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At the Fluxible UX conference last month, UX designer Steve Baty of Meld Studio gave a talk on innovation and sources of insight for customer research. The way he framed customer groups resonated with me as a marketer.
Normally, we think of people as being prospects or customers. In other words, once a person has crossed the point of purchase, they are a customer. From there many companies assume you have less work to do than when you were trying to get them to buy in the first place.
We all know that this isn't true, especially for customers of low-price-low-touch products, where you can cancel a subscription with the click of a button. Yet marketers tend to focus 90% of their efforts on getting new customers and 10% of their efforts on keeping them.
Steve's model for customer segments is closer to reality; I've sketched it below:
The first thing I like about this model is that it calls out that the customer may not in fact be the buyer or the user. This is often the case in the B2B space where there are multiple people involved in a buying decision, some who will never actually use the product. Think CRM, project management, marketing automation, etc...
The next thing I like is that it distinguishes customers from a group he calls near-customers. Near customers are people who have purchased your product, but aren't committed customers. These are people who may have chosen your product because the cost of trying it was low, or because it was the best option out there but not really what they were looking for. These people may technically be customers, but they are still looking for other options and are highly prone to switch to something else when they find it.
So how do you find the near-customers?
I'm doing this for a client right now and we are starting by interviewing people who have recently cancelled their subscription. We are using the Jobs to Be Done framework to understand why they are leaving, what they are switching to and what triggered their action. One of the things we learned was that there was a group of people who were leaving because they weren't in the habit of using the product. They were curious enough to try it at one point but they hadn't integrated it into their day to day life, largely because they were unaware of a feature that would make it easy to use this product while on the move and not just in their homes. When an opportunity came to tighten their budget or find something new to entertain them, this product was an easy candidate of something to do without.
In addition to the interviews we are doing some data mining to analyze what patterns we see in people who cancel versus renew, so that we can determine if there are specific fail points that we can flag and correct to hopefully prevent people from wanting to leave. For example, if someone only logs in through the website and not our app, or if they search for a product and can't find it and this happens more than twice in a 30 day period.
Putting both of these types of insights together, we can now start running tests to see what effect they have on customers' experience with the product, and whether our changes reduce the number of people leaving (churn).
I'll report back on how we did in a future post.
When it comes to getting better marketing results, most companies I talk to think they have an execution problem. i.e. if only they could convert more free trial users to paying customers, sales would spike. And so they start testing a bunch of tactics - PPC campaigns, landing page tests, etc.... While eventually they will come to some conclusions, the problem with this approach is that it leaves a lot to trial and error, which can be both costly and time consuming.
Here's an example from my own experience:
A startup called Blocko* is trying to stand out from their main competitor, Lego, which has great brand recognition and deep marketing dollars. Blocko is good at getting traffic to its website but the problem as they see it is creating the right triggers for people to order their products online. Their question to me was "what kind of messaging do we need to convert more prospects into customers?"
The marketing team had lots of ideas for creative that would be entertaining and distinctive, and they had a great understanding of how to run and measure split test email campaigns. However, when I asked the folks in the company "why do people choose Blocko over Lego?", I didn't receive a consistent answer. Half the people I talked to didn't know, a quarter cited market research on toy buyers, and the other quarter had an instinctive guess based on their experience or what they heard in the hallways.
So, why did this problem exist in the first place? It's usually because of one (or several) of these reasons:
- Available market research is outdated: The company did some market research when they first started spending money on marketing, but it was 3 years ago and is no longer relevant.
- Customer research hasn't been done: The company didn't do any customer research at all, because they didn't have budget, didn't think it was important, or thought they knew enough about their customers through their experience getting the company off the ground.
- Customer insights are not specific enough: The marketing team has some market research but it's generalized for the industry or only covers demographics and not real insights into how customer buy, what their motivations are, what cultural markers distinguish them from others, and how customers perceive products in this category.
- Customer insights have not been collected in a systematic way: The marketing team is not spending any time actually talking to their customers and documenting their insights for reference and validation.
So with this in mind, what are some signs you may have a customer insights problem and not a marketing execution problem? Here are some questions to consider:
- Do you know what your target customer is using/doing now that would be replaced by using your product or service?
- If your customer was asked to describe your product to a colleague, do you know what they would say?
- What problem does your product/service solve for your customer? What is that worth to them? How do they measure that worth - i.e. time, dollars, something else?
- How does your product/service make your customer feel? How do they feel when they are doing business with your company?
- Who does your customer take advice from when it comes to buying a product like yours? Where do they get that advice? Does this change as they get further along in their purchasing process?
- Where do your customers hang out, both online and in real-life? If they are on Facebook, what do they use it for? Do they go to online forums and if they do, what do they do there? What conferences do they go to?
- What kind of communication devices does your customer use? Do they look for information differently on their smartphone then they do on their laptop?
If you are fuzzy on any of these answers, you may want to spend some more time getting to know your customer. There are lots of ways you can do this, ranging from surveys to ethnographic research to customer advisory panels to simply taking customers out for dinner, knowing what to ask and how to listen. You'll be surprised at what you may find.
*Fictitious name borrowed from The Simpsons to protect the innocent.
A few months ago I had the unfortunate luck to leave valuables behind in a taxi not once, but twice, within the span of one week. (Clearly a sign I needed to slow down!). I used a different taxi app each time to hail my cab and noticed some interesting differences in how both companies thought about their customers.
The first time, my house keys fell out of my pocket into the taxi but I only realized it hours later, when I was heading home. I tried looking for a contact option for the taxi driver which is available in the app when you make a booking. I discovered that option no longer appeared once I had made my purchase. After some searching, I ended up having to send an email to a generic address found on the website but because of the late hour, no one was available to help.
The second time, I was using a different taxi app, and left an expensive gift bag in the back seat of the taxi, again only realizing it a few hours later. I frantically opened up the app, happy to find an icon for lost property and a well though out user experience that let me choose which journey I had left my belongings in, and a simple button to call the taxi driver as well as report the lost property to the company, all within the app. Within an hour, I was reunited with my bag.
Mapping customer use cases post-purchase
This is much more than a story about good customer service. My experience highlighted how well one company had thought about their customers post-purchase, considering typical use cases (turns out I am not the only absent minded cab passenger) and future purchase considerations such as:
- How am I using the service?
- What would make me want to use this service again?
- Who would I tell about my experience?
- Where would this communication happen?
- How would my experience influence other buyers?
- What would it take for me to recommend this service to others?
- What would cause me to switch to a competitor?
We know that many marketers take the time to map the buying behaviour of their target customers, in order to develop the right messaging and programs to get a prospect's attention and nurture them along their buying decision until they are ready to make a purchase. We've all seen the traditional marketing funnel. However, these approaches tend to focus on customer acquisition, and don't address factors that impact customer retention, churn and advocacy. Going the extra mile to look at customer buying behaviour past the point of purchase is important for many reasons.
Here are 3 that I've experienced firsthand:
Prospective customers are highly influenced by the experience of existing customers. People have always consulted their peers, friends or family before making a purchasing decision, but now, this information is available on a completely different scale. User forum postings and customer reviews are easy to access online, and new social tools can tell you who in your social graph has recommended or purchased a product you are considering.
It gets expensive to have to continually replace your customers. Once a customer purchases a product or service, they have a choice to continue to use that product or switch to an alternative. Take the example of a software-as-a-service subscription that bills customers monthly: customers have monthly opportunities to renew their subscription or cancel. Understanding how they come to this decision can provide some valuable insights that marketers can use to improve customer retention.
Your happy customers can extend the work of your marketing team. In this age of pervasive communication, it can be tough for a company to be present everywhere conversations about your brand are taking place. Knowing what it takes to turn a customer into a raving fan, and giving them opportunities to do so can amplify the efforts of your own marketing programs.