Defining a Market or Customer Problem
In my post the "12 Steps to Begin Developing and Executing a Basic Digital Marketing Strategy" I provided a high level overview. In this post, I’ll go deeper into Step 1 – Defining a Market or Customer Problem.
What problem or challenges are you trying to solve? Even if you have an existing business, dive deep, understand, and define the problem your customers are facing. Take a step back and look at it from all angles.
Let’s lay out a couple of rules before we begin. I know … rules suck! But, they will help you in the long run.
Customer / market are interchangeable. If you see "customer" challenge, you can insert "market."
You need a laser focus on the customer. Define the problem from their perspective. Avoid any perspective strictly based on your products and services.
Develop several alternative perspectives of the customer
Look at the their challenges from different angles. Let’s examine customer problem that’s been around for years – a dirty home. You’d think this customer problem has a simple solution, “Start a cleaning service company.” Yet, if you change perspectives and look at it from all angles, there’s much more to it. There’s even an emotional aspect. By viewing and defining a problem from all angles, you could end up disrupting the market. Or, at the least differentiating your business in an established market. Differentiating yourself from the competition is always your goal. Disrupting an established market is nothing less than awesome.
Case in point, have you ever heard of Alfred? It all started with a mess, limited time, and an emotional / behavioral response. Long story short, the two co-founders met at Harvard Business School. They worked long and crazy hours (The Reason). Their chores would pile up causing a mess (The Problem). Jessica Beck's (Co-Founder) apartment was so messy that she wouldn’t invite her friend Marcela Sapone (CEO) over (The Emotion/Behavior). Enough was enough. They hired someone off Craigslist to do their daily chores and split the cost (The Solution).
Don’t forget the human side your customer problems -Emotion and Behavior
The Alfred Founders defined the problem, knew why it existed, and understood the human response. Yes, they solved for their own problem first. But, other people in their building started asking for the same service. Ah ha! They realized there was a larger market. Today, for $99 / month, you can hire an “Alfred” to run errands, do laundry, chores, etc. Alfred has raised $12.5 million from investors. You can read their story on Business Insider.
This example showed two individuals starting out to solve their own problem. These founders went through the same process outlined above. They defined the problem and looked at it from all angles. These angles included the human, emotional, and behavioral characteristics.
When you begin to define your problem, keep asking yourself … what else?
Go deeper. Challenge your assumptions. Remember back in elementary school when they first taught you to construct questions? I believe it was the 5W’s and 1H. Who, what, when, where, why, and how? Use these. They are your best friends. Every time there’s answer to “What?” ask yourself “Why?” Then switch angles. Look at the human and behavioral sides. What human emotions and behaviors are surrounding the problem? Why? Always remember to be as specific as possible. By eliminating generalities, you’ll be able to focus. Focus allows you to narrow down generalities and define the specific problem. A narrowed and specific focus leads you to the correct target market.
Define the challenge to include - size, concentration, location, etc.
Spend a little time understand the problem or challenge from a broader market perspective. How big is the customer pain point? Is it a small niche group with a lot of potential value or a large diverse group? Fragmented or consolidated? Where does it exist? Dispersed or concentrated? This step can be difficult. Finding available and free data can be a limiting factor. Use Google and find proxies if needed. Since we are just trying to develop a basic plan, proxies can work for now. Define the problem from a market perspective. Write it down, refine, and finalize. It doesn’t matter if you plan to serve a local or international market. You’ll need to answer these questions.
Note - If you’re a startup trying to secure funding, you’ll need deeper quantitative analysis. Consider buying market data. VC due diligence will require solid market analysis. Do as much as possible with data hacking and proxies until you understand the exact data required for your market analysis.
Don't be afraid to step away and use your friends, family, or network
As different perspectives develop, ask them to review each perspective with you. Ask them for alternative perspectives. What did you miss? What can you expand upon? Refine as needed, but avoid analysis paralysis. Get a solid draft. As we progress through each step, we’ll continue to refine based on new information and data.
The wrap up
Define your challenge from the customer’s perspective. Include human and behavioral context. Expand your analysis to understand the broader market – size, concentration, location, etc. Don’t be afraid to use friends, family, and colleagues. Find alternative perspectives and refine your definition of your customer challenge. Next week I’ll go deeper into Step 2 – Developing Hypotheses to Refine Your Target Customer and Create an MVP.
Hopefully this post helps. Don’t forget to provide feedback. What do I need to clarify or go deeper on? What would you add or change? Also, don’t be scared! Share this post with your friends and networks. I look forward to hearing from you!