CEO White Paper: ‘Identifying Value: Your Customer’s Perspective’

October 18, 2024

Sarah Jardine, CEO epipole
October 2024

Sarah Jardine (centre) is the brilliant engineering mind leading epipole into the future

An Impatient Patient

Recently I attended an appointment at my doctor’s surgery, and a conversation with an older lady in the waiting room got me thinking – about customer expectations.

Let me explain.

I had to book a non-urgent appointment but wanted to see a specific doctor; when I had called, I could get an appointment with her within a week – Great!

I turned up 10 minutes before my appointment time and was pleased to see that there were only 3 other people in the waiting room at that time.  With 5 doctors working that afternoon, and a number of practice nurses, technicians and support staff also working, this made me feel confident that I would be seen on time, and I wasn’t spending my waiting time working out how many people were in front of me and how long I was going to have to wait. 

This, my engineering brain thought to itself, is exactly how a ‘continuous flow’ system is supposed to work – parts (or people) turn up at the expected time and are processed within an expected time frame. 

So, the fact that the waiting room wasn’t bursting at the seams with people made me confident that everything was working as expected, and when I was seen on time ultimately, I felt good as a customer of this process. 

The lady opposite me had a completely different reaction to the ‘quiet’ waiting room, and she was very (vocally) dissatisfied.  To her, the lack of people in the waiting room signalled that people “weren’t working hard enough” and the same lack of people failed to explain why she “had to wait so long to get an appointment”. 

Conceptually, is busier better…?

So, for her, a waiting room bursting at the seams with other ‘customers’ would have made her feel better about her 2 days wait to see a specific doctor, whilst the same waiting room scenario would have made me feel like I was running late before I even started!

From the Waiting Room to the Board Room

Conventional wisdom says that if you want to know what your customers want, then you should ask them, but this other lady and myself both wanted different things.  So, can you ever really know, and really deliver, what your customer wants?

There are a couple of people who famously ignored what their customers wanted, including Henry Ford who is famously quoted as having said “If I had asked people what they wanted they would have said faster horses”. 

Whilst there is no specific evidence that Ford actually said this, history indicates that this is how he thought and behaved (e.g., “Any colour – as long as it’s black”), and that he systematically ignored what his customers wanted, instead focussing on what he thought they needed, which was lower cost cars. 

To start with, this paid off – Ford went from manufacturing c.10,000 cars in 1908, to c.935,000 cars in 1920, which equated to approximately two thirds of the US market at that time. 

Ford achieved this by ‘freezing’ the design of the Model T and continuously iterated the moving assembly line manufacturing process to cut costs, lower prices and increase volume, which ultimately delivered growth for Ford.

The Customer is Always… Wrong?

Not quite. This approach of ignoring customer wants and needs started off well, but began to backfire in the 1920’s when General Motors challenged the “Any colour – as long as it’s black” approach with “A car for every purse and purpose” which addressed different market segments with different purchase models (e.g. trade-ins and pay in instalments). 

By 1926 Ford’s market share had halved to around one third of the US market as his business model made it difficult for him to respond to his customers.  In fact, in 1927 he had to close his factories to re-tool them in order that Ford could continue to compete, and this shut down resulted in a further halving of his market share to around 15%.

So, it seems like Henry Ford wrong to ignore what his customer wanted, right? 

I’m not so sure.

Customers:  Driver side, or passenger seat…?

Ford’s approach, in the first instance, enabled him to deliver his vision of the first durable mass-market automobile, so from that point of view his initial approach was correct.  However, what Ford was probably guilty of was failing to test his initial vision against reality, and once he had shown his customers what was possible, he failed to listen to his now better educated customer. 

Essentially, he was unwilling to continuously adapt his vision in the same way as he was willing to adapt his manufacturing process to achieve the initial successes.

Incredible Intuition vs A ‘Dangerous Lesson’

Steve Jobs was another individual who grew a huge global business (Apple) on intuition rather than market research. 

In 1997, Jobs told Business Week, “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.” However, Forbes calls this “a dangerous lesson,” likely because it assumes access to an elite, experienced (and costly!) design team – something out of reach for most companies, especially startups.

Whilst there are many examples of companies that are successful when they show customers what is possible, rather than asking them what they want (e.g. Facebook, Twitter, etc), there are many more examples of companies which failed because they didn’t listen to their customers at all – and the reason that we don’t know about these companies is because they failed, and their founders are not interviewed by business magazines or asked to speak at conferences! 

The harsh reality is that many entrepreneurs waste significant time and money on products no one wants – Studies show that 90% of startups fail[1], with the number one reason being a lack of product-market fit (a problem cited in 32% of failed startups[2]). This means that even with passion and hard work, if there’s no demand for the product, the business will likely fail​.

Additionally, 56% of failed startups attributed their downfall to poor marketing strategies, particularly not validating customer interest early enough. Successful entrepreneurs prioritise quickly testing and adapting their product ideas based on customer feedback to avoid wasting resources​.

This highlights the importance of ensuring that a product solves a real problem or meets a specific customer need.

Going With the (Correct) Flow

In my Improving Flow paper[3] I introduced the concept of the 5 lean principles as shown in the diagram below, and said we would come back to identifying value from the customer’s perspective:

Value from the customer’s perspective is not just about the product or service itself, but about how it meets their needs, solves their problems, and fits into their lives. 

So, how do we effectively identify value from the customer’s perspective? Especially if they value different things (as per my example in the doctor’s surgery)?

Delve Deep into Data

Typically, and wherever available, we might start by analysing purchasing patterns or data to see what products or services customers are buying, how they are buying them (online, in store, over the phone etc) and how often they are making purchases.

For many digitally connected/online products we can often directly track how customers use our product or service, and we can determine that specific features/functions that are frequently used or highly rated, can often represent the highest value to the consumers.

While this data on its own can be useful, it will be limited if we know nothing else about our customer except what they are buying or using and how often. 

We need to cut or segment the data in different ways to gain the best insights, so it’s therefore important that we gather enough information about our customers to do this.

Quantitative + Qualitative = Understanding

Customer surveys, interviews, and focus groups, where appropriate, can help us gain insights into what customers need, want, and expect, and gain understanding of the problems they are trying to solve and the outcomes they desire. 

In these types of interactions, we can structure our feedback forms to gather information which will enable us to segment that data anonymously; gathering the useful data, whilst protecting the identities/PPI of those involved.

We can also gather feedback through product reviews, social media channels and customer service interactions – often, talking to our own front-line staff can be one of the best ways to understand the challenges faced by our customers, because they help manage them day to day.

In all of these interactions it’s important to listen to what customers are saying about what they value and what they feel is lacking – don’t solely focus on the positive or negative, we need to look at both. 

Asking for positive feedback, along with negative, can be incredibly valuable in business, despite potentially feeling counter intuitive. Feedback forms (rather than just ‘complaint’ forms) that ask for more positive suggestions – like listing three things to keep (or even add) and one to stop. This can help uncover hidden strengths and features/benefits that you might otherwise overlook. If you only focus on what’s wrong, you risk unintentionally dropping elements that customers value on the journey to ‘fix’ these problems.

Balancing both types of feedback ensures that improvements don’t come at the cost of losing what’s already working well, and can also unlock entirely new opportunities for customer delight along the way, by giving them things they want that you may not have considered as important.

Rankings and Mappings

Net Promoter Score (NPS) is another common way of measuring customer satisfaction and loyalty.  It’s measured by asking how likely customers are to recommend a product or service to others, typically on a scale from 0 to 10.  Once again, we need to analyse the reasons behind both the low and high scores to really understand what our customers are telling us.

If we want to understand what our customers value on a more emotional level, then we could engage in empathy mapping to understand what customers are thinking, feeling, seeing, and doing.  Adding in to the customer journey (which maps the process of the buying journey) pain points and moments of delight can highlight the areas in this process where our customer perceives value, as well as uncover hidden opportunities for optimisation.

Some of these methods of gathering data and insights may seem overly simple or indeed too esoteric or complicated, but all of them show that by actively engaging with customers, analysing their behaviour, and continuously seeking feedback, we can gain a deep understanding of what they value most and ensure our offerings align with their expectations.

Back in the doctor’s surgery both myself and the other lady were seen on time, by the doctor we wanted to see, and by listening to their customers the practice has developed an efficient process for seeing their patients.  In turn, this has probably resulted in making more time available to listen to what their customers want (as evidenced by the results of the survey posted on the wall, detailing which radio station is played in the waiting room). This will in turn enable more service improvements in the future.

Changing What Has ‘Always Been Done’

The dictionary defines conventional wisdom as “a generally accepted theory or belief”, and the reason that it is generally accepted is likely because it has been tested and proven a number of times.  However, this does not mean that we shouldn’t challenge it, in order to ensure that we deliver a product or service that our customers want and are willing to pay for.

To do this, I believe we need a cycle of continuous investigation, validation and improvement to ensure that we are on the right track – The customer may not always know what they want, but with active communication, conversation, dynamic feedback, and taking the time to understand their needs, you can absolutely help them discover it, together.

Speak soon!

Sarah

Sarah Jardine, CEO, epipole

We love to talk!

Drop us a line at https://www.epipole.com/contact/


[1] https://www.failory.com/blog/startup-failure-rate

[2] https://startuptalky.com/startup-failure-success-rates-statistics/

[3] https://www.epipole.com/news/improving-flow-from-manufacturing-to-the-modern-healthcare-practice/

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