Most companies don’t know their customer

In the Product-Led Growth era, customer understanding is more important than ever. Yet most companies aren’t prioritizing customers, and the symptoms are troubling.

The customer matters, but processes don’t show it 

Companies know the customer matters. However, data shows most companies aren’t talking with customers or leveraging customer insights for scalable growth. 

A Capgemini study found that while 75 percent of companies believe themselves to be customer-centric, only 30 percent of customers believe this to be the case. When ProfitWell analyzed over 3,000 subscription companies and 1.2 million consumers, SaaS executives indicated that 7 out 10 organizations are speaking to less than 10 customers per month in a non-sales research capacity.

Other research indicates nearly half of companies aren’t even asking customers for feedback, let alone researching them. A HubSpot analysis found that 42% of companies don’t ask customers for feedback, and only 19% have a formal customer advocacy program. Even in the few companies where customer insights are a priority, User Interview research indicates less than 40% of stakeholders know how to access research findings. Many major companies aren’t collecting qualitative customer data or don’t know how to act on that data when they do collect it. 

Worse, while companies may fool themselves into thinking they’re customer-centric, they’re not fooling customers. Only 12% of people believe company messaging that claims to put the “customer first.” 

“Saying your company is customer-centric is easy. Actually being customer-centric requires that you lead by example and walk the walk every day in every situation.”

– Todd Olson, CEO/Founder at Pendo

Companies say the customer matters, but most internal processes, practices, and budgets reflect otherwise. And this gap manifests itself in a number of expensive and troubling ways.  

Suggested sidebar: 7 out of 10 organizations speak to less than 10 customers per month; only 19% of companies have a formal customer advocacy programer; only 12% of customer believe “customer first” company messaging

The further you are from the customer, the worse your product performs

When a company fails to research customers, processize insight collection, and implement understanding, certain symptoms routinely appear. Most often, this looks like poor product engagement, flailing customer experiences, and expensive support inefficiencies. 

Wasted features and poor product engagement 

When ProfitWell asked product leaders to assess the last 5,000 features they’ve built, leaders were confident they delivered high value features customers are willing to pay for. Yet when ProfitWell then asked customers to assess features, the data told a different story. Customers ranked the majority of features as both low value and low willingness to pay, or high value but low willingness to pay.   


Via https://www.profitwell.com/blog/customer-research-benchmarks

This is in line with earlier research from The Standish Group that indicated 45% of features software projects ship are never even used. The opportunity costs from producing these features, not to mention the ones that teams abandon and never launch, are enormous. 

“It’s impossible to be customer-obsessed without addressing the digital expectations of those customers. But too often, those efforts get swallowed by technical minutia and fall prey to a pursuit of digital for the sake of digital. One common example is the proliferation of new mobile apps created to attract customers but that go unused. Despite the more than 1.6 million apps available to Android users and 1.5 million apps available in Apple’s App Store, customers still spend 84% of their time in just five of their favorite apps. The result: lots of shiny new (digital) objects that your customers don’t like or even care about.”

– Forrester, The Operating model for Customer Obsession 

Rising acquisition costs and poor customer experiences

Software is easier and cheaper to produce than ever. Because of this lower production bar and increased competition, customer acquisition costs (CAC) are rising for both B2B and B2C companies. Research from ProfitWell indicates that CAC is up nearly 60% across all sectors. For B2B markets that have been established for a decade and a half, the competition is even more fierce. In those sectors, CAC has increased by 70-75%. 

Given how expensive it is to acquire customers, companies would do well to focus on customer experience and retention. But while executives know this is good practice, data shows there is disconnect here as well. According to Forrester, an overwhelming 87% of marketing decision makers say improving customer experience is their top priority, but Forrester’s research also indicates that customer experiences aren’t getting better. In 2019, 81% of brands had stagnant scores for customer experiences. 

Expensive support inefficiencies  

When Hubspot analyzed a year’s worth of support cases, they discovered an expensive problem—41% of support requests were solved with a documented solution. When they tallied up the time support employees had spent addressing these cases, Hubspot realized they spent $7M helping customers find existing answers. 

Because Hubspot prioritizes customer success, they were able to correct this expensive flaw and serve customers even better. But for the 56% of companies who don’t offer a knowledge base at all, the annual costs are even higher. Especially in light of research from Forrester that indicates 72% of US online customers prefer to use a company’s website to get answers to their questions. 

Suggested sidebar: 72% of customers prefer to use a company’s website to get answers; 56% of companies don’t offer any knowledge base 

Customer understanding isn’t a nice-to-have; it’s essential 

Back in 2011, Forrester predicted our current time period would be the age of the customer. 


“The only source of competitive advantage is the one that can survive technology-fueled disruption — an obsession with understanding, delighting, connecting with, and serving customers. In this age, companies that thrive are those that tilt their budgets toward customer knowledge and relationships.” 

– Forrester, Competitive Strategy in the Age of the Customer

Their prediction proved true. In 2019, Forrester found that moving up just one point on Forrester’s Customer Experience Index translated into an extra $244 million in incremental revenue for big box retailers. A decrease in experience translated to an equally dramatic loss. 

Today’s top Product-Led Growth (PLG) companies indicate that customer-centricity has a proportionately large impact in SaaS as well. Compared to other players in the SaaS market, PLG companies have over 2x valuation, over 1.5x higher revenue, and over 9% higher revenue growth.

Via https://openviewpartners.com/product-led-growth-index/

In today’s climate, SaaS companies can’t win their markets without strong products. But teams can’t build strong products without rich customer understanding. As Hiten Shah observes, “You’ll create the best product if you know more about customers than your competitors and you act on that knowledge.”

So how do teams get closer to the customer, not just in theory, but in revenue-boosting practice?

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