Courtesy Lighthouse Advisors LLC
By Michael Cruz
Whenever I speak with new business owners, I ask a simple question: “What do you think the number one key to your success will be?”
All too often the answers are money or having the right people on board. The real answer–the only answer–is customers.
Most entrepreneurs tend to be product centric. They know a lot about specific products in their industry. They “know” what their customers need. Often they are right. But that’s not enough.
Knowing what customers need, and knowing what they value are not the same thing. Sales is all about establishing value. It requires us to focus on the economic proposition. What will customers trade their hard-earned cash to get from us? Sales is the ultimate form of customer feedback. We ignore building a customer base at our own peril.
The same is true if you are launching a new product or a new product line. The Harvard Business Review recently did a study of 120 entrepreneurs. In it, they asked these entrepreneurs if their initial rollout had been successful. Less than half of those interviewed said yes. The biggest mistake cited in the survey was that these companies had fully developed their product or the value proposition prior to engaging customers.
Most innovators need constant customer feedback. It needs to begin prior to bringing new product to market. Good visionaries know that they need customer input if they’re going to be successful quickly. Feedback helps in positioning and designing of products. And most importantly, it ensures that we have an early revenue stream. It’s hard work, but it is absolutely necessary.
We overestimate our ability to deliver new products successfully. We underestimate the difficulty in customers switching to our product or service. New products and services need to offer a greatly superior value before customers will undertake the risk of changing their business or their supplier model. Often we don’t listen to them. Instead, we extol the virtues of our new offering.
And then, after our sales have disappointed us we go back and redesign our offering. It is an unnecessary step.
We need to start by listening to customer feedback early in the cycle. We need to identify a few key ‘anchor customers’ and do what it takes to win their business. In this way, we will help ourselves by delivering greater value to our customers and greater revenue for our business.
Cruz is president of Lighthouse Advisors LLC in Queensbury.