to the customer,” than it is to actually listen, absorb, and sometimes be wrong.
To build a 10X Culture, you have to be open to feedback from your customers, just like you want to be open to feedback from your team. If your company feels comfortable and no one is challenging its decisions or providing feedback, it has become too insular — and it likely won’t grow. Here are a few ways to get more customer feedback to grow your business.
Encourage replies to automated emails
Nearly every email in our new user sequence ends the same way. One or two sentences, in bold type, use some variation of this statement: “We’d love to hear from you. Reply to this email and let us know.”
Because our emails are generally written in a casual tone and formatted as if an actual person is sending them, we get a ton of responses on all kinds of topics. We found out one user had made custom tutorial videos so that all of his clients would use Hugo exactly as he wanted. Such dedication! Other times we’ve found out people are trying to introduce Hugo to others at their company — a great time to step in and provide some resources. So as your first step, go into your email sequences and look for ways to encourage customers to actually respond.
Conduct regular customer interviews
Before making any big decision — such as in our pricing, product roadmap, or content marketing planning — we usually do a round of customer interviews. We’ll reach out to five to ten customers and see if they would be willing to chat about their experience with Hugo for thirty minutes in exchange for a modest gift card for their time.
We use a meeting agenda template that includes a lot of general, open-ended questions, which allows the customer to drive the conversation to topics they are most passionate about. The template also delves deep into the heart of why someone is using Hugo and what value they are getting. By launching a series of them before every major decision, we maintain a steady flow of information that helps ensure we have the right perspective.
In the appendix of this book we share this template so you can see exactly how we go about this.
The customer value equation
In its simplest form, customer value can be defined as:
Value = Benefits – Costs
It’s not that simple of an equation, though. Both benefits and costs incorporate tangible (quantitative) attributes and intangible (qualitative) ones. Customers assess these categories using both rational and emotional criteria. Despite the equation being so subjective, great companies still work to maximize customer value as best they can. Below are four tips that have worked well for Hugo in untying this Gordian knot.
Plan to make choices
Time and time again, you will have to choose between multiple good ideas. So plan for it. You won’t be able to please everyone all the time. Instead of fighting against this, acknowledge it. Understand that tradeoffs are part of the process and that it is better for everyone if you are realistic with your product services or roadmap. Otherwise, you may find yourself overextended, with nobody satisfied.
Follow a specific set of principles
Your company has a mission statement. Your product has a customer value proposition. Your software has a design language. Together, these provide a constellation you can use to guide your decisions.
For example, Hugo’s mission is to connect the way we meet — with the way we work. Returning to this statement has helped numerous times in making crucial decisions about our product roadmap. When filtered through your company’s principles, even challenging decisions often become obvious.
Ask customers to make tradeoffs
Another useful exercise is to involve customers by giving them difficult hypothetical questions. If your product is software, for example, your first instinct might be to softball this. You might ask them to rate a handful of features between one and five. While some ratings may be higher, usually this survey yields a relatively flat curve with few obvious insights.
Instead, up the ante! Ask customers to make tradeoffs. If you could only have one of these two things that you want, which one would it be? Now, instead of a few threes, fours, and fives, your customer has to give you a clear preference.
Calibrate the right amount of focus
When making decisions that will impact your customer base, there are two ditches you can fall into.
The first is focusing too deeply on a single type of customer. Just about every product or service has multiple customer types. This may be varying industries or use cases, or it may be different personas within a company. It’s probably a little bit of both. If more than one type of customer is critical for your success, broaden your thinking.
The other common error is doing a little bit of everything — trying to please everyone but in the end pleasing no one. For smaller companies, it is often better to go, as I like to say, five inches wide and five miles deep.
Focus and clarity are a good thing. Just form a hypothesis around where your growth is going to come from, and put your effort into those areas.