Service design is a core skill of any successful business. This might seem a surprising statement, but put it another way it will actually seem pretty obvious. That is, to be successful a business must know who its target customers are, what value it is delivering, and why customers choose its products and services rather than those of competitors. And to survive over time, the business must also be able to respond to external trends and changes in customer needs; and be able to make enough money to survive on the way through. This goes right back to Michael Porter who said the fundamental role of a business is to find and satisfy customers.
So how do businesses find and satisfy customers and keep doing so over time? Especially now, with new businesses much faster and cheaper to launch than ever before.
The answer is to ensure your business can answer the following questions, and to regularly test whether yesterday’s answers to the questions are still relevant today. The questions can be grouped under three headings – Why, How, and Wow:
Why does your business exist
- What customer need does your business address, or in service design terms, what problem does your business solve?
- Who has that problem?
- Is the pain of the problem bad enough for target customers to seek a solution or a new solution?
- How are customers solving the problem now?
- How will your products or services solve the problem?
- Are your products and services so compellingly better than the alternatives they will motivate customers to change and be loyal to your product or service?
The first question is what ‘problem’ are you trying to solve. In other words, what is happening in customers’ lives that your product and service will help with. This can be an ‘opportunity’ or an ‘unmet need’ rather than a ‘problem’, or a combination. Some ‘problems’ are functional, e.g. how do I get my tax return done. Others are emotional, e.g. many luxury goods are about increasing users’ sense of self-worth. Some are social like Facebook; and others fit across all of these dimensions. By the way, ‘problem’ may not be a word you use directly with customers – they may not appreciate being told they have a problem! – but is still a useful way of framing the search for an opportunity that has inherent motivation for customers to act.
The question ‘who has the problem’ will enable you to identify your target market. This means your target market should be defined in terms that are relevant to the problem. It’s always tempting to use easily identifiable things like demographics (age, gender, education, income, etc.), but this often includes lots of assumptions and is an easy way to miss opportunities. Supermarkets used to think their target market was people (usually women) doing a large weekly shop, then realised it was also busy career professionals who want to pick something up to eat on the way home (so now there are small ‘metro’ supermarkets). The practical goal of targeting is to maximise the return on investment of marketing budgets. It might be easy to think of a target market as being all women but advertising that aims to reach ‘Australian women’ would be expensive and likely to waste money promoting your product to people who have no need or interest.
Is the pain bad enough to change – is a check on how motivated are potential customers to change their current behaviour. Buying a new product or service always involves some level of behaviour change so your target customers need to be motivated to make the change. Startups often look for those who feel the pain the worst and so are the most motivated.
How are customers solving the problem now – will identify your competitors. A competitor is anything currently used to solve the problem and often includes ‘do nothing’ or ‘D.I.Y’ if some customers currently solve the problem themselves.
Asking ‘how will your products and services solve the problem’ is a check that what your business does actually matches the problem. Its also useful to identify ‘friction points’, actions that customers have to take and which don’t add value or might make the customer think ‘I will do this later’ (which is usually code for ‘won’t get around to it ever’!).
The last question is probably the most critical – how likely is your business to get how many customers, and how long can it expect to keep those customers. This goes to the size of your potential customer base and customer lifetime value.
Startups refer to answering the above questions as finding ‘product-market fit’ – finding a product that has a market of people willing to buy it.
Once you have answers to the core questions, marketing techniques become relevant – growth hacking, pirate metrics, social and content marketing, customer success, and so on – but none of these techniques will be of much help if your business hasn’t answer the core questions.