Gathering accurate information about potential customers is essential for developing an effective business plan.
Learn how your customers make the decision on whether or not to buy your product.
Determine the key decision-making criteria they will use to choose your product over your competitors'. It does not matter what you think they should consider in the decision — all that matters is what the customers think and how they actually make their choice.
So how do you gather information about what your potential customers prefer? You need to get out and talk to them, observe them, or whatever it takes to learn how to think like they do.
Also, gather information about how well your competitors are satisfying these customers. You can gather this information by talking to customers, visiting your competitors' businesses, interviewing suppliers and meeting with others in the industry.
Entrepreneurs typically rely heavily on their business plans when the time comes to launch their new venture. It is a plan that they may have agonized over for weeks, months or years. They have done their research, creating a carefully thought-out business that justifies their financial forecasts. But then a funny thing happens. They assumed in their business plan that the market wanted "A." But if they listen carefully to the customer, they often find out that the customer really wants "B."
Switch; don't fightOne of my former students, Matt Meents, is a case in point.
His Minneapolis-based company, Reside LLC, originally was set up to build high-end Web sites for the real estate industry. They had conducted extensive research and thought they understood the right market for their services.
Although they did land some real estate firms as clients, the market soon began to tell them that there was a wider market for what they offered beyond real estate.
Other types of business contacted them to see if they could do similar services for their businesses. They listened to this information from the market and significantly broadened their target market. As a result of this change, Reside LLC has seen significant growth every year.
If Matt had rigidly followed his original plans, his company would never have grown the way it has. The market wanted to help Reside LLC grow, but Matt had to be willing to listen to what it really wanted and shift his plans.
I call this learning to "dance with the market." And you should be ready to let your customers lead in this dance.
The need to listen to the market never really ends. Markets are dynamic, so you need to be ready to follow where they lead.
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