Understand Your Customers’ Business As Well As They Do

Imagine working for a company and not understanding how the business works. Sure, millions of people do that every day in the US, but is that a good thing? How would you know which choices would lead to greater company success? How would you know what work to prioritize if you had to choose? Purely selfishly, how would you know if you were doing a good job and on your way to a promotion?

Now imagine you’re that employee’s manager. Would you believe him or her capable of making thoughtful decisions throughout the day? Would you entrust him to effectively solve problems when he doesn’t understand how your industry works? How confident would you be in his ability to drive growth?

As a manager, it’s your responsibility to make sure your team understands the context of their role within the company and the industry at large. If you haven’t clearly communicated that information and you’re frustrated with someone’s performance, first look inwards, bub.

As CEOs and product owners, we are effectively outsourced employees of our customer’s businesses, contract force accelerators solving our clients’ needs. Yet more often than not, we act like the clueless team members described above, sleepwalking through the day, hoping that our actions align with our employer’s goals or, at worst, praying we don’t fuck up enough to be noticed.

But unlike a full-time employee, it’s not the boss’s job to educate us. We’re asking someone to pay us for the privilege of solving their problem, it’s greedy to ask them to tell us how to do our job to boot.

In fact, understanding the customer’s business is the foundation of the three key requirements for establishing product/market fit.

  1. Describe the customer’s problem in their own language
  2. Offer an intuitively credible solution
  3. Articulate the value created for the customer

When I started Gnip years ago, I just assumed that people wanted social data. I had all sorts of hypotheses about how Twitter info could be used in call centers and financial services companies and plenty of other verticals. But they were only hypotheses. My sales pitch was basically “You want data, right?”

Not only was that a shitty sales pitch, but it was impossible to segment prospects to efficiently attack a vertical. Literally every customer looked the same to me because I wasn’t sophisticated enough to understand the differences between them. Thankfully, other people knew better and ultimately Gnip became tremendously successful on the back of an incredible sales organization that understood EXACTLY how their clients’ businesses worked.

Let’s say you were selling customer service software. If a prospect had an unexpected employee no-show, could you fill in at their call center? Do you understand how calls are routed to different customer service reps? Do you know how they go about answering customer questions? What causes them to escalate problems to their managers? What that looks like from a logistical perspective?

Do you understand what KPIs drive the customer service business unit? Do you know what numbers reps are evaluated on? Do you know what numbers the business unit owner is managed on? Average time to respond? Percentage of problems solved? Repeat calls from a customer? Do you even know if it’s considered a cost center or a profit center? Seriously, dude, what do you even know about customer service?

If you don’t understand all of that context, how can you even attempt to describe a problem that companies have with customer service? And if you don’t really understand the problem, what are the odds that you’ll stumble upon a compelling solution? And how would you know whether that problem is worth solving?

Have you ever heard the phrase “a solution in search of a problem”? That describes the vast majority of new products in both startups and the enterprise. It’s an idea that’s so entrenched, a recent VC fundraising overview lists “describe solution” before “validate market need”. In that frame, you’re literally calling people and saying “hey, I make widgets — would you like a widget?” Seriously, fuck that noise.

So you’re probably wondering how you go about learning about your market, especially since I said earlier that it’s not reasonable to ask your prospect to teach you. This boils down to curiosity and a willingness to reach out to strangers.

Before you go build a product or service, just start talking to people in your preferred market. If you ask a hundred people to spend 30 minutes talking to you about their business, I guarantee you’ll set up at least ten calls, and probably many more. People hate to be sold to, but they love to give their perspective. People want to feel respected and important.

Early on, you’re just asking the basics. How does your business work? What are the main challenges you face? How do you measure success? What is unique about your market? Broad questions that enable the other person to speak expansively.

It’s unlikely that most people are going to tell you their biggest problems right off the bat. Trust takes time to build, so you should expect to chat with people multiple times. This isn’t a one-and-done strategy. If you’re really thoughtful, you’ll probably start piecing the problems together on your own. You start to pattern match and begin asking more direct questions — “I was thinking about this thing we talked about last week. How do you manage for X outcome?”

By engaging a diverse set of domain experts, you can quickly amass a greater data set than most people in that industry have. You might not have 20 years of experience, but you’ll have the benefit of pattern matching against hundreds of years of experience.

If you can’t describe to a lay person the basic drivers and key differentiators of businesses in your market of interest, you probably shouldn’t be selling to them yet. You should be learning from them, with boundless curiosity.

So get out there and talk to people. Make contact. Crucially, learn about the business. Before your brand is established, the only thing you have to build credibility with is your shared understanding of a prospect’s business. Don’t leave this as an afterthought. Make it your first step in starting a company.

— Eric Marcoullier

Fuck it. Quarantine is where it’s at these days. Nobody needs another article about dealing with crisis, mainly because I’ve seen so many companies get past that. People are just running their companies again, under vastly changed and challenging circumstances, mind you. So I’m back to writing about the fundamentals of building new businesses. Obvious startup advice.

If you’re one of those intrepid entrepreneurs, hell-bent on starting a company in the middle of a pandemic, you might want a coach in your corner. Given how crazy the world has gotten, it’s more important to have someone working with you on a weekly basis to avoid the pitfalls that sink companies even in the best of times. If that sounds interesting to you, shoot me an email at eric@marcoullier.com or visit my coaching site at Marcoullier.com.

(Photo by Lachy Spratt on Unsplash)

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