The 3-Minute Rule

At my venture capital firm, Cue Ball, we’re pretty maniacal about understanding customers. We encourage our client CEOs to dive deep and learn about every dimension of their customers’ behavior.

While there are obvious ways to gain significant customer understanding, such as surveys and focus groups, some of the most interesting insights come from less direct analyses.

Take our three-minute rule for example. You can learn a great deal about customers by studying the broader context in which they use your product or service. To do this, ask what your customer is doing three minutes immediately before and three minutes immediately after he uses your product or service.

Here’s an example: One of our products provided investment analysts at Thomson – a Cue Ball portfolio company – with financial earnings data. What we hadn’t fully appreciated until we applied the three-minute rule, though, was that immediately after getting our data, these analysts were painstakingly importing it into an Excel spreadsheet and reformatting it.

This observation led us to prioritise developing a more seamless Excel plug-in feature with enhanced formatting capability. The result was an almost immediate and very significant uplift in sales.

Another example is described beautifully by shopping pattern guru Paco Underhill. In his book, “Why We Buy,” he describes how shoppers who don’t have a shopping basket go quickly to the checkout line when their arms get full. A casual observer says that is obvious.

A savvier approach might be to interview people in a checkout line with an armful of goods to ask where they were three minutes earlier and whether they would have considered buying anything else if their arms hadn’t been full. Underhill concludes that more establishments should consider putting shopping baskets in the middle of the store to keep customers shopping longer.

These situations illustrate the narrow-mindedness to which it is easy to fall prey. In the Thomson example, we were thinking of ourselves as a data provider, though we were really part of a broader work-flow solution. We failed to realize the importance of customer context over our own product capability.

In Underhill’s example, the three-minute rule reminds us that rearranging the context of a shopping experience to better meet customer patterns can be extremely effective.

So what are you doing three minutes after reading this?

Distributed by The New York Times Syndicate