Mark Hurst and Phil Terry, the founders of Creative Good, an agency focused on improving customer experience, just released a new book titled Customers Included: How to transform products, companies and the world — with a single step.

In the book, the authors assert that the key to delivering impactful results lies in a customer-centric approach to designing products and services. Citing case studies from massive companies like Apple, Netflix and Walmart, as well as lesser known stories such as the revitalization of Prospect Park in Brooklyn and the overwhelming failure of the Playpump in African villages, the book explores significant customer-centric themes such as the importance of addressing unmet customer needs, the dangers of ignoring the customer as well as research methods and usability.

Written for CEOs, entrepreneurs and senior management teams, the authors make the case that there’s always time to include customers in the strategy and innovation process — even though the customer doesn’t necessarily always know what they want.

We caught up with Terry last week after his speech at the Stella Summit to dig deeper into Customers Included and hear his thoughts on the old adage, “the customer is always right.”

1. Why is the seemingly simple notion of “including customers” worthy of its own book?
Saying that you include customers is easy but actually delivering on that promise is difficult. It’s difficult because companies have to be willing to challenge their internal assumptions, sacred cows and ways of working if they are to truly include the customer. Unfortunately, most companies prefer to stick with their own assumptions, rather than go through the important but challenging process of discovering something new.

2. What do you hope CEOs and senior executives learn after reading the book?
We hope that they reexamine their ways of thinking and working and are willing to support their whole company in including the customer in strategy, product development, marketing and customer service, operations, and design. If they do, then they will discover that including customers can have an enormous impact.

3. As detailed in Customers Included, several years ago Netflix infamously lost 800k subscribers, but since has been able to recover from this misstep. What can be learned about including customers from the Netflix/Qwikster case study?
Reed Hastings, Netflix CEO, is quoted in our book with answering this question. He says the key reason for the Netflix mistake was “arrogance based upon past success.”

If that’s true, the question then becomes how do successful companies combat the tendency to get arrogant and exclude the customer? The answer is simple – although many don’t want to do it. What is it? Make a commitment to regularly get out from the desk and observe real customers and prospects interacting with the company and key competitors. That methodology will deliver key insights, reinforce humility and remind executives that quite often it’s the basic things done well that customers really care about.

4. How did Netflix win those customers back?
Again quoting Reed Hastings, they decided to “execute on the fundamentals” and to ignore the “bright, shiny objects” that can lure executives away from what really matters to customers.

This approach adopted by Hastings also addresses the second part of your earlier question. No company can execute on the fundamentals without having great customer service. It’s absolutely critical to retention and loyalty.

 5. Part 2 of the book discusses the methods in which many organizations approach gathering customer insights — focus groups, consumer surveys, etc. What’s the value in actual consumer observations vs hypothetical outcomes?
As you note, we go into detail on this in the book. We show how Walmart relied on hypotheticals from a survey and lost billions of dollars as a result. Companies love focus groups and surveys because they are relatively easy to run – and because they are easily manipulated by those who know the answer they want to get. If, however, a company wants to actually get real insights, then there is no way around the importance of observing customer behavior – and having key senior executives directly participate in that process themselves.

Ironically, Sam Walton, the legendary founder of Walmart, may be one of the best examples of an executive who habitually walked the stores to learn about customers and to inform his strategy and operations. Every senior executive needs to imitate Sam Walton – whether they work at Walmart, or a media company, a business-to-business biotech firm or an online retailer. Online businesses may not have stores to walk but, as we discuss in the book, they can find other ways to observe customers interacting. They can go into homes, workplaces, coffee shops and research facilities where they can set up 1:1 interactions. We pioneered this method in the 1990s and have helped hundreds of companies – from Travelocity starting in 1998 (we helped architect the first “fast fare finder” in online travel) to large omni-channel retailers today.

6. Why is it commonly accepted that Steve Jobs ignored the customer in the innovation process? How did he actually approach the design process at Apple, and what does this tell us about the importance of addressing the unmet needs of consumers?
Part of the aura around Steve Jobs – and Steve Jobs cultivated this aura – was that a mysterious process, unique to Jobs and Apple, was behind the success of their products. This aura helped to intimidate competition and create media buzz. It was part of their marketing strategy. The reality is somewhat simpler. First, it’s true that Jobs hated focus groups and surveys. He was right to dislike those ineffective and misleading methods. But, it’s not true that he ignored customers. Quite the opposite was the case. In 1997, when Jobs returned to run Apple, he spoke quite clearly about his product strategy. We wrote a whole chapter in the book on this because you can’t talk about including customers without someone bringing up Steve Jobs – and trying to use him as a counter example. The short story is that in 1997 Jobs said very clearly that great products get made when companies “start with the customer experience and work backwards to the technology.”

 7. The customer is always right: true or false?
False – when it comes to innovation and product development. If executives want to get good insights, then they have to begin with understanding that customers often do not know what they want.

It it is difficult for human beings to verbalize the things that are most important to them. This again is why surveys and focus groups are so problematic (and why it’s so important that companies like StellaService help offer solutions that actually deliver real insights).

As I say when I’m delivering keynote speeches about the book, executives need to understand that this is where the conversation begins and not where it ends. In other words, because customers don’t often know what they want, it does not follow that they should be excluded. The question is – how to then include customers? The simple answer is that the CEO, the executive team, and the key leaders need to get out and observe customers. Customers can tell you what they want from what they do and don’t do. Their actions are the guide to key insights. Smart executives combine observational sessions like I’m recommending with great data from companies like StellaService to figure out unmet needs and then design great products, services and experiences.


Follow Phil Terry on Twitter: @philterry. Get in touch with him if you’d like him to speak at your event.

Enter to win a complimentary copy of Customers Included by leaving a comment here with your answer to the question: “Is the customer always right?” We’ll select three winners to be notified by November 15, 2013.

Read the original interview at Happy Customer.