When building a new business or launching a new offering, success hinges on more than just innovative ideas or clever marketing—it requires a deep understanding of the problems your customers face. At the heart of this understanding is the customer problem statement, a critical element that serves as the foundation of any business. Far from being just another business term, the problem statement is a precise declaration that identifies the gap between where customers are and where they want to be. It’s this clarity that directs all aspects of business development, ensuring that the provided solutions are not just relevant, but truly necessary. Without a well-defined problem statement, businesses risk being directionless, offering products or services that do not fully resonate with the target audience. By focusing on the real issues customers face, businesses can develop solutions that not only meet needs but also create lasting value.
Buzzword Breakdown
The term “customer problem statement” (or simply “problem statement”) is often thrown around during business development, but its origin begins at the core of the business model. The customer problem statement is the foundation for any business. Without it, the solution a business offers is vague and haphazard. There is no clear, measurable problem to solve, and without that, understanding the target audience becomes a shot in the dark. In today’s increasingly competitive market, pinpointing and addressing customer pain points can differentiate between a thriving business and one that fade away.
In short, the customer problem statement is the lifeline to building any business; without it, a business is aimless and can easily be overtaken by competitors.
The Customer Problem Statement is Important, but What is it?
Definition
“The customer problem statement is a declaration of the root cause creating the gap between where the customer stands in the current market environment and where they want to be.”
As people, we are always in motion when it comes to our needs. We are either moving away from something causing us pain or towards something offering us pleasure. If your stomach is growling, you eat to relieve hunger. If it’s cold outside, but you want to look stylish, you reach for the Moncler jacket.
These two movements - away from pain or towards pleasure - are daily actions, but that doesn’t mean the current solutions, if there are any, are the best ones. A customer problem statement is built when there is a gap in value like this.
The customer problem statement serves three purposes:
1. To hone in on the basic human need currently unmet by existing market options,
2. To identify a target audience,
3. And to provide a baseline metric for the success of meeting the customer needs.
A problem statement is a concise, focused description of a particular issue that customers face, capturing the essence of the problem from the customer's perspective (that’s the key). A well-crafted problem statement should be specific, measurable, and directly tied to customer feedback or data, ensuring it reflects real-world challenges rather than assumptions.
The best way to understand market gaps and customer needs is through primary and secondary research. Primary research involves talking directly to the target audience, hearing their pains and woes firsthand. Secondary research is about observing and listening (or reading), often in forums, groups, and meetings, benefiting from a larger sample size. Both types of research are valuable and vital to identifying the root cause of the problem, not just the symptoms. Symptoms can change, and they do not provide a solid foundation on which to build a business.
Keep It Simple: A Busy Monday Morning Without Coffee
Imagine a busy Monday morning. You and your spouse are scrambling to get ready for work, the kids need their lunches packed, and the dog needs to go out for the third time this morning, because . . . squirrels. Amidst the chaos, you realize there is not time to make coffee, the go-go juice that jumpstarts the day.
You think, “If only there was a way to have coffee ready right when I need it without having to fill the coffee pot and start it myself.” Aha! There is the beginning of the customer statement.
For this busy working parent, the problem isn’t just making coffee or forgetting to do so; it’s the time it takes to make the morning cup. In this case, you are solving a timing problem.
The customer problem statement might be something like, “Busy morning people who love coffee lack a convenient and time-saving option for a daily fresh cup of joe.”
It’s simple, to the point – convenience and timing - and measurable – the time it takes to make coffee. It also identifies a broad target audience: anyone busy in the mornings, whether working professionals, parents, or sleepy college students rushing to their 8AM class. Together, the customer problem statement and the target audience pave the way for developing a solution.
Business Case Studies
To illustrate the value of a strong customer problem statement, let’s take a look at two popular business’s out-of-the-box solutions.
The Rise of Netflix in Blockbuster’s Downfall
Business Case Study No. 1
Rest in peace to all the Blockbusters, corner family video stores, and late-night movie runs. Netflix, the global streaming giant, is a prime example of how a well-defined customer problem statement can fuel business success.
Back when movie rentals were an adventure to the store, the surmounting late-fees were a mountain to climb unto themselves. Rentals were often limited to a night or two, and when they were not returned on time, customers got slapped with hefty fines. As late fees increased, customer satisfaction decreased.
Netflix saw the problem and took action. It wasn’t just about eliminating late fees; it was about solving the inconvenience of store visits and limited movie selections. Netflix intervened with a new DVD rental-by-mail service, allowing customers to choose from a vast library and receive the movie within days. After watching the movie as many times as they’d like, customers mail the movie back and select a new one. No late fees, no out-of-stock disappointments.
Later, Netflix identified a growing problem within itself: customers did not want to wait days for their movies; they wanted instant access. This insight led Netflix to shift from physical DVDs to digital streaming, delivering entertainment instantly over the internet. If Netflix had not noticed the growing dissatisfaction within its customer base, someone else would have, leading to a new, better, faster way to deliver entertainment.
VRBO’s Privacy that Airbnb Lacked
Business Case Study No. 2
Airbnb revolutionized the travel industry by offering unique, local lodging alternatives in people’s homes, giving travelers a more personalized experience. These unprecedented options provided more than hotels could: a single location for large groups with individual spaces, the “home away from home” feel, and, most notably, a friendly host often staying at the home during the guests’ stay.
While the social butterflies and extroverts loved the chance to connect with a local and get the insider tips, others weren’t so keen on sharing space with a stranger while trying to enjoy a relaxing vacation. Airbnb does offer a “private” option, but that doesn’t always guarantee the entire property is reserved solely for the traveling party. Frustrated with the communal spaces, customers wanted more travel options for their desired privacy.
Enter VRBO, a similar in-home lodging company that catered to customers’ need for privacy by offering only completely private stays. Travelers can confidently book any VRBO property knowing they would have the entire property to themselves. While VRBO solves the privacy problem for introverts, extroverts can still connect with locals through Airbnb. This illustrates how each company understood the problem their target audience faced and addressed them effectively.
Impact on Your Business
Customers are the lifeblood of any business. Without customers willing to literally buy into a company’s solution, that business will not succeed. Ultimately, business isn’t just about profit; it’s about genuinely benefiting others by filling the value gaps they experience. Do that well, and you’ll have no trouble finding and keeping the right customers. In fact, you’re likely to gain repeat customers and referrals, as your solutions meet needs in impactful, meaningful ways.
Taking the time to understand where the problem lies, how it negatively affects people, and how they want it solved will set up a business more successfully than any amount of planning ever could. Discovering the customer problem statement means going directly to the source to learn what they need, not what you assume they need.
The Power of a Clear Customer Problem Statement
The customer problem statement is more than just a foundational step; it’s the heartbeat of business. Knowing the problem you’re solving is crucial—without addressing a real need, ideas are just fads, and fads fade. On the other hand, a clear, well-defined problem statement becomes the compass that guides an entire business strategy. From product development to marketing and customer engagement, everything aligns to meet the specific needs of the target audience. This focus not only drives customer satisfaction and loyalty but also helps a business stand out in a crowded market.
A strong problem statement also streamlines internal decision-making, ensuring teams stay aligned and focused on what truly matters—solving the right problems for the customers. This efficiency accelerates the ability to adapt to market changes and customer feedback, maintaining relevancy and competitiveness over time.
Ultimately, a strong, clear customer problem statement can make business building from the beginning easier and more effective. Although it can be done over time through trial and error, copious amounts of customer feedback, and some inevitable frustration, it adds unnecessary steps and challenges to an already complicated process. It is the key to understanding your customers, meeting their needs effectively, and building a brand they trust and value. Remember, the goal is to improve customers' lives, and that intention should be the driving force behind developing every problem statement.
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About the Author:
Em is the co-founder of L2Business and Director of Communication. With a passion for writing and helping others, "Kill the Jargon" is Em's favorite L2 project. When she's not busy with the business, you can find her yelling at the TV watching her alma mater Texas Tech or any hockey game she can find. If you have any questions, reach out via our contact page or connect on Facebook!
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