Before we discuss in greater detail the types of value we are able to create for our customers, and how we do that, we need to know something else: who are our customers?
Only when we know who our customers are, can we really know the value we want to create for them, or even better, the value they need us to create.
We can’t know this precisely, and we probably won’t want to limit our customer down to such a narrow group of people that we could know precisely what they’re thinking, but we do need to think about it.
“Who is going to want to buy the value we’re creating?”
One way, the old-fashioned way, is market research, and just because it’s old-fashioned doesn’t mean you can ignore it. It’s still a very good idea to know the approximate size of your market, and what it is that limits that size, whether physical location or technological adoption or age. The defining boundaries of your “Total Addressable Market” could be anything, but they are definitely worth knowing right at the very beginning.
Once you do have a gauge of your total addressable market, then it’s even more important to work out “who” they are. If you’re going to create value for them, you need to understand them, so you can understand the value they need so that they will buy it from you.
Obviously you would buy from you because you love your business because you made it.
It’s not about you. You need to empathise with them. You need to connect. If you can put yourself in their shoes, then you can understand why they would buy from you.
- They might be on their way home from work and have no time to buy something for dinner.
- They might want to impress their friends with something no one else has seen.
- They might want to buy a similar thing somewhere else but can’t afford it.
- They might be annoyed at how inefficient something is and want it faster.
Can you feel it? Can you feel their needs? Can you imagine their thought process?
Have a look through the design kit from IDEO for methods and tools for understanding customer needs.
One interesting term that some companies use to understand why customers do things is to find their “pain points”: the things that are causing psychological discomfort for the customers that they would rather avoid. “Pain” might seem too strong a word, but it highlights why customers change behaviour, which if you have a new business is exactly what you need them to do.
You can only do this if you deeply understand them, and you can only do this if you really try.
The best businesses start because someone asks “Why hasn’t someone else solved this problem?” If you are addressing a problem that someone else is asking, then you have the core of a truly strong business, because you will be creating real value for the people whose problem you’re solving.
In 2008, Kevin Kelly wrote a now-famous essay entitled “1,000 True Fans”, establishing the maths behind a new business model that you only need a core group of customers who will buy every single thing you produce, to have a proper sustainable business.
It’s fascinating, because it’s both the oldest of business models and yet it’s the newest of business models. At the dawn of business, the local shop would sell everything local people needed. The shopkeeper would know them all, and they would know where to go. That was a business.
Today, the total opposite model is possible: your 1,000 fans may be dotted all over the world, but if you can make exactly what they want, and get it to them, you have a business.
They seem the opposite, but they are both the same: they know their customers’ wants and needs, and give it to them.
If you know your customers just as well, you will have a business.
Then you can worry what kind of value you can create for them. First, answer these questions.