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When to Listen to Customers

Peter Drucker famously asserted that the purpose of a business is “to create a customer.” Intuitively, one way to do this is to actually listen to these customers -- potential or current ones. Yet, some business scholars have warned against listening to customers. Harvard professor Clayton Christensen has theorized that firms will ignore disruptive innovations -- and to their own demise -- because they have a close ear to their customers, who see no value in those types of innovations (ones delivering inferior results to the current product). A saying attributed to Henry Ford, makes a similar point about listening to customers: “If I had asked people what they wanted, they would have said faster horses.”

Business writer Steve Martin summarizes what many researchers have concluded about the worth of asking people questions about their own future behavior or what they hypothetically might want: “Most of the time they won’t know the answer.”1 And sometimes they won’t give an honest one. So, when should managers and businesspeople listen to customers?

In the mid-1990s, Herman Miller designed the next generation office chair, called the Aeron. The Aeron was advertised as an ergonomic chair that was quite different from other office chairs, which usually featured plush padding and high backs. During the design phase, test groups reported the chair to be both uncomfortable and ugly. In fact, on a scale of 1-10 the Aeron scored 4.75 with its initial test groups, well below the 7.50 threshold usually required to bring a product to market. Yet Herman Miller pushed on, and the Aeron went on to become the all-time best-selling office chair.

Despite the perils of listening to customers -- either because they can’t tell us what they need or they won’t -- there are times customers can be quite helpful. Certainly, after launching its first iPad, Apple was very quick to hear customers talk about the need for a camera and other features that would make the device more useful, leading to a quick release of the iPad 2. And while Henry Ford was very smart in his conception of a mass market automobile, once the notion of a car for everyone was proven, Ford’s unresponsiveness to customer tastes nearly killed the company by the 1930s. A helpful way to think of customer input is to use the business life cycle.

New market ideas cannot be benchmarked, and people can't talk about something they don’t know about or understand. With the Aeron chair, people had well-entrenched conceptions of what an office chair should look like, and in order to overcome this (prove the concept of an ergonomic chair), Herman Miller had to find out what it would take for people to buy the chair (e.g., had to have them sit in it for several days instead of a few hours). Businesses that are in a proof-of-concept stage get virtually no value from customer input -- because customers base their input on what they know now, not on some hypothetical future they have no experience with.

Cell phones are another example. Firms that simply asked existing land-line phone users what they thought of cell phones received negative responses. Compared to the phones consumers already had, cellular phones were inferior in terms of reliability (dropped calls) and quality (sound). But firms that thought of the cell phone as a new business, seeking to prove the concept, looked for needs that consumers didn’t know they had -- such as a security device when driving a car. During the product development phase, however, well after the concept had been proven, cell phone companies and manufacturers have gained substantial benefit from customer input into improving the service and the devices.

Here are some guidelines for when and how to listen to your customers:
  • If you are considering a new concept (like the ergonomic chair) or a new market (cell phone users), focus on figuring out what will get customers to buy. This is never accomplished by asking them what they want or what they would hypothetically buy.

  • Distinguish between customers who already have the product and those who don’t. In the early phases, customers who don’t have the product will not be able to give useful input on it. Those that have the product and have tried it for some time can be very useful. Remember that if customers come with preconceptions of the product (like with the Aeron chair), they may need more time with it to really form valid opinions.
  • Innovation after proof of concept usually occurs based on understanding customers and the problems they encounter. Sometimes listening to them is sufficient in this phase, but observational and empirical methods are often better. After advocating to stop listening to customers, Martin suggests watching them instead.

  • Address customer inputs discriminately. As entrepreneur Patrick Vlaskovits suggests, “Feel free to ignore customers’ inputs.”2 For example, if the business is mature, customers may suggest nice-to-have features that overshoot actual market needs (or the position the firm holds in that market) and add unnecessary costs to a product or service that must compete on price.

Ford may have been right about the nascent mass automobile market in 1913, but ignoring customers later was nearly ruinous. Knowing where the business is its life cycle can help managers know when customer input can actually be valuable.

1Steve Martin, “Stop Listening to Your Customers,” HBR Blog Network, January 30, 2013.

2Patrick Vlaskovits, “Henry Ford, Innovation, and That ‘Faster Horse’ Quote,” HBR Blog Network, August 29, 2011.

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