Market Need Discovery
Innovation Customer Discovery and Delight Value
In short, innovation begins with -
a problem being experienced by
needs - both emotional (wins) and functional (results) - that are unmet by
existing solutions, but which may be satisfied by a new innovative idea solution to provide
Customer discovery and delight (let’s call it "customer love") is at the core of successful innovation -the "creation of market unmet need customer value". Y Combinator captures this in its motto - "Make something people want" and Rahul Vohra, Julie Supan, JZ Zhang, Mar Hershenson and many others would add - "and love".
There are plenty of theories for why YouTube became one of the fastest growing startups in Silicon Valley history. Julie Supan says the reason is simple: "We sold the emotion. What we cared most about was how it made them feel. Speak to the people who will really care. Ensure that you build precisely what customers need - even if they didn’t realize they needed it until it came into their lives...and bet on their emotion." Every startup needs to ditch generic platitudes and start speaking to the people who will really care. This reinforces the advice of Paul Graham: "You can either build something a large number of people want a small amount, or something a small number of people want a large amount. Choose the latter."
The Why - Positioning
Dave Bailey coined it this way - "For startups, the need is all that really matters. It is the foundation of your entire business. It is how you position your product. It’s the 'why'. It can trigger powerful emotions, like empathy and disgust, on command. Every need is contextual. It’s felt by a particular person, at a particular time, in pursuit of a particular end-goal. It has a functional side - e.g., 'I need this picture to look beautiful' and an emotional side - e.g., 'I need attention from my friend'. Needs find a way of getting met - with or without your product."
Julie Supan concurs: "Positioning is the big bet a company is making over the long term", before you can embrace where you're going, you need to understand who you're taking with you. "Identifying the one thing you do really well that is original and defensible is the first step. Then you have to align your business, product, operations and marketing to ensure that you are building precisely what customers need - even if they didn't realize they needed it until it came into their lives." Think about the customer who'll get the most out of your product, so you can speak directly to them - and bet on their emotion."
Figure out your precise target customer for the short and long-term. Even if it means taking a couple of months to really nail this down. What's a couple of months in the roughly 5-10 years you'll spend betting on this customer to build and grow the company?" The first and most crucial step to successful positioning, then, is to define your ideal user - what Supan calls "the high-expectation customer."
The High Expectation Customer (HXC)
You don't need to sell the problem to the high expectation customers. They are already living the problem and trying multiple hacks to solve it. It's someone who will acknowledge and enjoy your product or service for its greatest benefit," says Supan. That discernment is key, because this customer is also someone who can help startups spread the word. The HXC needs to be a person who others aspire to emulate because they see them as clever, judicious and insightful." If your product exceeds their expectations, it can meet everyone else's." It's tempting to assume your early adopters are also your HXCs, but that's not always the case and failing to make that distinction can prove challenging to a young company.
It's no exaggeration to say that correctly identifying the target customer can make or break a young company. Founders need to take the time to methodically define their HXC: Do your research. This is not the time to guess or go with gut reactions. "A significant amount of customer research is required to deeply understand what people love, what frustrates them, what they believe your greatest challenges and true benefits are, and what they wish for in the long term," says Supan. Define your customer. With your aggregated data in hand, it's time to start sketching out the profile of your high-expectation customer. This is where you'll identify the specific personality traits and characteristics that define the target audience.
Nailing the high-expectation customer can be game-changing for a startup. "You'll actually see a physical response from your team - newfound energy - if they agreed with and were part of defining the target customer. You'll see more urgency and a sharper focus," says Supan. "You need to incorporate that customer into the DNA of your company - your strategy, product roadmap, operations and marketing. It can take 6 - 8 weeks to do this well and discuss how things need to be altered to exceed the expectations of your HXC". As your company evolves, the HXC serves as a valuable touchstone to ensure that you're growing in the right direction and to validate - or invalidate - your action plan.
Charting the Right Course
Do the work to make sure you are building a product that people will actually find valuable. That requires an incredibly deep understanding of the user, their hopes, and their motivations, instead of taking the easier path of operating off of untested assumptions according to Sunita Mohanty. Many fail to cultivate a deep level of empathy for their users, which ultimately can lead to building the wrong product for any specific market. If you don't put in the work upfront, you risk charting the wrong course towards product-market fit, which you may not discover until you're facing struggling retention numbers or battling high user churn. It makes it tough to drive alignment and focus on what features matter the most or how to align product features with go-to-market needs.
The idea is that innovators win by resolving a consumer's struggle and satisfying their unmet aspiration. Focus on emotional connection over tactical task management. There are many customer jobs your product could tackle, but focus is paramount here. From user interviews, look for themes that emerge in jobs to be done. You can also run surveys that ask users to rank the importance of jobs and how well each job currently is served by another app or product to gain a better understanding of the market opportunity. This can help you to narrow down jobs and prioritize those with the most demand and the largest gap to be filled. Ultimately, building products people love requires curiosity, deep listening and truth-seeking to make sure the problems you think you should solve are truly real pain points.
Lovability - A Must Have
The term "minimum lovable product" was originally coined in 2013 by Henrik Kniberg in his overview of the product development process at Spotify. Brian de Haaff of Aha also has written about lovability. Japan's professor Kano developed a good tool helping to communicate universal categories of customer's needs and understand them better than their customers understand their needs themselves.
If companies want to stay competitive, Jiaono Zhang (JZ) contends, product folks need to be even more diligently attuned to a fledgling product's lovability - not just viability. "The minimum viable product was appealing because it was cheap, and you could get it to market faster. But we've advanced past a world where products are 'the first of X,'" she says. "Stiffer competition means that MVPs aren't going to cut it anymore. If startups truly want to stand out, they need to strive toward creating a minimum lovable product instead." Lovable products aren't simply functional or useful - they demonstrate an acute understanding of what users find valuable. In a nutshell they are minimum lovable-viable products (MLVP).
Product/market fit is not just the prerequisite for growth, it is the fuel that powers all sustainable growth efforts. Achieving product/market fit is so difficult, that once you have achieved it, it becomes your company's most important asset.
The mistake that many marketers make is that they are optimizing for short term conversions. They think it's all about maximizing clicks and signups. But if the product isn't truly great at delivering on the promise, then you will likely lose these people anyway. It is better to convert fewer people with a promise that reflects why the product is truly a "must have." These people will not only stick around, but they will also become the customer advocates that boost your organic growth rates.
These same sentiments drive the strategy in Rahul Vohra's market-product fit engine that he used to develop M-P fit for Superhuman.
Beyond Customer Satisfaction to Emotional Connection
To repeat JZ’s sentiments - Lovable products aren't simply functional or useful - they demonstrate an acute understanding of what users find valuable. And the most effective way to maximize customer value is to move beyond mere customer satisfaction and connect with customers at an emotional level - tapping into their fundamental motivations and fulfilling their deep, often unspoken emotional needs.
Motista has found that customers become more valuable at each step of a predictable "emotional connection pathway" as they transition from (1) being unconnected to (2) being highly satisfied to (3) perceiving brand differentiation to (4) being fully connected and that businesses can utilize a detailed understanding of emotional connection to attract and retain the most valuable customers. Moving customers from highly satisfied to fully connected can have three times the return of moving them from unconnected to highly satisfied. Motista has determined which emotional motivators are most powerfully associated with customer behavior and customer value. Ten of them are generally applicable to all sectors.
HXC Engagement and Customer Love Investment Drivers
It is not unexpected that this focus on the HXC and highly emotionally connected customers now drives seed investment criteria for Pear VC according to Mar Hershenson. At the early seed stage the key is demonstration of "customer love" by organic growth, reference accounts, superfans/addicted users and songs of love in posts and emails - but not necessarily with a lot of revenue this early on. The startup northstar is customer love!
Innovation (Emotion-Function fit) Roadmap
Taken together, these insights indicate the importance of discovering and prioritizing HXC emotional unmet needs - customer love - and then aligning emotional and functional unmet needs well to achieve market-product fit. Then startup seed financing may facilitate progress towards successful growth. We may align these concepts along progressive innovation roadmap steps where value success is driven by customer discovery and delight. These steps include:
Problemation - The HXC already knows her/his problem and is struggling with it. Customer questionnaires collect their highest priority specific problem needs while data analyses may differentiate between met and unmet needs and their importance to the customer.
Ideation - The innovative idea is then generated based on resolving the highest priority HXC emotion-function fit unmet need(s) derived from problemation discovery customer surveys. The idea is the basis for the positioning hypothesis that will resolve the HXC emotional-functional challenge. Solution features are then articulated in the job-to-be-done job story.
Experimentation - Idea solution tests are conducted via an ML-VP (minimum lovable-viable product) to confirm that the HXC challenges are being successfully met through innovation.
M-P Fit (Market-Product Fit) – Questionnaire surveys regarding the level of customer satisfaction are conducted and responses are segmented based on HXC personas (to provide a solution that will achieve the MP-F Ellis metric).
Seed financing – Early investment success is largely based upon demonstrated (HXC) proof of "customer love" for the solution.
Discovering and Characterizing Needs - both emotional and functional
There are several literature references that identify types of customer emotional and functional data. In the innovation ecosystem, incubators and accelerators such as MARs provide examples of customer values in their 101 teachings. A few examples are illustrated here and aligned with Miller Heiman aggregations.
Many of these build upon courses and books by Steve Blank (e.g. Udacity course EP245), Eric Reis and Ash Maurya on "lean". Osterwalder et al have published a book on the value proposition canvas that aligns with their business model canvas book illustrating examples of customer jobs, pains and gains. Miller Heiman (now Korn Ferry) provide courses on Strategic selling that teach the necessities of defining, discovering and aligning emotional wins and functional results at various stages in the strategic selling process. Strategyn describes a very detailed jobs-to-be-done (JTBD) process, mainly for larger established companies that centers on functional job types but also covers related emotional jobs. And as noted above, Motista has determined several hundred emotional motivators that are associated with customer behavior and customer value.
The emotional and functional job success criteria together - that is, emotion-function fit (or wins-results fit) - are the customer value propositions for the highest priority unmet needs. These drive startup positioning for the innovative idea solution ML-VP - the minimum lovable-viable fit product.
While there are several examples that identify types of emotional and functional needs data, there are almost no good practical methodologies for acquiring this data via surveys, interviews and other means and then analyzing and interpreting the data for valuable "love" insights. We provide a means to do this in the next article with an example.