Tag Archives: market

Customer Development Design

I’ve been a regular follower of Seth Godin’s blog and like almost all his posts. However there are some posts of Seth that I like way more than others. A couple posts that really caught my attention a few weeks back were on choosing the customer and training your customers respectively.

Posted at an interval of two days these two blog posts taken together offer a nice(different?) perspective of looking at things when it comes to Customer Development. Against the common notion that you should try to attract all kinds of customers Seth suggests that you choose your customers. Yes, you choose your customers for your business by your brand value proposition, pricing, customer experience and other things. All aspects of the way you run your business attracts or repels certain kinds of customers. You might wonder, why is it important to choose your customers?

It is especially important to choose your customers if you have a perspective/vision and you want things to happen according to that and not according to the terms defined by the market. For example sake, consider two product companies, one of which is very choosy when it comes to picking their customers and would rather prefer a smaller set of customers of the kind that they’d like while the other company is not really that choosy and is open to catering to all sorts of customers, the more the merrier. Assuming they both start from the same point, it won’t be difficult to imagine how differently would shape up after an year into the business. Company A which focuses of select customers will emerge out to be almost on the lines of the founder(s)’s vision while Company B which wants to get as much customers as it wants will have significant difficulty living up to the varied expectations and might just give in to the (un)reasonable demands of the majority.

Not only this, Seth suggests that businesses should also train their customers. Yes, training the customers by encouraging certain type of behaviour by rewards etc and discouraging certain type of behaviour. For ex: If you’ve priced your product slightly above the market standard then there’ll be lots of customers complaining about your price and trying to negotiate their way down(in terms of prices). Now there are two ways to go about it, one that you let customers negotiate and other is to don’t bother. Over a period of time if you follow the don’t bother policy you’ll observe how some price sensitive customers will move out and the remaining customers will get used to the higher than market price and stop complaining (This assumes that their is something that the business  offers to offset the high price).

Another interesting effect that this has is that it helps in building a culture among your customers that’s decided to a large extent by your terms and not the markets.

Business: Scratch your own itch or someone elses?

The easiest, most straightforward way to create a great product or service is to make something you want to use. That lets you design what you know—and you’ll figure out immediately whether or not what you’re making is any good. – Jason Fried & DHH in Rework

(Image courtesy: topnews.in)

“Scratching your own itch(SYOI)” is a popular phrase amongst many startup circles. What it essentially means is to build something that solves a problem you face. The case in point cited by many is the fact that when you are solving your own problem you know what exactly the problem is and how it can be addressed while on the other hand if you are scratching someone else’s itch you are sort of taking blind shots at both the problem and the possible solution(s).

Apart from the obvious fact of knowing the problem a bit better what works for SYOI is

  1. Immediate & Direct Feedback: You can directly feel the impact that your solution creates. If for example one builds a product to manage his food expenses, the utility/futility of the product can be judged directly and immediately. One doesn’t need to do a long trial run/demo to see if the product works.
  2. Extra Incentive: You + Customers > Customers. Working on a problem that benefits oneself directly has additional incentive because of the direct personal impact. Not just this, the beauty of this scenario is that one doesn’t need to think about the customers all the time i.e one can be content by just solving his/her problem. Other customers become secondary and this is a good thing because you don’t have to worry about what they might/might not like and just focus on what works for you, simple.
  3. Passion: SYOI also makes one more passionate about the problem they are working on because they can relate a lot more to the problem and the issues that arise because of it. The direct impact of the solution on you also adds to the passion.

However having said all that, Is ‘Scratching your own itch’ the only way out? or Is ‘Scratching your own itch’ better than ‘Scratching someone else’s itch’?

While SYOI might have it’s own benefits, it certainly isn’t the only way out for entrepreneurs and not every invention/business is born out of it. For ex: A closed social networking platform for Chief Executives (CEO’s, CXO’s etc) of Fortune 500 companies built by 24-25 year olds can still work or a dating platform built by a married man is no less likely to work because he’s not scratching his own itch {assuming he’s not interested in finding himself a date through this platform 🙂 }

Also, not all’s good with SYOI and it also has its fair share of negatives

  1. Small Market: What bothers you which might not be bothering others. Thus some SYOI businesses also stand a risk of solving problems for a very small market segment. For ex: A friend of mine hates to wait in queues for getting CNG for his car and is ready to pay someone extra amount to take his car and get CNG filled in it. So if he were to start a service based just on this then it’s quite likely that there might not be a lot of people willing to pay extra money to get CNG/Petrol.
  2. Financial Feasibility/Business Model: SYOI might work great for Open source where all developers are constantly writing/modifying code to meet their needs and in the process helping scores of other fellow developers it might not work that well when it comes to doing a business. Not all personal itches and their solutions can have business models. This is not to be confused with the previous point on Small Market as having a solution for small market can still be monetized but monetizing something that appears to be a problem to you but no one else might see it as a problem can be an issue.
  3. Domain Knowledge or lack thereof: Needless to say, while starting a business it makes a lot of difference if you have enough domain expertise in your team and it might hurt if you are trying to solve your problem without having enough domain knowledge. For ex: I probably won’t land anywhere if I were to try to solve my itch of building a car that flies instead of crawling on Delhi roads. It’s worth noting that lack of domain knowledge is also likely(a bit more?) to hurt when you are trying to scratch someone else’s itch.

S0 are you scratching your itch or someone else’s? How’s it going?


Links:

  1. http://archipreneur.blogspot.com/2010/03/scratch-your-own-itch-rework-by-37.html
  2. http://gettingreal.37signals.com/ch02_Whats_Your_Problem.php
  3. http://www.instigatorblog.com/scratching-your-own-itch/2010/08/12/