To illustrate how critical it is for both start-ups and growing businesses to get customer feedback as they develop products or solutions, let me tell you about the fate of two local pubs.
They were both acquired in late 2015. One is a beautiful, good sized, black and white coaching pub in rural Herefordshire. It has a long history as an old coaching inn, sits on the crossroads of two busy A roads, has a big car park, pretty garden, grand old range fireplace and cosy restaurant area.
The other is in a small village. To look at it isn’t that quaint, it’s small and way off the beaten track.
The first pub closed its doors in June 2016 and is still up for sale. The second is thriving.
So why does the business with fewer advantages continue to do well and why did the pub with everything going for it fail?
The difference was that the new owners of the first pub, delightful people though they were, chose to replicate their successful London business model and without any testing or customer feedback, transfer it into the rural Herefordshire countryside. They swapped city types and a metropolitan clientele for local farmers, ‘escapees to the country’ and tired and hungry walkers but didn’t understand they would want something different.
Without any customer research, they opened a curry restaurant (locals didn’t want this and didn’t patronise) offered art house movie nights and tried to charge £8 per head for the privilege (no one came). Charged £3.50 a pint for badly kept beer (local competitors priced at circa £2.80 – £3 for exciting and ever changing artisan beers) They closed on Mondays which in itself wasn’t a problem, but it was when they didn’t open on Bank Holiday Mondays when both locals and tourists wanted a drink and food. There are plenty more examples, but you’ll get the drift. They had no shortage of great ideas but they were not a product/market fit.
The other pub, despite not being in as advantageous a location nor having the ‘chocolate box’ appeal, opened up their business before Christmas last year with a party, inviting everyone who lived in the vicinity to join them, gave out free drinks and laid on food. They also handed out a survey asking what the locals wanted from their pub. Did they want food, if so what did they like to eat? How about a shop as the nearest is a good 10-minute drive away? Library? Did they want their pub to be open for coffee during the day? What opening hours did they want? What else did they need? How could they new owners help the local community? What were their pains? The new owners also talked to every customer as they came in on the opening night and for many nights afterwards to understand what they liked and wanted. The result is that this pub is packed most nights, has a healthy trade during the day and is thriving. They have opened a small shop (the locals number 1 request) and are serving great, amazingly priced ‘pub food’.
So the moral of the story is, you can ‘hold all the cards’ and have some great ideas, but if you don’t check what the customer wants and find out if there is a market for the product or service you are proposing to provide, then you’ll most likely fail. You can succeed if you know what your customers want, what their pains are and provide a solution.
Eric Ries in his book The Lean Startup talk about 3 ‘fits’:
Product-Market Fit – Is there a market for the idea? Can we build it/create it? Knowing the answer reduces technical and product risk
Problem-Solution Fit – Will people use it/buy it? Does it solve a customer problem? Early insight reduces customer and market risk
Business Model Fit – How can we make money out of it? Establishing this ‘how’ early and frequently testing for valuable customer feedback will reduce business model risk.
In product or business development of any kind, it’s good to test the riskiest assumption first. It works just as well for a village pub as it does when developing software solutions.
So test the problem/solution fit early, get critical customer feedback to validate your assumptions before spending large sums on marketing or kit. And then develop the product or service incrementally from there, keeping the feedback loops going.