In the early 1900s the phrase “the customer is always right” started to make its appearance. Many credit Gordon Selfridge, founder of the Selfridges department store with coining the term, but undoubtedly this era was a turning point in customer empowerment.
Prior to that, you were more likely to experience “buyer beware”, putting the onus on the purchaser to ensure the product was of sufficient quality. But at the turn of the century businesses started to realize the power of satisfied customers, and the need to create differentiation in an increasingly competitive world. “Le client n’a jamais tort” (the customer is never wrong) was the bold declaration of Cesar Ritz, founder of the Ritz Carlton hotels, and that obsession with service continues to serve the hotel chain very well.
I’m coming off the heels of our flagship customer event LicensingLive, so why on earth would I want to declare that “the customer is always right” is not only naive, it is dangerous to your business.
Let’s explore this conundrum further.
It’s All About Context
A good customer experience is indeed a surefire way to obtain customer loyalty, and retention: both vitally important in this day and age when customers have more choices than ever. But the IT world has borrowed this concept liberally from retail without applying the necessary context or nuance. Retail hinges tremendously on a more primal emotion. Often people purchase something simply because it makes them feel good.
This is why we live in a world of fickle fashion, and celebrity endorsements. Forbes recently showcased 20-year-old Kylie Jenner (of Kardashian reality TV fame) as being worth $900m on the back of her Kylie Cosmetics makeup company. I’m no chemist, but I’m willing to wager a healthy sum that there was no miraculous advancement in cosmetology that she pioneered. She simply tapped into her market’s obsession with fashion and leveraged Instagram for her own brand of customer intimacy.
I have also now achieved the very dubious distinction of making a Kardashian reference in a B2B technology story. I hope you’ll read on.
In the world of high tech, and particularly B2B tech driven by software (what isn’t driven by software these days), these same purchasing impulses don’t imply. Sure, people like to do business with friendly customers, but the product outcomes are going to be far more lasting than the purchase experience. Yet far too often B2B companies follow the same “customer is always right” principle to dictate their business direction and their product roadmap.
Sales, Sales, Sales
One reason we live in a particularly customer obsessed environment is the power wielded by Sales teams. And understandably so, after all, Sales forms the primary interface between a vendor and customer and represents the vendor’s most cherished objective: revenue. So when deals are on the brink of collapsing, and the customer starts dictating the terms, Sales wields their mighty hammer and exerts their influence on the business.
Many a beleaguered product manager can attest to this very familiar scenario. Roadmap and strategy become sacrificial lambs to the conversation-ending “end of quarter revenue” rebuttal. And there is generally little one can offer to counter that argument. Mostly this is because good evidence doesn’t exist to create a compelling enough argument against the customer’s short-term needs. Or against the Sales person’s quarter focused request.
Know Your Customer
So much of product strategy is dictated by gut feel and the opinions of experts. This reverence to an instinctual gift has led to the deification of people like Steve Jobs and Elon Musk who seem to possess an innate feel for what the customer wants.
The irony of Apple is that the company that is most associated with having a cult-like customer following, is the one that routinely disregards customers in favor of their company vision. In an era where phones were getting smaller with longer battery life, they introduced a very unstable and bulky iPhone. Their charging chords are unique to them, they change them without regard, and make decisions like entirely abandoning the headphone jack.
No customer survey would ever have validated any of those decisions. I realize Apple isn’t the best example to use because almost no B2B vendor will achieve that sort of a cult following. But is instructive to see the opposite of conventional wisdom have so much success, and in spite of recent stock troubles, Apple remains defiantly resolute in its Steve Jobs like laser-focused approach to product development.
So what do the rest of the folk who don’t possess clairvoyance or crystal balls do? Understanding how your product is actually being used seems like a good place to start. The frightening reality is that most vendors don’t really know their customer. They have an idea, and they supplement these ideas with things like customer surveys, that are generally aimed at validating preconceived notions. It often amounts to a self-fulfilling prophecy.
We hear what we want to hear. Even in this day and age of agile development, product strategy is generally set for 12-18 months or beyond. And today market’s can be disrupted in less than 12 months.
Build For Insights
B2B vendors have long turned to software licensing technology to enforce contracts, and ensure adherence to business terms. The enforcement creates a more transparent conversation between vendor and customer, and allows for those renewals and true-ups to take place in a more amicable fashion. What gets overlooked is that the consumption, activation, and renewal of these licenses are a significant indicator of business health.
If a solution isn’t being activated as frequently as anticipated or isn’t renewed as often as predicted one can start to draw some conclusions. Insights are increasingly being used to prevent customer attrition, although still not nearly frequently enough, insights are rarely used as fodder for product strategy. Your customers are telling you what they like and don’t like how they are using your solution.
This data can be assessed at a macro level where one can start to draw some evidence-based conclusions. This information is far more representative than a response to a customer survey. That is not to say surveys aren’t important. They are extremely relevant in telling you how easy you are to do business with. But when it comes to product strategy and roadmap, you cannot rely solely on customer opinions.
Our customers are the lifeblood of our business. Events like LicensingLive are invaluable to me, as they afford an opportunity to hear terrific examples of our solutions being put to action, and helping vendors get more value out of their software.
And when it comes to the experience of doing business with us, our customers will always get the Ritz Carlton treatment. But when it comes to giving them the best in class solution for their needs it is our responsibility to leverage our decades of experience, and supplement it with real-time business insights, to create a product for tomorrow, not a quick fix for today. So it’s time for B2B vendors to exert some tough love, and invest in better business insights, knowing that the tools to do that are readily available today, they just haven’t been used that way.