Getting ‘Customer requirements’ is key to a good business plan
By Otis D. Jones
For the St. Louis American
According to Wikipedia, a business model is “a description of how an organization functions. It identifies the firm’s customers and the products and services it offers. A model also provides information about how a firm is organized and how it generates revenues and profits.”
Many businesses big and small have business models that can drastically differ from each other. Many of these business models work. You can find good examples of working business models in Google, Dell Computers, Starbucks, Wal-Mart and many other popular companies. At the same time, many models do not work. Why?
If you can understand the following 2-step process, then you can understand the basics of creating an effective business model. Business is the process of:
1. Determining what the customers want.
2. Giving the customers what they want.
Determining what the customers want involves executing a marketing strategy. Typically, business owners develop their marketing materials (brochures, flyers, websites, etc.) first, then push those materials out to the customers. The owners then expect the customers to get excited about their business and start buying its products and services. Not once do the owners consider asking the potential customers what they want from the business before the business opens.
A better approach is as follows:
1. Design a process that asks potential customers what they would want from the business and products or services. Use surveys, focus groups, phone interviews, etc. to collect this information. This information is called “customer requirements.”
2. Ask the right questions. Here are some examples:
a. What do you want my product to look (feel, taste, etc.) like?
b. How often should my product (service) be delivered?
c. How much would you pay for my product (service)?
d. What’s the best way to access my product (service)?
e. Describe your ideal experience when interacting with someone from my business.
3. Create a final design of the business and products and services.
4. Record all of this information.
5. Periodically review and update it.
You can ask many more questions to get more detailed customer requirements. However, you should remain conscious of the customers’ time. Surveys and phone interviews should take no more than 20 minutes and focus groups shouldn’t exceed 30 minutes. The goal is to discover in detail, what the customer wants from your product (service), when they want it, where they want to receive it, why they want it and how they want it delivered.
There are very little costs, if any, associated with gathering customer requirements. Yet, gathering the customer requirements is what separates getting big profits from getting little to no profits. Once you can confidently answer these questions, you will be ready to open the business and successfully sell products (services) to the customers.
Once the customer requirements have been identified, it’s time to give the customers exactly what they asked for. This involves developing the business and products (services). Use the answers to the marketing questions as a guide. These answers also help you to construct the proper legal contracts, disclaimers and security processes and give you hints on how to greet your customers upon entering your business, your customer service process, the return policy and the personality and strategy of your sales team.
After the business is set up according to the customer requirements, start creating the marketing materials. Creating the marketing materials becomes relatively easy, because all you are doing is telling the customers that you have exactly what they asked for.
Business models can make or break a business. If a business owner develops a sound business based off of customer requirements, then regardless of what the final business model looks like, the business owner can be confident that the business and its products and services will be exactly what the customer wants and is willing to pay for.
Otis D. Jones is a management consultant specializing in organizational development, human resources and project management. Jones has worked with Fortune 500 companies and small companies in both service and manufacturing industries. He can be reached at joneso@hiseconsulting.com or www.hiseconsulting.com.