This post from Steve Blank "Killing Your Startup By Listening To Your Customers" provides insight into understanding your customers and what they want vs. what they need. I want to reflect on the lesson learned "Pick the customer segments and pricing tactics that drive your business model".
Picking your customer segment can be intuitive and straight forward, but it can also prove a difficult profiling exercise for many that leads to a feedback loop, which if not broken can paralyze a young company. While Henry Ford was supposedly quoted as saying "If I'd asked customers what they wanted, they would have said a faster horse", the reality was he did give his customers the choice of colour. While few of us are blessed with the visionary aptitude of Henry Ford or Steve Jobs, there are simple tools and exercises widely used to profile customer segments.
The Empathy Map as described in the Business Model Generation, is a really simple visual tool, developed by XPLANE for understanding audiences, including users, customers and other players in any business ecosystem. If you haven't already, use the (Customer) Empathy Map for your business right away. It will help you go beyond industry segments and demographics and develop a better understanding of the real environment as a customers sees it - their concerns, aspirations and behaviours.
If we build this process into the review of our business, it can be used to define, ideate, prototype and test a product (and its customer base) throughout its lifecycle. To grow and defend a stronger business model and reach customers in more convenient ways, where they are willing to pay for your product's pain killer or gain maker attributes, in order to alleviate themselves of their pains, frustrations, obstacles or risks/fears in the "job to be done".
In this search vs execution phase of a business, the empathy map is particularly important, but when executing you can't assume all your original assumptions were simply right. As noted in Steve's blog, "Part of Customer Development is understanding which customers make sense for your business. The goal of listening to customers is not to please every one of them." This is what business development is about. Finding the right customers for your business, figuring out how to reach them and how positioning your business will meet their needs (whether they know it or not) the best!
From here you can execute better, define and test your pricing models over time, across different customers, until you find a repeatable and scalable model. Follow, disrupt or lead your market's pricing bracket "your way"... not the way your customers want you to!
If you're interested, check out this Empathy Map Game.