Lesson 4: Your Customers and Competition
Your Customers and Competition
In their excitement to get started, some new entrepreneurs gloss over assessing their customers' needs. But this is a crucial step, since it’s the buyers who determine your product or service’s value.
Jobs, Pains, and Gains
One way to frame it is to think about the “jobs, pains, and gains” of your customer base. Consider their professional, social, and emotional needs.
- What jobs do they need to get done during the day? This could refer to tasks at work, as a parent, etc.
- Secondly, what is a pain for your customers, or what’s annoying them?
- And finally, what can they stand to gain, or what would make them happy?
By looking at your consumers’ daily lives from these three angles, your company can offer a solution to one of their problems. Consider what job you can assist them with, how you can make this task less of a pain, and what they would gain from using your product.
Getting Initial Feedback
In an earlier lesson, we started to learn about the validation process. You need initial feedback on your idea, which you can get from family and friends.
That way your product or service can be tweaked before you start selling it. Here are some tips for gathering feedback:
- Develop a prototype. A “prototype” is the first model of a product or service. Say you make dishware, and your early customers complain that the glaze is coming off when they wash it. You would know from this flaw in the prototype that you should start using a new glaze before putting your dishware on the market.
- Try out your pitch. Practice your pitch in front of family and friends. Outline a problem and how your business plans to solve it. You can make it a personal story, too. Ask your audience which aspects they connect with, and what you could change before pitching to investors.
- Collect data. Surveys and interviews are great ways of collecting information. You can make free surveys using Google forms which you can then email to your network. Try visiting a place where you could find volunteers to interview, like a college campus. Be sure to reward participants in some small way. After all, who doesn’t like donuts?!
Standing Out from the Competition
After gathering feedback from your personal network, it’s a good idea to look at what your competitors are doing. When you visit their website or store, ask yourself: how can I do business differently? And here are some other things to reflect on:
- Unhappy customers. Oftentimes these buyers write Google or Yelp reviews which explain why they’re dissatisfied with a business. If you see trends in what they’re describing, think about how you can innovate and stand out from your competitors.
- New technology. Technology is always evolving, and not every business can keep up. Maybe there is a new platform your company could use to engage its customers. You can also add exciting features to your website. (There’s another lesson coming up called Technology for Your Day-to-Day which provides more tech tips).
- Gaps in the market. If there is a need for something that your competitors don’t provide, this is a “gap” that your business could fill. For example, if there are other ice cream shops in the area, but none of them serve non-dairy options, meeting this need could allow you to stand out from your competitors.
Taking these steps will also help you to identify your customer segments.
Think of your customer base as a pie. Different customer segments make up slices of this pie. It’s important to know who your buyers are—their gender, ages, jobs, and hobbies—so that you can develop an effective marketing strategy. If it turns out that your largest slice is retired folks who like to fish, this gives you a good sense of how you can market your product.
But before we go into marketing, let’s get to the nuts and bolts of building your business—and start thinking about that daily grind!