The 2 critical questions you must be able to answer about your customer

A 5-3-1 is a strategic planning framework that works through 5 questions:

1. What's the problem you're solving?

2. Who's the customer that you're solving it for?

3. What's your solution?

4. What's the right strategic positioning?

5. What's the plan and execution to get there?

Once you know what problem you're solving, the next logical question is, “Who are we solving that problem for?” Where does the problem exist and who are we focused on?

In thinking about who you are focused on, there are 2 questions you must get right. Get either of these wrong and you likely have no chance of winning:

1.        Do I understand my customer?

2.        Are they the right customer?

Getting these questions right will drive alignment through your strategy to make sure that everything fits perfectly together and makes sense. And so, when I go through this topic with clients, some of the questions I ask may seem obvious but it's important that we cover off all the key areas to make sure we understand the customer and really make sure we are set up to head down the right path with strategy realignment.

Here are some of the questions I’ll ask about the customer:

·      Who are they? Tell me about them.

·      Tell me what their day is like.

·      What do they do?

·      What kind of difficulties or challenges are they facing?

·      What's important to them?

·      How do they think?

Too often companies will describe their customers based solely on demographics or the size of the market.  Those things are important but ultimately, you really need to try to get deep into understanding who that customer is.  It goes without saying that the customer you have chosen to focus on better have the problem that you're solving, and that problem should be, exceptionally important to that customer. If it's number 200 on their list, well, they may use your product, but you'll be much better off if this is a pressing enough problem for them. I often think about the problem in the context of the customer and their hierarchy of issues as mild, medium or hot.  If it’s mild then you may be in trouble.  You’re just somewhere on the list and they can probably go use another product or skip the issue altogether.  If it’s medium then at least it’s higher on their needs and you can leverage that to attract more customers and differentiate yourself.  The best situation is when the need is hot.  It’s a burning need for them.  They must solve it and therefore you have a customer group that will probably come looking for you.

As I said earlier, demographics are important, they just aren’t the only thing.  So, you’re still going to want to know the demographics of the customer.  If it’s companies, how big are they? And for both consumers and companies, how many of them are there? People use the term TAM, total addressable market.

In the context of defining a customer and market, I've often heard folks say, why does it matter? Why do we have to limit ourselves? Why can’t we go and talk to lots of different potential buyers? Well, sure you can. But again, this comes back to focus, and how do you make sure that you're focused and aligned to get the maximum result that you can get with a strategic strategy. It’s certainly okay if non target customers use your product, but it's not okay for you to refer to those others as your customer. You still need to know who your core customer is. You need to be clear on who that customer is.  Some additional questions you might want to get into include:

·      How big is that group?

·      What industry or industries are they in?

·      Is it a consumer, or is it a company?

·      How do they do the things that they do today?

·      How are they currently operating?

·      What tools are they using?

·      Are they using something like what you have? Other things that support or are complementary to what you have?

·      Are they already using your product? And so can you point to those customers, and ask who they are and how are they using your product?

·      Also, it’s critical to understand why are they using your product?

Quick story: In one of my past businesses, we had tons of customers, and we were growing like crazy, and bringing in new customers every day and celebrated how wonderful we were.  The problem was that those customers were using our product for the wrong reasons, not wrong reasons for them, wrong reasons based on why we existed in the first place. Despite all the sales and revenue growth, that misalignment put a big cap on the potential of the company.  So, I’ve learned this lesson the hard way.  Just make sure that you don't go there.

Just a couple other things to consider:

·      How do you find the right customers?

·      Where do you find those customers?

·      Are they easy to identify? Do they put their hands up or come to you or do you have to seek them out?

·      Do you know where to look for them?

·      Do you know how often they buy and how they go through the buying process?

·      Are the user and the buyer the same person?

Lots of questions but hopefully, you already have the answers to most (if not all) of them.  Aligning customer and problem to make sure you’re operating in the right space is so fundamental and so often taken for granted. 

Next, we’ll move on from the problem and customer to the solution you’re offering.  Every entrepreneur loves to talk about what they do and how they do it.  The difference as we go through that will be keeping an eye on the lenses of the first two categories.  Does your product still help solve the problem you set out to solve and does the customer you’re targeting have that problem.  The alignment of these pieces is so obvious and simple and yet gets skipped over all the time when companies get busy. 

Think I can help, let’s talk.