A customer need is a problem or pain-point that the customer intends to solve with the purchase of a good or service.
Here are a couple of billion-dollar examples:
Price is an important concern for customers booking travel online, hotels leave you disconnected from the city and it’s a culture. No easy way exists to book a room with a local or become a host.
Cabs in 2008
When you think back to a decade ago, did it sound like these were huge problems worth pursuing? We spent the last year thinking about how to identify and evaluate problems like these.
In this article, we outline repeatable steps that can help identify and evaluate customer needs. It’s a simplified explanation of many ideas from design thinking and lean startup, but without the jargon.
This is something obvious, but really difficult to nail. Let’s say you’re starting Airbnb, you cannot conquer the world on day one. You need to start small, you need to start somewhere - in their case, (i) it was apartments listed on Craigslist for the initial supply, and (ii) travelers looking for short term accommodation while attending conferences [3].
The more specific and identifiable your target segment, the less time it will take to understand their needs. A quick gauge - can you think of at least 10 people who fit the profile you have in mind?
In practice, it’s quite difficult to have this nailed down right from the beginning. So let’s start with something broad let’s say “recruiters”.
The ‘jobs to be done’ [4] is a simple, but really effective framework to understand customer needs. In essence, the theory is, ‘people hire a product or service to do a job they want to get done’. For example, I use Airbnb to book travel online, I take Uber to get to work.
You can start by Googling “a day in the life of ________”. There are loads of people who have written blogs about how they spend their day at work. Its the quickest was to start identifying what “jobs” your target segment needs to get done. Example - A day in the life of a recruiter [5]. Once you read through 5-10 of such entries, you'll have an initial list of things they get done every day.
If your target segment is more specific (which is a good thing) this quick hack may not work. You can conduct user interviews with your target segment and ask them to describe a day in their life. The goal at this point is just to get a list of things that your target segment ‘gets done’ regularly.
At first, it might seem that it’s just a bunch of random things they’re talking about. And you can’t really tell what the “jobs” they’re trying to get done through the day. You can start making sense of this data by applying thematic analysis. Which is an iterative process of categorizing the data from your research into “jobs”, evaluating if those categories make sense?
Here’s an example from - A day in the life of a recruiter [5]
And so I begin a passive search. I try not to rely too much on job boards, so I hit up the holy grail of recruiting -- LinkedIn. I start with my network, looking for referrals, and then expand out into the cold calling abyss.
The jobs: search candidates, source candidates.
I’ve written about how to apply how thematic analysis to user interviews over here [6] - you can apply the same process to identify jobs-to-be-done from your user interviews. It’s worth the effort to do the analysis because, by the end of it, you’ll start getting an idea of things like which jobs are done more frequently, which ones take up a lot of time, which ones are the most common across people in your target segment.
With your initial analysis, you’ll have a starting point to dig deeper. Not every job they do will be relevant to your product or service at that time. So think about the objectives that are driving your business forward and start digging deeper.
For example, let’s say that you’re building a recruitment platform. And you identify recruiters have three key jobs “source candidates”, “filter candidates” and “share candidates” which you want to serve.
Pick one and dig deeper by talking to people in your target segment. Ask them how they get that job done. Here are some questions to ask when getting started:
Asking these questions should help you build an understanding of the “job(s)” you’ve chosen to focus on. Based on their answers you can start working out (i) what their goals are for that “job” and, (ii) how they currently go about getting it done.
The goals are usually some sort an optimization problem the customers are trying to solve. While “sourcing candidates” the recruiters' goal could be something like - “reach out to as many relevant candidates as possible, in the least amount of time possible”. The element of optimization opens them up to new solutions. The solutions help them achieve those goals in a cheaper or faster way.
They have a set of existing ways of achieving those goals. Example “post job descriptions on online job boards”, “gather referrals”, “attend career fairs”, etc. Your solutions must be better than, or help improve upon these existing alternatives.
Going back to the Airbnb example, the job was “booking travel online”. The goal for their target segment was - “find the nicest, most affordable accommodation that is close to the city and its culture”. Optimizing for comfort, location, and price. And their existing alternative was to “find short term rentals on craigslist ”.
Customer needs are the specific challenges they face while trying to get their job(s) done. These challenges lead to inefficiencies in achieving their goals. Here are a couple of possible examples while “posting job descriptions on online job boards”:
These could be problems in their existing way of doing things. They cause inefficiencies in the job of “sourcing candidates”.
By focusing your questions around how your customers currently get their job done, you'll be able to start uncovering these needs. For example, the question “what is the most annoying part about posting job descriptions on online job boards?” is the most likely way of finding out something like - “manually having to post on multiple job-boards”.
Customers from different segments will perform the same job in very different ways. Their goal will be similar, but their needs can be very different. The steps that a recruiter hiring for executive roles will take, will be totally different from those hiring for a graduate program. Having a clear target segment is essential to understanding their job(s) and identifying their needs.
Identifying needs and understanding the customers' job(s) is an iterative process. Sometimes you may discover that the initial definition of your target market wasn’t quite right. Or your definition of their jobs wasn't accurate. But over time, your research helps you classify them better and improve your understanding of their needs.
Let’s say you started with “recruiters” as your target segment. Within a few interviews, you'll realize that each of their jobs seems to be different. This should nudge you to improve your segmentation and classify them better. Perhaps as “headhunters”, “smb recruiters”, and “those in charge of graduate programs”. Pick one to focus on and continue.
For each job or step, you investigate, there can be a new layer you can dig into. This is great because it gives an endless tree of opportunities waiting to be captured. But it's easy to get stuck in a loop of endless discovery.
There is only one key to finding these needs quickly and making progress quickly. Narrow the segment and the job you’re investigating with each iteration until you’re able to identify the pain-points in line with your business objectives.
Keep track of the path that you’re exploring to ensure that you’re making progress in the right direction. And remember that the learnings’ you uncover during these iterations can always come in handy at some point in time in the future. This could be when you’re looking to address new opportunities to target more segments or improve your offerings for existing customers.
Let’s say you completed a few interviews and have observed that “manually having to post on multiple job-boards” is a problem faced by recruiters in your target segment. Use these observations to formulate a theory about the behavior of your target segment.
For Airbnb, their theory about the customer needs was “price is an important concern for customers booking travel online, hotels leave them disconnected from the city and it’s a culture. No easy way exists to book a room with a local or become a host.”
In our example, the theory can be “smb recruiters want to source candidates from multiple job boards, but don’t have an easy way to list their posting on multiple boards”.
Now that you have an amazing theory about the customers’ needs based on your research and observations. It’s likely to be true, but what if it isn’t?
Nearly ⅔ of all the money spent on building software generates an underwhelming ROI($400B/yr wasted) [7]. 80% of the features that get built never get used [8]. Companies end up spending a lot of time and money into solving a problem that isn’t interesting and doesn’t help in achieving your business objectives.
The most efficient way to minimize that risk is to evaluate the need by making a prediction about measurable customer behavior, and seeing if it holds up to actual evidence. For Airbnb, the prediction was - “we will find several listings for temporary housing on non-purpose built websites.”
In our example the predictions could be “if recruiters want to source candidates from multiple job boards, but don’t have an easy way to list their posting on multiple boards” - “we will find that recruiters have active user profiles on multiple job boards”, or “we will find the same listings posted on multiple job boards at ad-hoc time intervals”.
An interesting customer need is one that:
Quantify the prediction from the previous step to evaluate what numbers will make it interesting to act upon. In the Airbnb case, let’s say more than 10,000 temporary housing listings on Craigslist in NY & SF, will make it an interesting problem that many people are facing. One that, if solved, could generate plenty of revenues.
In our recruitment example, let’s say more than 1000 duplicate job listings across three or more job boards in the last month - would mean that there are enough recruiters who are facing this hypothetical problem, making it interesting enough to solve, and invest further into building an initial prototype.
You’d also have to think about how you can quickly gather the data. In our example, we just have to write a simple scraper which would scrape listings from five popular job boards and see if there are any duplicate listings created and the time interval between them.
Airbnb found that there were 17,000 temporary housing listings in on SF & NYC Craigslist, it gave them the evidence to show that they’re not crazy - and that there were enough people who had the problem they were solving.
Finally, is it worth building an easy way to publish job listings across multiple job boards? The answer depends on how many listings were duplicated across several job boards on the last month. There are two possible outcomes when you gather this data.
The first is that you find enough duplicate listings across multiple job boards and you’re right, which is great - because now you can invest in solving this problem knowing that the solution will help out enough recruiters.
And, the second is that you find that there are fewer listings than you anticipated, and you evaluate that it’s not something worth pursuing, which is also great because you just saved making an investment in solving a problem not faced by enough people.
You just have to continue searching for another opportunity.
A customer need is a problem or pain-point that the customer intends to solve with the purchase of a good or service. The steps above are a repeatable way to identify unmet customer needs and evaluate their potential.
It is an iterative process, where it is easy to get stuck in a loop of discovery. The way to avoid this is by constantly narrowing down the scope of the exploration in line with the business objective. The hardest challenge in systematically understanding customer needs is in:
We’ve been working on Epiphany to solve these problems and come up with a way which simplifies this process of discovery for everyone. We are on a mission to unlock the world's creativity, and the first step for us is to demystify what it takes to be able to build products users need.
If you’re your working on a product and are keen to incorporate these ideas into how you build them, let us know by requesting access to our beta. If you have any questions, you can get in touch with me on linkedin.
Epiphany is a product discovery software that helps your team make sense of qualitative feedback & user research data – to identify underserved needs, and set roadmap priorities.
Curious about our other learnings, like “how to analyze user interviews?”. – Subscribe to our blog 👇.
References
[3] How Uber, Airbnb, and Etsy Attracted Their First 1,000 Customers
[4] Clayton Christensen: The Theory of Jobs To Be Done
[5] A DAY IN THE LIFE: RECRUITER
[6] How to analyse user interviews?
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