The Importance of Listening to Your Customers by David Cancel

BY MARTIN ERIKSSON ON DECEMBER 12 2016

Drift founder and CEO David Cancel spoke about the importance of listening to your customers at this year’s London MTPCon, and gave us some apposite examples of what can happen when companies listen to their customers and when they don’t. Listening to your customers is “one of things we always talk about but few people do. It’s simple but never easy,” he said.

Why do we need to listen?

Cancel gave the example of chip cards to illustrate why we need to listen to customers. While they are commonplace in the UK, EMV cards, as they’re known, have only been rolled out in the US over the last year. They were marketed to US consumers on the promise of security, but to quote business news outlet Quartz: “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.” What went wrong, says Cancel, is that the businesses involved – banks, credit card companies and retailers -weren’t listening to their customers. They thought that they knew the job to be done, and that people wanted a secure card reader. But what people wanted was speed, not security, and they wanted security to be someone else’s problem. The companies’ solution had been decided behind closed doors, but if they had been listening to their customers, they would have realized that the 10 second processing time was a deal breaker.

What about Henry Ford?

There is a quotation, supposedly from Henry Ford, which is always trotted out to counter this argument, says Cancel – “If I had asked people what they wanted, they would have asked for faster horses”. He points that while in 1921 Ford sold more than 60% of all cars manufactured in the US, by 1927 that figure had dropped to 15%. This was because, says Cancel, Ford had concentrated on producing a single inexpensive mass-produced car, the Model T, and had failed to listen to and meet the changing needs of his customers. In doing this Ford opened the door to competitors like GM, who started to make cars for “every purse and purpose”.

In 2003 Lego lost $300 million – even though Lego has the highest profit margin of any toy brand – and predicted a loss of $400 million in 2004. In the 1980s and 1990s Lego had decided to innovate, but had innovated too much. It had replaced its veteran designers replaced with a younger crew who decided that customers wanted more choice. The number of unique Lego parts went up from 6,000 to 12,000, the designs became more complex and sales plummeted.

Finally Lego asked its customers what they wanted, and it was told that its customers simply wanted to build. Lego’s direction had shifted away building and creativity, but this was what people had loved about it in the first place. In 2004 Lego’s new CEO Jorgen Vig Knudstorp stated that customers would have a say in all new Lego designs going forward. In 2010 Lego was profitable with sales of $2.3 billion, and in 2015 sales were $5.2 billion. “This is why it’s important to listen to customers,” says Cancel.

No excuses

Today there is no excuse not to be listening to customers, says Cancel. “My approach, for the last decade at least, has been to shift away from waterfall and agile methodologies and say we now build software that is connected to our customers.” Why would you build a product in an internet-connected world and not lean into the advantages of that ecosystem, he asks? He points out that with the rise of messaging software customers can easily give you one to one feedback in real time.

But how do you know what to do with the customer feedback you get? Cancel says he commonly hears the complaint that there is too much customer feedback, and too much noise, making it hard to prioritise and translate feedback into action. He has a framework to help.

The Spotlight Framework

Customer feedback falls into one of three categories, says Cancel:-

User experience issues

These are questions like “how do I…”, “what happens when…”, “I tried to…”. Cancel says that PMs and engineers have a tendency to ignore this part of the feedback when they see it. For example a “how do I” question means that the customer already knows that something is possible with your product, so it’s not a product marketing or education issue, it’s a user experience issue.

Product marketing issues

These are questions like “can you…”, “How do you compare to”, “how are you different from”, says Cancel , and they mean that you may have failed somewhere in the education process and they point to a product marketing issue. Otherwise why don’t customers know this already?

Positioning issues

These are especially important in developing a product. They are questions and statements like “I’m probably not your target customer”, or “I’m sure I’m wrong but I thought”. If you think that they are your target customers, then statements like these immediately point to an issue which needs to be resolved.

Focus on the right part of feedback

Cancel adds that people tend to focus on the wrong part of customer feedback. When customers ask “how do I do X?” they focus on the X rather than the “how do I”. He advises not to focus on subject of the feedback but on the root cause.

He says that his framework is simple to implement and enables product teams to track how the feedback categories change month over month. The framework allows product teams to identify the top user experience, product marketing or positioning issues and ensure that they are crafting solutions that address the root causes of the issues at hand. “Innovation is not just about sweeping changes. People value the small updates and fixes and that they were involved in that journey. You build goodwill because you’re taking action,” he says.

In summary he says: “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 and communicate with their customers – will inevitably lose out. Keep your ears open.”

Martin Eriksson

About MARTIN ERIKSSON

Martin Eriksson has 20 years experience building world-class online products in both corporate and start-up environments for global brands such as Monster, Financial Times, Huddle, and Covestor. He is the Founder of ProductTank, the Co-Founder and Curator of Mind the Product and currently a Product Manager at large, advising and mentoring startups while writing Product Leadership, How Top Product Leaders Launch Great Products and Build Successful Teams (O'Reilly, 2017).

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