Recent research by SurveyMe conducted with over 3,000 businesses globally, shows that 88%of businesses decision-makers stated that knowing what customers think of their business is important. Yet only 50% of them are actually collecting customer feedback. For 4 out of every 10 businesses the leading factor stopping them from collecting customer feedback is ‘not knowing what to ask' in the first place.
Generally, recognized as the most important question to ask, Net Promoter Score (NPS) is widely accepted as a good guide towards predicting long-term business sustainability. But what many businesses decision-makers overlook is that NPS isn’t really a valid guide until you have actually created a ‘must-have’ product experience (‘MHX’). In fact, you could have a MHX but accompany it with such lousy service that customers would give you a low NPS but still use your product (purely because it fulfills an emotional need that they value). But they wouldn’t recommend you. Therefore your NPS score is skewed negatively against your likely future sustainability while you continue in the short term to sell lots of product.
The Harvard Business Review, (September-October 1990) showed that in industry after industry, the high cost of acquiring customers renders many customer relationships unprofitable during their early years. Only in later years, when the cost of serving loyal customers falls and the volume of their purchases rises, do relationships generate big returns. The bottom line: increasing your customer retention rates by 5% increases your profits by 25% to 95%. At the time those statistics quoted in Harvard Business Review startled many executives, and the article set off a rush to craft customer retention strategies, many of which continue to pay large dividends. Human psychology hasn’t evolved so much in 25 years since that research was first published to diminish the sentiment in any way. In fact, arguably retaining customers is even more important (and harder) today because the Internet and mobile technology means your (new) customers today are far more educated before experiencing your product first-time because they have access to a myriad of real-time information sources to make their choices. In contrast, your existing customers have already beaten a track to your door, you’ve got something they want that has achieved a product / market fit and because of that you’ve made a step towards business sustainability.
If you are reading this as a start-up business or someone responsible for launching new products (or services) then you know the only thing that really matters is getting to product/market fit. Broadly speaking, product/market fit means being in a good market with a product that can satisfy that market. i.e. satisfying some emotional need. You can always feel when product/market fit isn't happening because your potential customers aren't quite getting value out of the product, word of mouth isn't spreading, usage isn't growing that fast, press reviews are kind of "blah", the sales cycle takes too long, and lots of enquiries never close.
And similarly you can always feel product/market fit when it's happening because customers are buying the product just as fast as you can make it. Or usage is growing just as fast as you can add more capacity. Money from customers is flowing in and you're hiring sales and customer support staff as fast as you can. The media is calling because they've heard about your hot new thing and they want to talk to you about it. Heck, you might even start getting Entrepreneur of the Year awards from Harvard Business School!
Lots of products, services and startups fail before product/market fit ever happens. Our view, in fact, is that they fail because they never get to product/market fit. You have only achieved a product / market fit when you have a large group of people who want / need your product (or service). And after they’ve used your product (or service), it quickly becomes a ‘must have’ for them i.e. the positive experience and value that they’ve derived from using your product or service means they cannot live without it.
People don’t buy products. They buy the experience that goes with the product i.e. the emotional need that the product has satisfied. So you are not dealing with a must have product, you are instead understanding and testing the ‘must have experience’ (‘MHX’). The obvious implication is that if you know what your customers’ primary MHXs are then you can drive business growth by simply focusing on what they tell you and doing more of that. The quicker you can track what their MHX is and positively react to changes the better chance you have of sustainability. In that respect, there’s nothing quicker than real-time tracking which mobile technology now makes affordable for every business.
But how can you test MHX in the first place? – Well, like NPS there is one simple question you can use. Ask your customers this, “How would you feel if you could no longer use [insert your product name / service]”? Give them four options for their answers only. These are, “Very disappointed”, “Somewhat disappointed”, “Not disappointed”, “Not applicable / I no longer use the product”. The golden rule is that if the total number of “Very disappointed” answers is >40% of the total answers you receive, excluding the “Not applicable” answers then you have achieved a product/market fit and can begin understanding your customers’ MHX.
To begin understanding your MHX in detail, and looking only at the “Very disappointed” answers, now investigate why your customers would be very disappointed. Your survey should include a simple follow-up question with an open-text field that your customers can write in, to understand what they value. After understanding some of the MHXs you can then start creating marketing arguments and hooks that you know will appeal to win potential new customers who you know are just like your existing customers - simply because you know what existing customers value most. Thus it becomes easier to grow your sales exponentially and with less marketing risk too.
To do this, select 40 people who have said ‘very disappointed’ and ask a follow up question “what’s the one biggest reason you like about [our product]?” We suggest 40 because realistically that’s about as low as you want to go with a sample to make it relevant. If you have more, use all the comments. If you have to go with a lower sample than 40 then bear in mind that it may not representative. At the same time in the back of your mind, if you haven’t got 40 customers with a MHX, consider whether you’ve actually reached product/market fit in the first place. Then look for a pattern in those open-ended answers and, based on what you’ve received, create a multi-answer, multiple-choice question with the leading choices summarised. For example,
- I now make better decisions
- I now make faster decisions
- I now have data to support my decisions
Then ask an open-ended question, “Why did you select the benefit as your favourite?” Finally, once you’ve got the answer to this, you’ve reached information ‘gold’. Because once you understand what it is about your product that makes it a MHX for your customers then you can start creating an automated marketing process to deliver promises and hooks that are commensurate with the reasons why it is a must have experience. If you want to have a free go at testing your MHX, click here and use the template questions provided. You could be getting real-time customer feedback within the next 14 minutes. And you can increase your response rates plus customer loyalty by rewarding them with a surprise reward for helping you understand how to improve on their MHX.