Startups: Your Customers Are Not Ignorant, Selfish, Control Freaks

By Dharmesh Shah on July 12, 2010

Imagine you’re having some big, high falutin’ meeting.  Perhaps it’s a board meeting.  Or, if you don’t have a board, perhaps it’s a management team meeting.  Or, if you don’t have a team, perhaps it’s just you talking to yourself at 3:00 a.m. in the morning.  Whatever mechanism it is you have to talk about important issues and make decisions, imagine that meeting.  Are you imagining it?  Good.onstartups boardroom

Now, imagine that same meeting with one important change:  One of your smart, savvy, customers is at the table.  And, she has an actual voice.  She’s a peer. She makes arguments, some of which are wrong and misguided, just like you and the rest of your team.  If the customer were there, I think you’d have better meetings.

Practically speaking, you probably can't actually put a customer in all your meetings.  If that’s the case, you should act as if she’s there.  Pretend like she’s sitting in the room.  In the past, I’ve actually designated an empty chair in the meeting as being where the customer is, and looking in that direction while asking “what does the customer have to say?” (yes, I’m weird).  When you’re trying to make an important decision, and you’re sort of divided on the issue, ask yourself:  If the customer were here, what would she say?  You don’t actually have to do everything she says, but it’s useful to at least factor in her point of view.

Now, you might argue that you’re already factoring in customers in all of your decision-making.  And, I’m going to argue that you’re wrong.  You’re making decisions all the time where the customer’s voice is either absent or too weak.  Just think back on the last five debates you had, and the decisions you made.  Perhaps it was a pricing decision.  Or a funding decision.  Or an office space decision.  Did the customer really have a voice?  Was it as loud as everyone else’s?  Probably not.

You might then further argue that you have someone “representing” the customer (your head of customer support, perhaps).  I’d argue that that’s different.  Yes, your head of customer support is solving for your customers’ well-being, but that’s not the same thing.  Imagine if you were running a hospital.  You’d have operations, and finance and marketing and all sorts of other groups.  In your big hospital meeting, you might think that the doctors represented the patient’s interest (because they are looking to solve the patient’s problem), but if you’ve ever been a patient, you know that’s not the same thing.  Your hospital management meetings would be very different if there was a patient in the room.  Your startup is no different.  The decisions would be better if there was a customer in the room.

Finally, you might have the most insidious set of fears of all:  First, that your customers are ignorant (they don’t understand industry trends or technology).  Second, that they’re selfish (all they care about is getting the lowest price and extracting the most value from you).  Third, that they’re control-freaks and just want to run your business.  All of these are simply not trueYour customers are not ignorant, selfish, control-freaks.  Of course, there’s a distribution curve at work here.  You might rightfully argue that some of your customers manifest one or more of these attributes.  But, that misses the point.  I’m not asking you to visualize those customers at your meetings.  Visualize the smart, savvy and benevolent customer that wants you to succeed and has no intention of running your company.  You have some of those customers.  If you don’t, then go get some

That kind of customer is exceptionally useful.  They feel pain with your product that you’re likely not going to feel.  They can empathize with your other customers in a way that you can’t.  And, in the long term, even though they may not have as loud of a voice or be able to debate as passionately as you, they have a decent chance of being right.  Imagine if you were keeping meeting minutes from these meetings and noted her side of the story and her “vote”.  If you looked back a year or two later, you might say something like “Hey, you know what, in that meeting, she was right.  We would have been better off if we had just listened to her.”  Maybe you and your team are way more insightful than average, but I’ve said this to myself many times.

So, the next tiime you have a big, high falutin’ meeting and are attempting to make a big decision, try to give your customer a seat at the tableI think you might make a better decision.

What do you think?  How would you make sure the customer has a real voice in your company?

Topics: strategy
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From Minimally Viable To Maximally Buyable Product

By Dharmesh Shah on June 21, 2010

I’m a big fan of Eric Ries and the lean startup movement that he’s championing at Startup Lessons Learned.  I think many of the fundamentals behind the lean startup are things you likely have been practicing for a while.  But, seeing it articulated so well and establishing a common vocabularly for us to talk about it is immensely valuable.

One of the key parts of the lean startup is the concept of a “minimally viable product”.  The MVP is a product that has the minimum set of features needed to learn what the market wants.  The idea behind the MVP is to spend as little energy is possible figuring out whether what you’re building is something people want.

In this article, I’d like to look at what happens after you’ve built the minimally viable product for your market.  What’s next?  I’m going to suggest that once you know there’s a market, you should work towards the “Maximally Buyable Product” (MBP).  Yes, I know that’s not the perfect term, but I’m a sucker for literary symmetry and you have to admit, it’s got a nice ring to it.OnStartups Pot Of Gold

Given that this is the first time the term Maximally Buyable Product has been used (I made it up), I’ll take a shot as defining it:

Maximally Buyable Product:  The MBP has the set of features needed to capture the maximum potential opportunity in a market.  These are the features that make it easy for people to try, buy

Features Of A Maximally Buyable Product

1. Easy To Understand:  To be “maximally buyable”, the product should be simple to understand.  It’s hard to market and sell things that people don’t understand. 

2. Easy To Try:  You may think that your product is revolutionary and is creating it’s own category and that you have no direct competition.  But, as it turns out, your potential customers didn’t get that memo.  Doesn’t matter what market you’re in, people believe they live in an age of abundant choices.  Given this perception, to be “maximally buyable”, you need to ensure that the product is designed such that it is easy to try.  This takes investment. 

3. Easy To Buy:  This one’s going to sound obvious, but so many of us trip over this one (including me) that it bears mentioning:  To get the maximum amount of sales for your product, you need to have the minimum degree of pain in the buying process.  This includes having clear, simple pricing — on your website.  It includes a straightforward purchasing process (based on your market).  It includes payment mechanisms that map to customer expectations. 

4. Easy To Stay:  Chances are, your startup makes money from customers over a period of time.  This is either because you’re charging on some subscription basis (monthly, quarterly, annually) or because even if you have some large up-front fee, there’s some trailing revenue in terms of maintenance/support/upgrades/cross-sells etc.  Given that the revenue you see from a customer is spread out over time, the maximally buyable product ensures that customers are kept happy for as long as possible. If you design for customer longevity (not just customer acquisition), you'll find that often a different set of dynamics are at play.

5. Easy To Leave: Though you want customers to stay with you as long as possible, designing your product to  make it easy to leave is an important part of its "buyability".  A "feature" that supports this easy to leave notion is a robust "export" feature (to avoid data lock-in).  The easier you make it for customers to leave, the more likely that are to buy in the first place.

You may be thinking that each of the above aren’t really about product features, but about marketing (and sales).  I’d disagree.  I’d argue that even though these aspects of the product are not the features that customers are directly paying for (they’re not the ones that solve the customers immediate problem), they should still be thought of as “features”.  You should carefully select these “maximally buyable product” features just like you would select features for your MVP.  You should should design them like you would any other feature.  It’s a mistake to think of them as being part of finance/accounting/operations/sales/marketing/whatever.  They’re part of the product.

If it’s a part of your customer’s experience with you, it’s a feature of your product.

Some examples:  The “signup for a trial” process.  The “upgrade” process.  The “how do I get a receipt or change my billing info” process.  All of these are features of the product.  You can lose money just as easily by poorly selecting or designing these features as you can by the “core” features. 

What do you think?  Have you invested sufficient time in building a Maximally Buyable Product?  Would love to hear your ideas and experiences in the comments. 

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