Got a feeling your data isn’t giving you the entire picture of your customers’ actions?
Picture this: you’ve spoken to your customers and asked them what they want more of to continue buying from you.
You then make the changes: you add a feature here, you tweak the proposition, or introduce a new pricing structure.
You then launched. But a few weeks pass and you realize, you’ve not moved the needle at all. Growth hasn’t increased, and you’re back to square one.
The thing is: you spoke to your customers. So, why didn’t it work?
The big problem with relying on traditional research.
The traditional research, from things like surveys and reports, your business has access to will tell you who. Chances are, it tells you very little about the where, when and why.
But here’s the thing: it’s the where, when and why where the secret sauce is. It’s here where your consumer behavior insights lay.
When I talk to businesses struggling to double growth or identify why sales are stalling, I find early on that a lot of their work is based on persona work and guessing what a customer will do. It’s dangerous territory to be in.
As innovators, entrepreneurs, and sales people, we can talk confidently about customer behavior because of habit. But when customers change their behavior, all of a sudden they aren’t predictable in the same way they were previously.
That’s why we need to really understand the where, when and why.
I’ve spoken previously about why I have a big problem with understanding your market opportunity simply by looking at TAM.
By only looking at your total addressable market, you’re only looking at the who.
If you truly looked at how many people are struggling within your ideal market, reduce this figure to a tenth of the size of your original guess.
Who, where, when and why. These are the four things you have to be really good at to be great at product or launching a new service or trying to double down on growth.
Applying the where, when and why to AirBnB
I recently spoke on This Week in Startups with Jason Calacanis about decoding customer insights, and we got onto the subject of AirBnB.
He commented that many investors missed out on the opportunity to invest in AirBnB early on because they just didn’t get it. They didn’t get where the value creation was.
Jason asked: “If you had talked to the early AirBnB users from an investment perspective, how would you have run the interview?”
I loved this question. For me, it’s simple. I would have asked the founders: What is the real struggling moment you’re solving for? Because there are enough hotel rooms. So, this is not a hotel problem.
As an example, I have four kids, so when I go on vacation, I have to get at least three rooms.
The struggling moment is we don’t actually feel like we are at a house, we feel like we are at a hotel.
But there are certain occasions when you want to spend time and hang. You can’t do that at a hotel. Where are you going to hang in a hotel? The lobby? The bar – not with kids, the pool – maybe?
You start to realise when the trip is more about spending time together; you realise people will give up places to sleep so they can interact. It’s about the kitchen, the living room. It’s about the shared space.
Most people buy AirBnB because it’s not a hotel.
Look at how they create their ads, they’re representing it perfectly. Groups of people hanging out in communal spaces, catching up with friends, loved ones.
The moment you understand the context, the irrational becomes rational.
Most people think most decisions are rational, but typically, it’s the irrational one that’s made.
Irrational behavior means you don’t know the story yet. If you see something that looks irrational, you’re probably missing a big piece of the story.
Let’s circle back to my original point about traditional research and its implications.
Do you think if you’d relied on demographics or surveys you’d truly be able to get to the where, when and why?
If AirBnB relied only on demographic data, I think there’d be a very different story to tell. But they know the forces at play that drive people to purchase and book a room. They know what had to happen to make their customers realize today’s the day to make a change, to book that house with the pool and not three rooms in a hotel.
To finish off: final thoughts
Think about what data you have access to, and how you’re using data to drive consumer behavior this year.
Where are the gaps? What’s in place to understand the context your customers make decisions in? Where are the dominoes that need to fall to increase your chances of growth?
Feel free to talk to one of the team if you think there’s a gap or two in your data set.