Tag Archives: customer

How to Pick Your Insight Team

Amid the merry-go-round of new objectives, targets and budget allocation that keep many a leader of an insight team busy, there is a question of “Who?” Who will do the work? That is probably accompanied by “how many people will there be in my team?” and “do they have the skills and motivation they need?” At first, this can all feel rather daunting. But it will be helped by, first, being clear on your goals. If you know what matters most and why, you’re in a better place to make those ever tricky people decisions.

Staffing your team has more potential options than in years past, with more data, analytics and research agencies, consultancies and contractors. Determining which route to take requires some thought. In my conversations with leaders, it sounded like different businesses favored different resourcing models, but it was unclear which was most popular.

For that reason, we ran a survey among our readers about customer insight team resourcing models. Thanks to all of you who took part. The time has come to share those results.

First, we asked about how customer insight leaders currently resourced their four technical teams that make up holistic customer insight:

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  • Customer Data: For this team, as you can see, most leaders (67%) replied that all members of the team were employed by their company. The only alternative resourcing approach captured was a mixture of employed and contractors — but still all part of an in-house team. Perhaps it’s the greater ease of recruiting these skills, or the sensitivity with regard to customer data, but this team doesn’t appear to be a focus for outsourcing at the moment.

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  • Customer Analytics: For this team, there was a similar picture, with an even bigger majority of leaders (80%) stating that all the members of the team were employed by their company. Once again, the only other alternative captured was a mixture of employed and contractors as part of an in-house team. These results were perhaps more surprising, given the much-touted difficulty recruiting analysts or data scientists. Perhaps many businesses are still recruiting rounded analysts rather than the more limited pool of data science graduates. The result certainly flies in the face of advertising by many outsourcing analytics providers.

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  • Customer Research: Here, we began to see a slightly different picture. Only 50% of leaders replied with the most popular resourcing model thus far, that all the members of the team were employed by their company. The other half were split between outsourcing their research provision entirely and a mixture of both approaches. Sadly, this doesn’t surprise me. I’ve found many a CMO or CEO who assumes that research is an ideal candidate for outsourcing and just asks the agency to “do more.” Sometimes, this is down to the internal team not demonstrating clearly enough the value they provide, so they are simply being perceived as “research buyers.”

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  • Database Marketing: Last, but definitely not least, is this commercially focused insight team. This category showed the most variation in resourcing models. More leaders (40%) still chose the most popular option; all the members of the team were employed by their company. But all the options we have seen so far were also used — contractors, outsourcing and a mixture of all of them. Given the more visible dependency that most businesses have on this team to hit income targets, I was slightly surprised by this.

As always in business, past approaches are no guarantee of business strategy, funding priorities or resourcing model preferences going forward. So we added a couple of questions to capture personal preferences. Experience has taught me that the preferences of two key parties tend to influence the way customer insight teams are resourced. First is the CEO and any recruitment policies he mandates; second is the customer insight leader who is leading the recruitment.

See Also: Leveraging the Power of Data Insights

So, how did you vote for those two personal preferences in resourcing models, and does that give us any clues as to how customer insight teams may be resourced now?

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  • CEO preference: This reflects that CEOs value customer insight and view it as a potential competitive advantage, so the majority prefer all the members of the team to be employed by their company. There were also votes for use of contractors within in-house teams, a mixture of both and “no preference” (it depends on the team). This appears to be a continued opportunity for customer insight leaders to build on in 2016, to demonstrate to their CEOs that they offer that competitive advantage and are a key internal skills within their business.

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  • Your preference: So, we finally come to the resourcing model that customer insight leaders themselves favor. What has given them the best results, that they would prefer to have at their disposal to achieve 2016 targets? Well, based on votes, it would seem the answer is definitely in-house teams. 60% favor all the members of the team being employed by their company, with the other 40% voting for a mixture of employed and contractors making up this internal team. For what it’s worth, that was my own experience, too. Growing your own talent internally worked best.

I hope you found the results useful. Do they accord with your experience?

One final thought, if you are seeking to build a strategic insight capability within your business, one that will empower your company for years to come, are you thinking long-term? Rather than be at the mercy of whether the jobs market has the candidates you require or graduates have the skills and aptitudes you’re seeking, why not shape the latter? I know a couple of businesses that have seen real value through building strategic partnerships with local universities.

See Also: A Wedding’s Lessons on Customer Insight

If you are fortunate enough to have a local university with a good reputation for numerate graduates (from business school or maths/stats faculties), why not work with them? Are there opportunities for internships to try out potential future employees? Would it benefit the university for you to go in and speak to students, even teaching them some of the skills they will need within business? How much better would it be for you to know  that students are being trained in the skills you require?

A great example of building this kind of partnership was the Data Talent Scotland event. I’m proud to have delivered a workshop at this gathering of data science students, academics, industry experts and businesses, helping to forge the kind of partnerships customer insight leaders will need.

Please let me know if you have built a sustainable pipeline of talent to resource your insight team for years to come. What’s working for you?

FinTech: Epicenter of Disruption (Part 4)

This is the final part of a four-part series. The first article is here. The second is here. The third is here.

FinTech is more than technology. It is a cultural mindset. Companies hoping to flourish need to shift their thinking to better meet customer needs, constantly track technological developments, aggressively engage with external partners and integrate digitization into their corporate DNA. To fully leverage the potential of FinTech, financial institutions (FIs) should have a top-down approach and embrace new technologies in every aspect of their businesses.

Putting FinTech at the heart of the strategy

The majority of our respondents (60%) put FinTech at the heart of their strategy. In particular, a high number of CEOs agree with this approach (78%), supporting the integration of FinTech at the top levels of management. Advances in technology and communication, combined with the acceleration of data growth, empower customers at nearly every level of engagement, making FinTech essential at all levels.

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Our survey supports this notion. Among the respondents that regard themselves as fully customer-centric, 77% put FinTech at the heart of their strategy, while, among respondents that see themselves as only slightly customer-centric, only 27% put FinTech at the same level. A smaller but still significant share of respondents disagrees with putting FinTech at the heart of their strategy (13%). This might be a business risk in the long run, as firms that do not recognize the impact of FinTech will face fierce competition from new entrants. As rivals become more innovative, incumbents might run the risk of being surpassed in their core business strengths.

The share of respondents from fund transfer and payments organizations that want to put FinTech at the heart of their strategy exceeds 80%, a high proportion compared with other sectors. At the other extreme are insurance and asset and wealth management companies, where, respectively, only 43% and 45% of respondents consider FinTech to be a core element of their strategy.

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Adopting a ‘mobile-first’ approach

Adopting a “mobile-first” approach is the key to improving customer experience. As Section 2 shows, the biggest trends in FinTech will be related to the multiple ways financial services (FS) engages with customers.

Traditional providers are increasingly taking a “mobile-first” approach to reach out to consumers (e.g. designing their products and services with the aim of enhancing customer engagement via mobile). More than half (52%) of the respondents in our survey offer a mobile application to their clients, and 18% are currently developing one. Banks, 81% of which offer mobile applications, are, increasingly, using these channels to deliver compelling value propositions, generate new revenue streams and collect data from customers. According to Bill Gates, in the year 2030, two billion new customers will use their mobile phones to save, lend and make payments.

Significant growth in clients using mobile applications is expected by 2020. While, currently, the majority of respondents (66%) contend that not more than 40% of their clients use their mobile applications, 61% believe that, over the next five years, more than 60% of their clients will be using mobile applications at least once a month to access financial services.

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Toward a more collaborative approach

Whether FS organizations adopt digital or mobile strategies, integrating FinTech is essential. According to our survey, the most widespread form of collaboration with FinTech companies is joint partnership (32%). Traditional FS organizations are not ready to go all-in and invest fully in FinTech. Joint partnership is an easy and flexible way to get involved with a technology firm and harness its capabilities within a safe test environment. By partnering with FinTech companies, incumbents can strengthen their competitive position and bring solutions or products into the market more quickly. Moreover, this is an effective way for both incumbents and FinTech companies to identify challenges and opportunities, as well as to gain a deeper understanding of how they complement one another.

Given the speed of technology development, incumbents cannot afford to ignore FinTech. Nevertheless, a significant minority—rather than a non-negligible share (25%)—of survey respondents do not interact with FinTech companies at all, which could lead to an underestimation of the potential benefits and threats they can bring. According to The Economist, the majority of bankers (54%) are either ignoring the challenge or are talking about disruption without making any changes. FinTech executives confirm this view: 59% of FinTech companies believe banks are not reacting to the disruption by FinTech.

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Integrating FinTech comes with challenges

A common challenge FinTech companies and incumbents face is regulatory uncertainty. FinTech represents a challenge to regulators, as there may be a risk of an uneven playing field between the FS and FinTech companies. In fact, 86% of FS CEOs are concerned about the impact of overregulation on their prospects for growth, making this the biggest threat to growth they face. However, the problems do not correspond to specific regulations but rather to ambiguity and confusion. Industry players are asking which regulatory agencies govern FinTech companies. Which rules do FinTech companies have to abide by? And, specifically, which FinTech companies have to adhere to which regulations? In particular, small players struggle to navigate a complex, ever-increasing regulatory compliance environment as they strive to define their compliance model. Recent years have brought an increase of regulations in the FS industry, where even long-standing players are struggling to keep up.

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While most FS providers and FinTech companies would agree that the regulatory environment poses serious challenges, there are differences of opinion on which are the most significant. For incumbents, IT security is crucial. This highlights the genuine constraints traditional FS organizations face regarding the introduction of new technologies into existing systems. On the other hand, fund transfer and payments businesses see their biggest challenges in the differences in operational processes and business models. The complexity of processes and emerging business models, as explained in Section 1, which aim to lead the payments industry into a new era, have the potential to both disrupt and complement traditional fund transfer and payments institutions. Their challenge lies in refining old methods while pioneering new processes to compete in the long run.

Just more than half of FinTech companies (54%) believe management and culture act as roadblocks in their dealings with FIs. Because FinTech companies are mainly smaller, they are more agile and flexible. And, because most are in the early stages of development, their structures and processes are not set in stone, allowing them to adapt more easily and quickly to challenges.

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Conclusion

Disruption of the FS industry is happening, and FinTech is the driver. It reshapes the way companies and consumers engage by altering how, when and where FS and products are provided. Success is driven by the ability to improve customer experience and meet changing customer needs.

Information on FinTech is somewhat dispersed and obscure, which can make synthesizing the data challenging. It is therefore critical to filter the noise around FinTech and focus on the most relevant trends, technologies and start-ups. To help industry players navigate the glut of material, we based our findings on DeNovo insights and the views of survey participants, highlighting key trends that will enhance customer experience, self-directed services, sophisticated data analytics and cyber security.

In response to this rapidly changing environment, incumbent financial institutions have approached FinTech in various ways, such as through joint partnerships or start-up programs. But whatever strategy an organization pursues, it cannot afford to ignore FinTech.

The main impact of FinTech will be the surge of new FS business models, which will create challenges for both regulators and market players. FS firms should turn away from trying to control all parts of their value chain and customer experience through traditional business models and instead move toward the center of the FinTech ecosystem by leveraging their trusted relationships with customers and their extensive access to client data.

For many traditional financial institutions, this approach will require a fundamental shift in identity and purpose. The new norm will involve turning away from a linear product-push approach to a customer-centric model in which FS providers are facilitators of a service that enables clients to acquire advice and interact with all relevant actors through multiple channels.

By focusing on incorporating new technologies into their own architecture, traditional financial institutions can prepare themselves to play a central role in the new FS world in which they will operate at the center of customer activity and maintain strong positions, even as innovations alter the marketplace.

FIs should make the most of their position of trust with customers, brand recognition, access to data and knowledge of the regulatory environment to compete. FS players might not recognize the financial industry of the future, but they will be in the center of it.

This post was co-written by: John Shipman, Dean Nicolacakis, Manoj Kashyap and Steve Davies.

3 Skills Needed for Customer Insight

While working in Amsterdam, I was reminded how insight analysts and leaders can shine brightly in very different contexts.

In the Netherlands, a mixture of training and facilitation was helping an events business. What struck me was the similarity of the challenges faced by their insight teams to the challenges I see in the U.K.

The more I work with insight leaders across sectors and geographies, the more I see how much they benefit from highly transferable skills. Here are three that are relevant to very different businesses and locations:

Prioritization

I’ve yet to work with a company where this isn’t a challenge, at least to some extent. As more and more business decisions require considering the customer, it’s not surprising that demand for data, analysis and research continues to rise. Most insight teams are struggling to meet the demand of both regular reporting (“business-as-usual”) tasks and the range of questions or projects coming in from business leaders. There have been many attempts to solve this struggle, including “projectizing” all requests (which tends to come across as a bureaucratic solution to reduce demand for information) and periodic planning sessions (using Impact/Ease Matrix or similar tools). In today’s fast-changing businesses, I’ve found that local prioritization within “the bucket method” works best.

What I mean by the “bucket method” is the identification of the silos (mainly for decision-making) that are most powerful in your business. This often follows your organizational design, but not always. Is your business primarily structured by channel, product, segment or some other division of profit and loss accounts? Each silo should be allocated a “bucket” with a notionally allocated amount of insight resource, which is based on an appropriate combination of profit potential, strategic fit and proven demand (plus acted-on results) Regular meetings should be held between the insight leader and the most senior person possible within that silo. Where possible, the insight leader should meet with the relevant director.

The bucket principle relates to the idea that, when something is full, it’s full. So, in reviewing progress and any future requirements with the relevant director, you challenge him to make local prioritization calls. Going back to the bucket metaphor, adding more requires removing something else—unless the bucket wasn’t already full. Due to human nature, I haven’t seen the bucket principle work company-wide or group-wide. However, it can work very well in the local fiefdoms that exist in most businesses. In fact, it can support a feeling that the insight team is close to the business unit and is in the trenches with them to help achieve their commercial challenges.

Buy-In

When trying to diagnose why past insight work has stalled or why progress isn’t being made, stakeholders often identify an early stage in the “project.” The nine-step model used by Laughlin Consultancy has a step (prior to starting the technical work) called “buy-in.” It takes a clear plan or design for the work needed and sends it back to the sponsoring stakeholder to ensure it will meet the requirements. Often, this practice is missed by insight teams. Even mature customer insight teams may have mastered asking questions and getting to the root of the real business need behind a brief, but they then just capture that requirement in the brief. Too few interpret that need and provide a clear description of what will be delivered.

There are two aspects of returning to your sponsor to achieve buy-in that can be powerful. First is the emotional experience of the business leader (or multiple stakeholders, if needed) feeling more involved in the work to be done. As Alexander Hamilton famously said, “Men often oppose a thing merely because they have had no agency in planning it, or because it may have been planned by those whom they dislike.” It’s so important in the apparently rational world of generating insight to remember the importance of emotions and relationships within your business. Paying stakeholders the compliment of sharing the planned work with them ensures the intended deliverable will meet their needs and is something that often helps.

The other benefit of becoming skilled at this buy-in stage is learning to manage expectations and identify communication requirements. With regard to expectations, you should set realistic timescales (which, first, requires effective planning and design), along with openly sharing any risks or issues so that they don’t come as a surprise. Communication—and asking how much a sponsor wants to be kept in the loop—can make a real difference to keeping your sponsor happy. Some sponsors will be happy with radio silence until a task is complete or a decision is needed (they value not being disturbed). Others will lose confidence in your work unless they hear regular progress updates. It’s best not to confuse one with the other.

Communication

Training customer insight analysts in softer skills often results in a significant portion of the course focusing on the presentation of findings. This isn’t surprising, because, in many ways, that’s the only tangible product insight teams can point to, prior to driving decisions, actions and business results. Too frequently, I hear stories of frustrated insight teams that believe the business doesn’t listen to them, or I hear from business leaders that their insight team doesn’t produce any real insights.

Coaching, or just listening to others express such frustrations, regularly reveals that too many analytics and research presentations take the form of long, boring PowerPoints, which are more focused on showing the amount of work that’s been done than presenting clear insights. While it’s understandable that an analyst who has worked for weeks preparing data, analyzing and generating insights wants her effort rewarded, a better form of recognition is having the sponsor act on your recommendations. Often, that’s more likely to occur based on a short summary that spares readers much of the detail.

Data visualizationstorytelling and summarizing are all skills necessary to master on the road to effective communication. Most communication training will also stress the importance of being clear, concrete, considerate, courteous, etc. Many tabloids have mastered these skills. Love them or hate them, tabloid headline writers are masters of hierarchies of communication. Well-crafted, short, eye-catching headings are followed by single-sentence summaries, single-paragraph summaries and then short words, paragraphs and other line breaks to present the text in bite-sized chunks.

Transferable skills

Insight analysts and leaders who master such crafts as prioritization, buy-in and communication could probably succeed in almost any industry and in many different countries. Many directors will attest to the fact that sideways moves helped their careers. A CV demonstrating the ability to master roles in very different contexts is often an indication of readiness for a senior general management role.

Technology and the Economic Divide

Yelp Eat24 customer-support representative Talia Jane recently wrote a heart-wrenching blog about the difficulties she faced in living on her meager salary. “So here I am, 25 years old, balancing all sorts of debt and trying to pave a life for myself that doesn’t involve crying in the bathtub every week,” she wrote. Her situation was so dire that, on one occasion, she could not even come up with the train fare to work.  She lived on the junk food that they provide at work.

Her message was addressed to Yelp CEO Jeremy Stoppelman.

What did the company do? It fired her on the spot. Yes, Jane made a mistake in posting this message on Medium rather than sending an email to Stoppleman. But her situation isn’t unique. She outlined the contours of a life that are familiar to many of the people working on the lowermost rungs of technology’s corporate ladder.

After a social media backlash, Stoppleman acknowledged that the cost of living in San Francisco is too high and tweeted that there needs to be lower-cost housing.

But the problem is more complex than San Francisco’s housing costs. The problem is the growing inequality and unfair treatment of workers. And technology is about to make this much worse and create a cauldron of unrest.

Silicon Valley is a microcosm of the problems that lie ahead. Sadly, some of its residents would rather brush away the poverty than face up to its ugly consequences. This was exemplified in a letter that Justin Keller, founder of Commando.io, wrote to San Francisco Mayor Ed Lee and Police Chief Greg Suhr.  He complained that the “homeless and riff-raff” who live in the city are wrecking his ability to have a good time.

The Valley’s moguls do not overtly treat as inconveniences to themselves the bitter life trajectories that lead to experiences such as Keller complained of; but they have largely been in denial about the effects of technology. Other than a recent essay by Paul Graham on income inequality, there is little discussion about its negative impacts.

The fact is that automation is already decimating the global manufacturing sector, transforming a reliable mass employer providing middle-class income into a much smaller employer of people possessing higher-level educations and skills.

The growth of the “Gig Economy”—ad hoc work—is shifting businesses toward the goal of part-time, on-demand employment, with aggressive avoidance of obligations for health insurance and longer-term benefits. And the tech industry has a winner-takes-all nature, which is why only a few giant digital companies compete with each other to dominate the global economy.

A substantial part of the value they capture is concentrated at the center and mostly benefits a few shareholders, executives and employees. With technology advances and convergence, we are in the middle of a gold rush that is widening inequality.

Already, in Silicon Valley, the Google bus has become a symbol of this inequity. These ultra-luxurious, Wi-Fi–connected buses take workers from the Mission district to the GooglePlex, in Mountain View. The Google Bus is not atypical; most major tech companies offer such transport now. But so divisive are they that in usually liberal San Francisco, activists scream angrily about the buses using city streets and bus stops, completely ignoring the fact that they also take dozens of cars off the roads.

Teslas, too, have become symbols of the obnoxious techno-elite—rather than being celebrated for being environmentally game-changing electric vehicles. In short, there’s very little logic to the emotionally charged discussions—which is the same as what we are seeing at the national level with the presidential primaries.

Intellectuals are trying to build frameworks to understand why the divide, which first opened up in the 1990s, continues to worsen.

Thomas Piketty explained in his book Capital in the Twenty-First Century that the economic inequality gap widens if the rate of return on invested capital is superior to the rate at which the whole economy grows. His proposed response is to redistribute income via progressive taxation.

A competing theory, by an MIT graduate student, holds that much of the wealth inequality can be attributed to real estate and scarcity. Silicon Valley has both: an explosion in wealth for investors and company founders, and a real-estate market constrained by limits on development.

We need to immediately address San Francisco’s housing crisis and raise wages for lower-skilled workers.

Both are possible; the region has enough land, and the industry has enough wealth. In the longer term, we will also need to develop safety nets, retrain workers and look into the concept of a universal basic income for everyone.

It is time to start a nationwide dialogue on how we can distribute the new prosperity that we are creating with advancing technologies.

Dear Founders: Are You Listening?

Since my last post, “Distribution is 80% of your problem,” I have had the opportunity to speak in-depth with several terrific start-up founders about some of the incredible things they are doing and why things are not going so well. Several of their stories remind me of another big lesson I have learned over the years: We entrepreneurs often mistake “listening” as “waiting to talk,” until it’s too late.

A Little Knowledge (About Your Users) Is a Dangerous Thing

All the stories have a similar theme: We launched our product, and we got 10,000-plus users (or 100-plus small paying customers) using unscalable ways. Now, we are not sure of what to do next.

One founder I communicated with had talked to hundreds of her paying users and managed to convince herself that her market was women who want to make sure their kids don’t get too much unsupervised screen time. We talked to the company’s users and discovered that, in fact, the core group that loved the app were working women who want to keep track of their kids and know they are safe after school. Whenever this start-up had spoken to its user, it heard the answer it wanted to hear, not what the users were saying. The lesson learned here was about waiting to tell users what they “should” be doing with the app.

Another app — one that got to 20,000 users quickly with a small amount of seed money — found, once we dug deep, that fewer than 150 of their users were active weekly. The start-up had no idea who these 150 users were or what, specifically, they were doing with the product. After 20 user interviews, we discovered the start-up’s core use case was far from what the company thought it was and that the product was too hard to use. For far too long, the start-up was convinced its technology would change the world, especially because 20,000 users seemed to be using the product.

A third, B2B-focused start-up I recently spent time with has more than 100 paying users but has stalled growth and usage numbers. When I asked the company to tell me who its users were and what pain point it was solving, I kept getting back a laundry list of features and user personas instead. When the company dug deeper and spoke to users, it found that, of the 27 features, users are using two and that no one had discovered the three the company thinks are the real killer benefits. We realized the company’s model needs to shift away from “my users are using the wrong features and should have discovered the ‘right ones.'” As a start-up, you don’t get to tell users what scenarios and which features they should use your product for; consumers will tell you by using whatever they find useful.

Apple May Not Need to Talk to Users, But the Rest of Us Do

As a founder, you start with a hypothesis. You have all these incredible suppositions on how you will change the world with your product. You may think you can get away with: “My users do not know what they are doing. I will tell them what they should do. It works for Apple (or so goes the myth) so it will work for me — let’s just ignore users.” Believe me, those kinds of companies are black swans. For the rest of us, our users matter—who they are, what they use our products for and what they ignore.

This is for two basic reasons:

  1. Product/Market Fit: Unless we know and understand our users (or potential users), our incoming hypothesis of the value our product provides is literally that —a hypothesis. Sure, some people may not get it, and some may just dismiss it. But without a group of people who buy into the value we hypothesize that we can provide and who agree to become ecstatic users of our product, we probably did not have a real hypothesis to begin with, just a supposition that is wrong.
  2. Go-to-market: The more detail we can find out about users, the more we can figure out how to go after them in a tight, focused way. Going after moms who want to limit unsupervised screen time is very different from attracting busy working moms who really want to know where their kids are after school. The two are different products, have different features and have a different go-to-market.

One potential red herring during the early days comes when you manage to attract a chunk of users quickly. You can easily get deluded by the numbers — they’re like inventory, they hide a lot of problems. You convince yourself that what you’re doing can’t be wrong if 20,000 users think you’re right. The fact is that these 20,000 people do not think you are right ;  you somehow managed to “get” them, and they experimented with your product hoping to find something of use. 200 of those users might think you are onto something, but you don’t know who those 200 are. If you understood what those 200 really like about your product, you might be able to find the next 20,000 users who are really right for you.

What to Avoid When You Do Decide to Talk to Users

  1. Don’t defend what you have built and try to convince them you are right;
  2. Don’t keep coming back to your vision and what will come later or focus on product features they should be using;
  3. Don’t make a sales pitch about your company and yourself, make it about them and their real reaction to your product—even if it means you have to throw everything away and start over again.

If you do not do these things, you have not really listened to your users—you have just waited for your turn to talk and convinced yourself you understand your users.

A FRAMEWORK FOR WHEN TO LISTEN TO USERS–AND HOW 

Here’s a framework I have developed over the years about when and how to listen to users:

The First 500 Users

Those first 500 users are the most important people in your journey. You need to do more than just talk to them, you need to build a solid relationship with them — they are the foundation of your product.

In my previous start-up, a career marketplace, I personally introduced my early adopters to friendly hiring managers at many companies and helped them land a job. A lot of those early customers are now my Facebook friends. Some of them even became our ambassadors and had equity in the company.

Those first users add immense value. They  validate your hypothesis, refine your ideas, recruit more users and test new features, on top of a whole lot more. And they are also very forgiving to defects, crashes, bad user experience (UX), everything.

I used to schedule as many phone calls with them as I could. In every conversation, I would first show what we were working on (in detail) and get their feedback. I would then open up  and  ask about what they were doing with the product, why they chose it over others, how they found it added value, what related issues they had that we could help with, among other questions. I logged every conversation.

Listening Is Hard to Do—For Founders in Particular

Most of the time when we think we’re listening, we are actually just waiting for our turn to talk. Here are three reasons why:

  1. We are always busy talking — to ourselves. Even when we are obviously talking to someone else, we are also internally talking to ourselves. So listening genuinely — muting your internal conversation and giving someone your full attention — is hard.
  2. For founders, listening genuinely is harder. Most entrepreneurs have their product, features, ideas and vision so deeply ingrained that, when they talk to users, entrepreneurs are always defending things they find users having problems with . (“But you didn’t see the profile page; the settings let you change this,” “There are so many cool things you can do, didn’t you see this feature?,” “We’ll get to that in Version 3,” “Wait, no, you don’t understand, that’s where the puck is going,” etc.)
  3. It is not easy for people to articulate what they are thinking. To really understand what users are saying, you have to read between the lines. Even if you lead with your world view, you really have to listen to users’ views carefully — both what is said and what is not.

Talking to users requires real effort . Be aware of that and start focusing on your first 500 users. Treat your early adopters with special respect — make them feel special and take care of them beyond just the product.

Beyond the First 500 Users

Moving forward with your customer base requires using other techniques (in addition to real conversations) that are still important. One such tactic is talking through the product,  provoking conversations with product experiments.

An example of this would be radically changing your on-boarding — drop everything and get them in — for a small set of users and seeing what happens. Remove a feature you think is not useful and wait for users to complain. Removing things temporarily is the best way to test if they are really valuable.

It also helps to create ancillary products  ( quick prototypes )  to test value outside your core product. As you learn more about your users, you will start to see more value propositions, some that align with your vision and some that don’t.

Until you are truly convinced you have product-market fit, do not be shy about running small experiments on the side to keep testing different ideas. Use conversations to create hypotheses, and experiment quickly.

Another technique is to always ask, “What else would you want this product to do for you?” in every support email. My start-up once introduced a critical defect in our iPhone app that led to hundreds of support emails. Adding that one question uncovered several hundred feature requests, including a lot we had not thought about.

Talking to users as you scale is more than just about having conversations. Lead with a hypothesis, measure, iterate, run side experiments continuously to test.

Dear founder, do not wait to talk to your users until it’s too late.

And when you do, listen. Don’t just wait to talk.