My first experience in implementing customer-inspired ideas was in college. As a resident advisor working for the university’s housing department, I was charged with dreaming up, designing and executing two projects each year. One of these projects was to be centered on programming for student residents.
To discover student needs, I conducted a survey. My plan was unsophisticated but seemingly surefire: Ask residents (my customers) what they wanted and deliver what they wanted. The results were overwhelmingly in favor of one topic: weight loss. I contacted an expert in this field, arranged a series of interactive programs, and advertised appropriately. No one showed.
My takeaway from this experience: Discern what people truly want by observing the actions they take, not listening to what they say. Years later, Seth Godin offered more insight on this concept, stating that “needs don’t always lead to demand.”
Simply giving people what they say they want isn’t a quick path to success. So when customers pitch ideas about what they think will enhance your business, remember to distinguish momentary desire from profit-producing demand.
Sorting through customer ideas to discover what to embrace and which to ignore isn’t easy. Not only do you need to distinguish desire from demand, you must assign financial benefits and costs to ideas and make decisions on proper execution.
Customer ideas to be ignored often fall into these categories:
Products and Services Appropriate for a Limited Number of People
Filling niche demand with the long tail of distribution is often the raison d'être of the small business owner, but serving too narrow an audience with specialty items can be unproductive. In conversations with business owners and managers, they mentioned requests for certain types of inventory or specific items as ideas most likely to be ignored. Of course, they listened and considered carefully before dismissing the requests as suitable and appropriate for the business.
Questions they pondered included:
- Is the customer asking for this item in my target audience?
- Does this item fit within an established product category?
- How quickly will this product sell? That is, how long will this product linger on the shelf of my brick-and-mortar store and e-commerce distribution center, tying up inventory dollars that could be producing revenue?
- Are my competitors able to sell this product at a much lower price point?
- Will the cost of bringing this product to market outweigh potential profits?
Consider adding a new product or service if it appeals to your target audience and fits within your brand positioning. Evaluate profit margins to determine potential for contributing to the bottom line. Test acceptance of products among consumers or get a purchase order from customers who recommend the item before buying a container load or assigning resources to project delivery.
Extravagant Service Levels Not Sustainable or Compatible with Work/Life Balance
Customers often want instantaneous delivery of products and services, including those that must be highly customized to their preferences and needs. They may suggest extended hours or weekend hours, quicker-than-usual project turnaround, and 100 percent inventory availability.
- Is your ideal customer someone who typically has short lead times?
- Can you design a program that will offer preventive services to help customers avoid emergency services?
- Will charging more for a rush job cover costs associated with delivering results within a strict timeframe?
- Will working extended hours and weekends bring in greater revenue, or simply spread workload over a greater number of hours?
- Will inventory turns slow dramatically if extra inventory is kept on hand?
Providing 24/7 uptime may be an integral part of success for your business model. If pricing will support quick responses and spikes in demand (and resources are available), consider offering fast turnaround on a routine basis.
Methods of Growing Sales Without Regard to Profits
Customers may suggest ways to lower prices or restructure offers in a way that they presume will increase sales. Ideas may include volume-based discounts, standalone or single-use pricing rather than package pricing (or vice versa), and lower-end products and services. Customers may accurately predict sales increases but not understand the negative impact on profits.
- Will product and service expenses become progressively lower when volume increases?
- Will increasing sales to fewer customers reduce the need for marketing programs?
- Is your business so booked that reducing prices will lead to overwhelming demand (and increasing prices will appropriately level demand)?
- Do most customers need to commit to a service for an extended period (six months to one year, for example) in order to derive value?
- Are customers confused by bundled pricing? Does your target customer typically buy multiple items or need just one item among a menu of items?
- Will target customers be attracted to lower-end products?
Consider volume-based pricing that will allow you to close deals with key accounts, which can provide steady revenue. Use your judgment to determine whether target customers will gravitate toward full-service (and full-priced) products when presented with tiered offerings that include lower-end items.
Even Zappos sets boundaries, starting with a generous, albeit limited, timeframe on returns. Your business doesn’t have to adopt every customer idea in order to deliver happiness.
Julie Rains is a senior writer at Wise Bread, a leading personal finance community dedicated to helping people get the most out of their money. Get daily money tips by following Wise Bread on Facebook or Twitter.