A Simple Technique for Product Innovation

Ellen Isaacs has an interesting article over on GigaOm looking at the power of observation to help you figure out what your customers want. Ellen uses a technique called “ethnographic research,” though, with no offense intended, it could just as easily be called, “following customers around to see what they do.” [Updated to fix broken link.]

Why should you care? As Ellen notes,

“…ethnographic studies likely save businesses far more time than they take. These observations and analysis can reveal insights that shift projects toward demonstrated problems.”

I’ve conducted a number of ethnographic studies in my career and can tell you exactly how effective they are. In an example I’ve shared in the past, my team and I learned that the photos on the website we ran were far too small. Simply replacing our product images with larger photos increased revenues by more than 10% annually. And keep in mind this was a company delivering many, many millions in online revenue each year. Watching customers using your site for even a few minutes dramatically illustrates where you’re doing well — and where you’re going off the rails.

I’ve had clients ask me, “Well, isn’t it just easier to survey our customers?”

Almost always, the answer is “No,” for two reasons:

1. Observation is easy. Whereas putting a survey together and finding the right folks to survey can take a fair bit of time, tools like UserTesting.com and OpenHallway.com let you see how customers use your site and shopping cart — or your competitors’ — easily and inexpensively [I have no commercial relationship with either site — I’m just a raving fan]. Yes, you still have to put together a use case. But I find that asking representative customers to use your site to try and buy your product is a much simpler process than crafting questions designed to find out why they’re not buying.
2. Customers lie. Now, I don’t mean to impugn the integrity of your customers. They don’t mean to lie; they just can’t help it. Anyone who’s spent any time observing customers in action will tell you that a gaping chasm often exists between what customers say they’ll do and what they actually do. Watching customers shows you exactly how they’re using your site, where they’re struggling and, often, what you can do to fix it.

Of course, once you’ve watched your customers, it’s important to take those learnings and apply them. But it’s much easier to make the changes that will help your customer accomplish their goals if you actually understand where they’re working. And where they’re not.

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