It can feel safe to look at hard facts and historical numbers when steering your business into the future with buy-in for your team and stakeholders. However, staring at figures and data can sometimes just be counterproductive. The covid pandemic has more than ever proven that historic numbers are not sufficient as a means for steering a business, as we all became aware of the constant transformation occurring everywhere, not only within the startup ecosystem but for any business large or small.
Furthermore, start-up or scale-up entrepreneurs tend to rely on the initial success and forget to spend time on continuous work to understand customer behavior on a deeper level such as purchase patterns, buyers versus users, availability of time, behavior obstacles, etc.
And if you already have cash flow, you basically know your customer behavior. Your core team has a lot of insight that goes “unnoticed”. You surely have customers that you may ask for feedback. Start by looking at what you have. You just need to become better at building hypotheses for testing and find a framework for managing uncertainty.
What does it mean to build a hypothesis?
There is a lot of uncertainty in the global marketplace and competitors can emerge from any direction. The one reliable compass is to understand customer pain points, behaviors, and how they will change over time. You may ask customers about their needs. Very often, however, they will not recognize them before a full solution is presented. So you need to build and work under a customer behavior hypothesis. Have it jointly approved by your team and stakeholders. Test it, change it, until your case is proven right.
You have to awaken your inner Wayne Gretzky!
“I skate where the puck is going to be, not where it has been”.
Why is this difficult?
Startups themselves tend to fall in love with their product, services or any first success and spend less time continuously digging into the target group behavior for continued growth. They may fail to understand the full perspective of onboarding and customer success mechanisms which makes the complete offering viable and converts for growth. Very often the board finds it tedious to spend time in monthly meetings to talk about customer insight/behavior and reverts to number crunching as the sole means to keep control. All in all, there is simply not enough time amidst all other priorities.
How can you go about it?
First of all, you should talk to your customers ever so often (See Rosebud Venture’s earlier blog post about customer validation interviews). You should document your findings and try to structure & consolidate team knowledge in order to really share a common view of where your target group’s pain points and needs are – and use that knowledge to steer your business.
Rosebud Note! You have all the knowledge within reach. Start by looking within your immediate team, and advisors if any, and include close customers if possible.
7 steps to build a customer behavior hypothesis:
Find time to sit down with your team, advisors, and a close customer. By using the next 6 steps you may jointly document a customer behavior hypothesis for steering the business 6-12 months forward.
- Start by mind mapping different customer/consumer/user criteria that describe behavior in the target segment. E.g. Income, Age, Education, Budget, Religion, etc.
- Add sub-values to each criterion. What sub-values can each criterion carry? E.g Income: High/Medium/Low, Gender: Female/Male, etc.
- Finally, prioritize together which criteria to chase or to walk away from. Some criteria are neutral (i.e. good to acknowledge but neither chase nor walk away) and should be left as such.
- Use different colors depending on the prioritization i.e. chase/walkaway/neutral.
- Create your own customer/consumer/user segmentation tool based on key findings in a spreadsheet.
- Final step: Sign off the segmentation with the core team and start chasing your customer sweet spot!!
- Go Go Go!!!
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