Market research for startups

Posted on Thursday, April 23, 2009 at 8:20AM by

Jeff |

8 Comments

The Customer is not Always Right.

My friend Jay stopped by and made a comment about one of yesterday's posts, suggesting a link to an article by Steve Blank on marketing. It's a great article and well worth the read, which is why I highlight it here. This is almost a word-for-word recap of what happened when one of my companies was acquired, and in the acquisition I became the SVP of Marketing for an established, publicly traded company. The similarity is really uncanny. It's not even worth relaying the details of the store here, because it would be largely a repeat of his story. I'll save that spirited tale for another time.

The article did trigger something that I think is worth thinking about: The old adage "the customer is always right" is completely wrong. The reason is simple: customers lie all the time. They might lie to try and get a better price, they might tell you they're willing to pay for things they are not, they might tell you there are all kinds of new competitors when there are none, and they might tell you everything is going great 24 hours before they cancel your contract. These might be lies, they might be partial truths, or they might be misinformed attempts at truth -- who knows.

However, one thing I can tell you is this: The customer has all the answers. And it's up to you to get the answers out of them. Think about that for a bit, and you'll recognize that there is a big difference between having all the answers, and always being right.

This is really the point of Blank's story. You need to get out there and talk to customers. I've harped in posts before about the need to get out and discuss your business and product ideas BEFORE you actually launch them, with those people that would be your customers. The same holds true AFTER you launch the products. Get out there, talk to customers, and see what's going on. Marketing is not a passive profession.

The headline of Blank's article is brilliant. Inside the building there are opinions. Outside the building there are facts. Ain't that the truth.

One of the most fundamental responsibilities of marketing is to keep a pulse on what's going on in the market, and the easiest place to measure that pulse is with your own customer base. For some reason, this simple fact escapes many a would-be marketer, who might spend thousands of dollars on market research from industry analysts without ever picking up the phone or having lunch with, you know, someone who has actually purchased the company's products. Those analysts probably got their data right straight out of your own customers anyway, so now you're paying someone to get data you could have had for free and in it's more useful raw form. (There's some food for thought -- a whole industry exists where "experts" extract data from your customers and then sell it back to you!)

In my companies, we go so far as to merge two functions that are often separated in other organizations: engineering and product marketing. It is my opinion that these should be one in the same. The folks that are building the product are the folks that need to be out in front of customers, finding out what that product should be. They are also the same folks that should be telling those customers how they can use the products they've built better or in different ways. We call the combined entity "product development" and it is their job to build products people will buy. They get full responsibility, so there is no blame game between product marketing ("the engineers built a product that sucks!") and engineering ("marketing got the requirements all wrong!"). This one department is responsible for the whole enchilada, no questions asked.

A lot of technology companies delegate the responsibility for coming up with product requirements to "marketing" who then talks to customers (maybe) and analysts (probably) and copies what the competition does (unfortunately and almost certainly), and then hands a list of requirements to engineering, who inevitably further misinterprets the requirements on their way to creating a product that at best is marginally passable and at worst is so far of the mark that no one will buy it. What an unnecessary chain of misinformation and complexity. The people who design the product should be out there talking to people who want to buy it, and should build what they will buy.

Now, as I said before, you must be careful to extract all the right information out of the customers, because they have the answers, but they aren't always right when they tell you something. This is why you need to talk to *lots* of customers, to get a real feel for what is needed out there.

But I can tell you this: the people who can ask the customers the right questions are the ones who are most intimately familiar with your products and your customers. For whatever reason, many organizations put up a Chinese wall between the people who build product and the people who talk to customers. You need to have (and be) someone who knows both sides -- because the customers have all the answers, so long as you can tell the difference between when the customer is right and when they are wrong.

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Reader Comments (8)

Good article!
True that it is important to test your existing marget or target one before starting a company or launching a new product/service!

Everyone one should do it as it is also dedicated to small budget today thanks to Internet --> custom online surveys to test pre-startups project (providing panel of potential customers).
Have a look or ask me for more information

Good luck!

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