How to Truly Understand Your Customers

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1:33There's no safe like SimpliSafe. From Entrepreneur Media, this is Problem Solvers, a show in which entrepreneurs do what entrepreneurs do best, solve unexpected problems in their business. We were completely wrong. And I'm just like, it's not selling. It was like, we have to start from scratch. I'm Jason Pfeiffer, the editor-in-chief of Entrepreneur Magazine.

1:59Decades ago, Phil Terry was running a consulting agency. And one day, he got a call from a kid running this new tech company who had a funny question. Mark Zuckerberg came to us in the early days of Facebook and said, you know, we're not sure. Do you think that non-college students might be interested in this thing? That's amazing. Of course, today they're trying to figure out if college students could get interested. Get back to it. Yeah, right. Yeah, they completely lost them. And so I said, you know, that's a good question. Let's do some research. But I have a request slash caveat slash demand.

2:37Okay, something you should know before we get further into this story. Phil Terry is a pioneer and leader in customer experience. Phil was the CEO of an agency called Creative Good from 1999 to 2014, where their team ran more than 400 projects helping companies like Apple, Facebook, Microsoft, and the New York Times build digital experiences for customers. Phil was also on the startup team of the first company that Amazon bought back in the 90s. And today, Phil is doing a lot of other work connecting people, which I'll tell you about in a minute. But I wanted to give you that context before the rest of this Mark Zuckerberg story.

3:15Because today on Problem Solvers, Phil and I are talking about customer experience and how you can create better experiences for your customer. And the secret to doing that is in this request slash caveat slash demand that Phil Terry gave Mark Zuckerberg. Mark, you personally have to participate in the research. You have to come out with us when we run these listening labs, which is this methodology we created for how you observe customer behavior. It's not a focus group and so on. I'll talk more about that if you're interested. And to his credit, he agreed to do that. Now, why did I insist on that?

3:56This is the best and most important lesson I learned over 15 years, which is there's an interesting question, right? Which is, look, we all know that customer experience is important. I mean, how many books have been written on that topic? How many blog posts? how many speeches have been given, right? Yet we still find that many products and services are mediocre. So what accounts for that? Why is that the case? And there's not just one reason, but the biggest reason in my experience is the reason that it led me to ask Mark to come out and observe the research. And that essentially is confirmation bias.

4:35That is, once we're inside a company, we become, doesn't matter who we are, doesn't matter how smart you are, by the way, if you're really smart, actually, it's a problem because you think you're exempt from basic human behavior. You know, we're animals, like, you know, hello, we are animals, we are animals and we have behaviors and our psychology has evolved over thousands of years. And, you know, if you're going to change your psychology, you need to need a lot of help and support and practice. You need to do things differently. So how do you do things differently? That's more or less what we'll be answering here in this conversation.

5:13Before we go any further, as promised, I just want to tell you a little more about Phil so that you can really see where they're coming from. Phil is a connector. Through their work at Creative Good, they connected brands with people. Phil is also the founder and CEO of Collaborative Gain, which is a program that connects thousands of leaders at digital companies together so that they can learn from each other and build better products. And now Phil is also running Never Search Alone, which is a free community for people who are looking for jobs. If you're on the job hunt, you need to know about Phil's methodology for finding a job and the support groups that are a part of Never Search Alone, which are called job councils.

5:51I've heard incredible things from people who have gone through this. So you can find all of that at neversearchalone.com. And I'm telling you all that so that you can really see the breadth of how Phil thinks about connecting with people and about understanding people. It is at the core of what they do. But today we're focused on customer experience very specifically, which is its own form of connecting with people and overcoming the confirmation bias that inhibits leaders from truly connecting with and understanding and serving their customers. So that's what we're going to unpack on this episode of Problem Solvers, all coming up after the break.

6:32All right, we're back. Today, talking with Phil Terry, now the founder of Never Search Alone, about what it means to understand and connect with customers and build great experiences for them. The conversation that you're hearing with Phil happened live, which is to say, It was part of a session that I had put together for a group of entrepreneurs who were all in a Zoom room together with me and Phil. So that's why this will feel a little more relaxed than a typical podcast interview. And later in this episode, you're also going to hear some of those entrepreneurs chime in with questions for Phil.

7:04But okay, for now, let's just pick it up where Phil left off before the break. Phil was talking about confirmation bias, how no matter how smart we are, we tend to believe things that confirm or affirm our own opinions or work. and how that can lead us astray, especially when building companies. So to escape confirmation bias, Phil says, we need to approach things differently. Some of you know Daniel Kahneman, who sort of co-founded the field of behavioral economics with Amos Saversky back in 1969. They're in Israel, and they're like, you know, there's a countercultural revolution in the United States happening.

7:39People are at Woodstock, whatever. They started a different countercultural revolution. They said, hey, economics assumes that we're all rational human beings. That's ridiculous. They set out in a career to prove that we have, you know, different psychological tendencies. And by the way, these tendencies have benefits. They're not just bad. They're there because they bring benefits, but they also can lead to poor decision making. And blind spots just by their nature mean that they're blind. And Kahneman himself says in the book, by the way, most people don't get past page five of that book. I know this.

8:17The Wall Street Journal actually did a study, not just the bestsellers, but the best read books. And that one was at the bottom of the best read books. I mean, it's a thick book, and he's not a great writer for general readers. But I labored through that damn thing. And I got to page whatever it was, 283 or 363, whatever it was. And he says, oh, by the way, my knowledge of all this has no help in me avoiding these things myself. I was through the book against the wall. Like, what the what do I care if I can't do something different here? Right. And so what we learned by accident at Creative Good is when it comes to confirmation bias, when you're building products and services in a company, especially a technology company, but it's not just that.

9:04if you bring people out into the field and have them observe real people painfully interacting with their business and you bring out so it wasn't just mark but some of his key leaders together watching customers painfully trying to um navigate and use facebook actually what we found in that research was yes of course non-college students were interested and they they kind of didn't understand it you know so there were there were some real things that we had to address and thinking about how to architect that experience. And so, you know, people think Steve, I talk a lot about Steve Jobs. Apple was a client of ours in that era.

9:43And they think Steve Jobs didn't like customer research. It's not true. He just didn't like focus groups. Focus groups are generally effed up and not helpful because you just get a bunch of opinions and they don't really map to behaviors. What's really helpful, though, is observing behavior. And he loved that. And we did that with Apple. And we did that with a bunch of other companies. And, you know, it was it was my my so-called genius or brilliance. And I don't think I am, by the way. But if to agree, I know anything. I don't really have that much influence. What I can do, though, is help companies learn how to do this themselves.

10:22And and that's what we did for 15 years was we we tried to teach companies how to build ways of learning that cut through their confirmation bias. so that they could really understand customers and continue to adapt. I'll end my comment with this. We all have to keep top of mind something about capitalism that affects our careers and companies, and that is something called creative destruction. That's an economic term from Schumpeter. Some of you may know it. If you don't know it, don't worry about it. Economic jargon. It's just basically change. It's baked into the DNA of capitalism. What it says is that new products and services are constantly replacing old products and services and companies and ways of working.

11:05Right. And of course, it's sort of baked into Silicon Valley even more because that's that's what made Silicon Valley possible. But it's it's in every part of the economy. It's actually what gives the economy dynamism. The Soviet Union did not have this and it and and they fell apart. It's like they didn't have a way to grow. There is, however, a real significant problem with creative destruction. Well, there's several. One is there's, you know, job loss, you know, which is why I'm created Never Search Alone. It's kind of an answer to creative destruction and the emotional, social, financial impact it has on people and giving them more support.

11:46But it also means that we humans who are resistant to change as adults need to learn how to embrace change, which is effing hard to do. You know, it's not rainbows and unicorns. Like, oh, let's grow and learn. That's really fun. No, it actually kind of sucks. One of the things that happens when you learn or grow is you discover the ways you were stupid and miss shit. And that's humiliating. So many people are like, oh, I don't want to feel that. I've struggled with this myself, by the way. And I was like, oh, shit, really? How dumb? What an idiot. But we have to be compassionate for ourselves, right?

12:21Like, you know, of course, we learned what we learned and now we're growing. But it's hard to do and it's really hard to do alone. So this is, you know, this is, I guess, two themes to answer your question, Jason. One of them is we need we need ways to cut through confirmation bias and other other psychological tendencies that can get in the way of understanding customers. And and we need support because it is emotionally hard to learn and grow and to adapt and work in this society. We can't do it alone. And what we really need, in my opinion, we need support groups, right? And, you know, the interesting model for this and model that many people don't like to hear about, but they are profound and important to study is AA.

13:14When AA developed, AA still today is the most effective way to combat a really fucking hard thing to change, which is alcohol abuse disorder, right alcoholism and and stanford did a meta-analysis recently the medical school at stanford and they said oh yeah you know programs that charge hundreds of thousands of dollars whatever they can't touch they can't touch the efficacy of hey it's still number one and i think it's worth asking yourself what is going on there why is it effective you know and and why is something like collaborative gain where i run these councils effective or the job search councils or something like YPO or whatever, like what's going on?

13:53Why is that effective? And what does that teach us about the kinds of environments that we need to create going forward to continue to handle and grow in this ever complex world that brings so many different kinds of emotional, social, financial, political challenges? What you said there requires 70 different follow-up questions. I'm going to pick one of them. And just because I want to see you continue to draw this line down to the small business owner level. So I'll say this, hear your answer, and then we're going to start bringing in some members. Okay. So what you said was really interesting about the difference between focus groups and observing behavior.

14:36Focus groups is just a bunch of people giving you opinions. Observing behavior is when you can actually see what people do with their product. What it reminds me of is this story that I love telling in keynotes, which is about a brand that started, it was just called Wild Brand Chicken Chips. Maybe people have seen it. Have you seen it? Do you know what I'm talking about? I don't know it. No, I don't think I know this. Keep talking. I love Wild Brand Chicken Chips. So Wild is W-I-L-D-E. And so it is a bag of what looked like potato chips, except it said chicken chips really large on the front.

15:14Now, what on earth is that? That is created by this guy, Jason, who, not me, who was sitting on his couch one day eating potato chips and watching football and thinking to himself, I feel disgusting. Like, I wish that there was a way to snack, but also to be healthy about it. Get some protein or whatever. Exactly. So he thinks protein, and then he thinks this crazy thought, which is what if there was some way to take chicken and turn it into a crunchable potato chip-like chip experience. So because entrepreneurs are crazy people, he tracks down some food lab and works with them and they do it.

15:51They take chicken and they turn it into chips. And then he packages it up as a brand that says, this brand is called Wild Brand. And then it chicken chips on the front and he sells it to Whole Foods. Whole Foods picks this thing up and they carry it. and whenever jason is in whole foods and he is doing samples and can't handing out the chicken chips people come and they try it and they love it and they buy it it's good product but when he is not doing samples nobody buys and he cannot figure out why try samples people like it they try not uh not there nobody's buying so what does he do one day he does the thing that you are describing, which is instead of asking people's opinion, he just stands there and watches and he watches people walk through the store and he sees them encounter his brand and make a face and walk away because the term chicken chips is disgusting, right?

16:46Like that's what everyone sounds like chicken shit, by the way. Yeah, it sure does. Yeah. It's awful. It's awful. And the funny thing about the story is that from the second that I introduced this idea, everybody here was like, that sounds awful. Like I would never eat that. But Jason didn't know that because of course he had this confirmation bias. It was his idea. And so then he started to talk to his consumers and he reframed what this product was. And now it's called protein chips. That's what you see big on the bag. And that immediately signals to people, Phil is like rooting like at a football game.

17:20That immediately signals to people that this is a product that that fits into an existing system that you might have, because you already drink protein shakes, and you already have protein bars, and now you can have this protein chip. And once you hook people with that, then you can have a conversation about where the protein comes from. This by itself has completely unlocked this brand. It is now a national brand. You can find it everywhere, and it's been extremely successful. So my question to you, Phil, is, okay, Okay. Mark Zuckerberg, early days of Facebook, presumably still had the budget and systems to start to organize labs with your guidance where you could bring people in and whatever it was that they were doing, you could describe it.

18:04But for a small business with a very limited budget, what does it actually mean? Unless you have a product at Whole Foods that you can just stand around and watch people encounter, what does it actually mean to be able to observe your user's behavior? Yeah. So first of all, I love that story. It's a great story. And one of the things that it means for everyone, and certainly small business owners, is courage. So Jason had to have the courage to say, you know what? Maybe I'm missing something. And that's hard. Yeah. You know, when we would bring people back, we'd set up, we go to a focus group facility, but we do these behavioral labs and we'd have the team from the company behind the glass.

18:54Right. And we would coach and work with them all day long so they could see what was happening and not freak out. Right. I mean, it is like it is emotionally hard to do and it requires courage and emotional support and a willingness to see that you were wrong or miss something. now practically speaking when you're talking about small businesses you know if you have a if you have a product in a physical store you can do exactly what jason did if you have a software product you can do what marissa meyer did in the very early days of google she would go to starbucks with her laptop and she would buy ten dollar fifteen dollar gift cards and she would talk to people standing in line and say if i give you a fifteen dollar gift card to starbucks would you spend 10 minutes with me sitting down looking at something, you know, and working on a, you know, responding to and interacting with the website, you know, so you can be, you need to be creative.

19:50You know, you don't have the budget. You're not going to hire an agency or a firm to do this work for you. You need to, you know, and what, but, but, but you need to find people. So when, so when I was writing Never Search Alone, I went through about 400 drafts of the book. It took me about 10 years to write the book. And because what I did is I was constantly dogfooding it. I was constantly having job seekers read it and give me feedback. I started with people that I knew and council members, but really what I wanted to do was find people I didn't know, right? Right. And they didn't know who I was and they had no need for me to like them or, you know, or, you know, like get some favor for me or something from me or something like that.

20:36Right. That was really important. So when you're running a small business and you want to get that, you want to get outside of your bubble of your friends and family. You can use them initially and they'll give you some helpful input, hopefully. And you can tell them to be honest and you can handle it. And hopefully you can come back here or whatever and get the support you need to hear the honest feedback. But then you really want to find people you don't know. You know, but it's not that hard to do. You can ask your friends for their friends. You know, anyone who meets a particular profile of what you're looking for feedback from.

21:06And here's something that's important to know. If you ask for help well, which is what we're talking about here in a way, people love giving help. It's so counterintuitive. People think, oh, I can't waste your time. Well, yeah, if you ask for help badly or just try to get me to, you know, If somebody sends me an email and said, can you get me a job? I'm not going to respond to that email, of course. But if they say, and I say this in the book, if they say, I've really thought about this, I've figured out my candidate market fit, and I'd love your opinion for five minutes because I think you, I would jump on the phone with that person, you know, because they've been thoughtful and done their homework.

21:42So, you know, if you're building a B2B business, whatever it is, and you want to talk to a potential client, you know, do your homework on them, figure out how to approach them and, and, and be thoughtful and say, you know, I'm, I'm not looking to sell you something. I'm actually looking for your feedback as I develop this product or service. I think, and often, not always, but often people love that. Again, if you've done that well. So I hope, hope that's an answer for you, Jason. Yeah, that's great. All right. Michael, I'm going to bring you up first because because you had shared this really great specific challenge that you have.

22:18So hold on, let me figure out how to add you to the spotlight. There you are. So Michael, set us up here with the community that you've built and the success that you've seen, but also the challenge that you're seeing. It's so funny, you talked about chicken chips. I have so many of my clients, I'm a health coach, They eat too many of those damn things, and I try to get them to stop eating some of the other. Wait, the chicken chips? Yes. It's huge. It's huge. It's huge. That's incredible. One of the problems that I have and many people have with food is that there is kind of a rule of too much of almost anything is problematic.

23:06Right. Right. To eat a lot, you know. Right. So like I said, I'm a health coach, a bariatric health coach, to be more specific. I'm a product of successful, lost 170 pounds, changed my life, and I want to pass that on. So I started out two years ago working one-on-one with clients. Yeah. And I see the importance of them needing community. Yeah. So through Kajabi, which they allow you to set up your own community. I know Kajabi. Works just like Facebook, but it's your own thing. So I just set that up November 1st. We kicked October 1st. We kicked it off. Okay. And so it's kind of a new, it's like Facebook, but it's a new app for them to have to go to.

24:04It's kind of a new thing for them to have to go to my initial offering. I got three people to sign up, paying me about$200 every quarter.

24:21So the problem I'm having a hard time is understanding if I'm engaging enough with them. Like I want to be like micromanaging them or like feel like I'm micromanaging by making them like post something new every day or encourage a fellow, you know, crap like that. So how many people do you have involved? Four. Just four people. Okay. On this Facebook like interface. And how many people do you coach? I coach five. I have five one-on-one clients. Okay. So first of all, these are just, these are very small numbers and really hard to get much going with. Right. So the, the, the kind of the rule in online community where you've got people on Facebook or previous online communities that go back to the early days of the well or whatever, is that about a 2 % of the people who are on a online community will post.

25:30Right. So, you know, we've got four people you're going to get, you know, you're not going to get many posts. It's going to be tough. And yes, it's a new activity, a new app to add, you know, whatever. so um you know i think if i were you and i'm not so you have to decide what you want to do what i might look at doing is with that number of people you could put them to get so you could do your one-on-one coaching but then meet with them as a group of four or five you know over zoom or whatever and have that be the way you're engaging them and build that group i've failed to mention that we do meet every other week.

26:14With the group of work. Okay. And I get 100%. I get 100%. Oh, that doesn't surprise me at all. I love that. And that's an amazing thing. To be able to, between those meetings, you know, it's hard to get engagement, you know. And my community is bigger than yours. And we have an online platform that I built because I like to build my own stuff around that. because that's all of the story, but I think Kajabi is fine. Anyway, the point is that, you know, whatever, I have about 1500 people and we get 10 to 15 to 20 posts a week. Right. So, yeah. And, and people engage with those posts, whatever, but it's not, I mean, we're not talking about thousands and it's just really hard.

27:03I think, you know, I, I might, I don't know if the Kajabi thing is worth focusing on right now. I think it's like you're in Zoom efforts, you know, is going to be your power. Again, you have to decide and maybe that's, you know, you want to have that. And maybe it's a repository for certain files and stuff like that. And I just wouldn't have much of an expectation of a group that size. What they may be willing to do, Michael Moore, is a WhatsApp group. WhatsApp group, they may be willing to text to each other much more regularly about, oh, I woke up this morning and felt like shit, you know, because I ate too much last night and my stomach was really hurting and whatever.