Many companies still fail to speak to their customers regularly enough, so those who keep in close contact with them should rightly be proud.
It no doubt gives you an edge.
But it can also create a dangerous blind spot that has been the undoing of many well managed, well intentioned companies.
How can a well run, customer-obsessed company ever fail?
This was the subject of best-selling book The Innovator’s Dilemma by Clayton Christensen.
For a free copy, book an appointment with us before the end of November to learn how we can help you avoid the same fate as the companies discussed in his book!*
The danger doesn’t come from listening to your customers; it comes from only listening to your customers and not paying enough attention to what’s happening in the wider world.
Why should you pay attention to anyone who’s not paying you money? Those non-customers? Even those non-customers who you feel may never become a customer?
To answer those questions, let’s look at two specific ways that listening to customers over consumers can actually hurt your company, whether you’re a startup or the incumbent.
Market leaders and established brands
If you’re a market leader (or at the very least, a well established brand), then you’ll have plenty of customers to talk to, which is a great position to be in.
You probably have larger marketing and innovation budgets than anyone else, and of course you’ve got the competitive advantage of brand awareness in your favour.
Assuming you keep your customer base happy, the future probably looks pretty secure.
In fact, you can probably outcompete new entrants in terms of the sophistication of your product offering, investing in more and more advanced technologies that add incremental value to your customers, helping your grow you top line too.
And this is why you miss the next great wave of innovations that may well sweep away your entire company, no matter how unassailable you look right now.
How do you think Nokia was feeling just 10 years ago. 6 years after this cover story, they were no longer an independent company.
Then of course there’s Kodak, who suffered a similar fate, having been the market leaders for many years. They even invented the first digital camera. But because they focused more on their core market (existing customers), and less on the emerging use-cases amongst non-customers, they didn’t capitalise on their own innovation.
Kodak stock price.
What happens to market leaders when they focus too much on their customers?
This is the crux of the book, and there are lots of things at play here, so for brevity let’s highlight two common scenarios.
Scenario one: Build faster horses
While we don't believe that consumers in general can’t articulate what they want (see the dangers of survivorship bias), there is an element of this when specifically talking to existing customers.
It’s existing customers (rather than consumers in general), who will find it hardest to ‘think outside of the box’ and reimagine how they might interact with a product or service in your category that doesn’t work in a similar way to your existing solution. They will likely anchor everything to their frame of reference.
This makes it harder for you to come up with genuinely disruptive innovations, and focuses you instead of creating new features that increase the value of your existing solutions.
While this sounds great in theory, it can often mean you miss the really big changes (think Kodak and Nokia again here), with devastating consequences. It's the difference between incremental and disruptive innovations.
Scenario two: What market?
Another likely scenario is that you start to pick up on some buzz around a niche market offering for customers that you’d never normally target - often because they can’t afford to pay the premium prices you currenly charge.
This makes them less valuable to you as a business, and because there’s not many of them, you shrug and think ‘what market.’
Unfortunately this gives new competitors a toe-hold in your market, and a loyal customer base. Adoption grows from there, their offering becomes more robust, they spread the word...and before you know it the challenger brand playing in an unappealing niche has grown big enough to eat your lunch.
This is why keeping a regular eye on unprompted brand recall, competitor NPS and purchase drivers is incredibly important, so you’re alerted to this threat before it’s too late.
Startups and challenger brands
The Innovator’s Dilemma focused on how market leaders get disrupted by new competitors coming into their markets, but startups and challenger brands can also be vulnerable when they focus too much on existing users.
Why? Because it can lead to you making the wrong decisions when it comes to future product development.
How? Because if you listen to your existing users - and particularly your most active ones (power users) - they’re going to give you feedback that best serves them. But their usage doesn’t always reflect the average usage of your product or service, and most likely it's focused on adding more powerful features, and more complexity.
This runs directly at odds with what your next wave of news users probably want, which is simplicity and ease of use.
This was a lesson learned early on by Sarah Tavel, Pinterest’s first product manager (now a partner at Benchmark Capital), who says:
“Your loudest users — the users who complain when you ship something they don’t like, and post in your Facebook Group their feature requests, are a blessing and a curse. Without them, you wouldn’t have a company. But to reach your next 100m users, you need to be willing to ignore them.”
Facebook faced a similar challenge over 10 years ago now, significantly changing the way their newsfeed worked, leading to an angry backlash from existing users. That’s when they had 12 million active users. Today? They have well over 1.2 billion.
The lesson...being focused on your existing users and all the digital metrics they provide is valuable; but to ignore the needs of your next wave of users could be terminal.
How do you find out what non-customers want? How do you make data-driven decisions when you can’t look at your usual analytics dashboard?
This is where a commitment to Brand Intelligence is so important.
You have to reach beyond the easy-to-get, familiar data that existing customers and users provide you.
You have to focus on a process of deliberate self-disruption.
Never get comfortable. Don’t get lulled into the false sense of security that your customers have all the answers, or that the world won’t change around you.
A platform like Attest can help you to stay uncomfortably close to your market. The moment something changes, you’ll feel it.
With a reach of 70 million consumers across 80 countries, we can help you get the consumer and market feedback you need to figure out future growth and stay one step ahead of disruption.
It’s the best answer to the myopia that’s created by paying too much attention to your existing customers.
As Joseph Heller famously wrote in Catch-22 “Just because you're paranoid doesn't mean they aren't after you.”
This is the attitude every business would be best to adopt when it comes to staying sharp and ahead of the game.
Just because you’ve got happy users and clients - whether you’re a startup or a market leader - doesn’t mean you can ignore everyone else.
In fact, the best companies constantly look beyond their own customer base to figure out what’s next and stay ahead of disruptive forces.
Why not join brands like Carwow, Deliveroo, DogBuddy, Fever-Tree, Samsung, Treatwell, Twitter, Uber and Unilever to avoid getting disrupted and find the edge on your competition?
Talk with one of our Brand Intelligence experts before the end of November and we’ll send you a free copy of the Innovator’s Dilemma!*
*We can only offer this to UK-based businesses, where your meeting takes place prior to Midnight, 30th November