Once you've acquired your first hundred customers, it’s easy to forget how little you know about them.
You quickly get swept up in planning your next features and managing your growing team. As your business accelerates, your customer development efforts don’t keep pace.
Collecting meaningful data on your customers isn’t a trivial task. Yet, if you aren’t continually executing on a well-defined customer development strategy, you’re going to run into serious problems as your business scales.
We’ll look at the common trap that ensnares businesses after they achieve some early growth, pinpoint the right time to make a big investment in customer research, and cover the essential practices that belong in any solid customer development strategy. Let's jump in.
Getting some initial traction with your business can be intoxicating.
You’ve been pounding the pavement for months, testing your ideas with as many potential customers as you can find. You’ve identified some serious unmet needs and put together an MVP that’s attracted some buzz. Finally, sales start to roll in.
You shift your focus to building out the other parts of your business, rapidly scaling your sales, marketing, and product teams and adding new features left and right.
Without knowing it, you’ve fallen into a really common customer development trap.
Far too many businesses spend their first weeks conducting hundreds of customer development conversations and rigorous market research only to abandon those efforts entirely once they get some traction. Finding that initial product-market fit isn’t enough. When we overlearn the lessons from our initial success, we face some serious and sometimes irreversible consequences down the road.
Let’s walk through exactly what happens to your business if you don’t make customer research a core part of your strategy relatively early on.
What Can Go Wrong
When we strike gold, we think we know exactly how to find it again.
We tell ourselves that we have a lock on what our customers need and can easily replicate that success. We then spend months or years heads down with our teams on what we’re sure is the next great feature only to find that it’s a dud.
There’s plenty of evidence of our collective overconfidence, some of which I recently shared in my SaaStock talk on the state of the subscription economy. In a survey of over 5k product folks at subscription companies, they told us that they were mostly building high value features that customers would happily pay for.
Turns out that the opposite is true. Overwhelmingly, subscription companies are putting out low value features that won’t make our customers open their wallets.
This is an especially pernicious issue because it compounds as your company scales. With each new hire, the inertia behind your product roadmap increases and it becomes more challenging to change the course of your business.
With a few people, it’s really easy to shift direction when your customer surveys come back with bad news. With 100 or 200 team members, it can be incredibly difficult to pivot away from the product or features you’ve already spent so much time developing.
With a strong product out of the gate and a good sales team, it’s possible to brute force your way to a $3M ARR business. But you can’t brute force your way to $100M ARR business.
If you aren’t collecting data by the time you’re at $3M ARR, you’re seriously hampering your growth. That revenue level is the perfect time to devote more resources to customer development - it's early enough to lay the foundation for a customer centric culture, but late enough that you have enough customers and experience to draw upon.
Let’s cover some key steps you can take to keep your customer research front and center in your business.
Getting Customer Development Right
Your customers won’t stay in the same place - your understanding of them shouldn’t either. Here are some core practices that should be a part of your customer development strategy:
1. Regularly return to your buyer personas.
We’re a broken record on this, but only because quantifying your buyer personas is one of the biggest strides you can take towards better understanding your customers. It’s not enough to go through the exercise of quantifying your personas once and call it a day. You should update your personas at least once a year if you aren’t making major changes to your product and more frequently if you are.
2. Bake customer development into your team’s objectives.
3. Identify the customer-focused data points that support every decision.
Even if you’re using a mix of qualitative and quantitative data, collecting the evidence that supports your choice can help to identify gaps in your understanding of your customers and expose your assumptions.
While any customer research is better than none, it’s especially important that you make time to actually speak with your customers on the phone or in person. If you can watch and listen to your customers while walking through an idea for a new feature, you’re likely to pick up on some issues that don’t make it into survey feedback.
In addition to discovering whether a particular feature has value, these conversations will deepen your empathy for your customers. Your customers rely on your product to succeed. When something isn’t working for them, you need to feel their pain. Empathy will motivate you to dig deeper into the issues that crop up and make you focus on serving your customers’ biggest needs first.
Your Customers Define Your Business
For sustained success in the subscription world, you need to rigorously collect feature value data and regularly talk to your customers. This is especially true once you hit the $3M ARR mark, where your future growth becomes incredibly dependent on your ability to deliver features and products tailored to your customers’ needs.
In the subscription market, your customers should rule your world. Whatever the size of your business, make sure you give them the time and attention they deserve.
By Patrick Campbell
Founder & CEO of ProfitWell, the software for helping subscription companies with their monetization and retention strategies, as well as providing free turnkey subscription financial metrics for over 20,000 companies. Prior to ProfitWell Patrick led Strategic Initiatives for Boston-based Gemvara and was an Economist at Google and the US Intelligence community.