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  6.1. Nailing the Solution to the Customer Pain (4 min.)

intuit.jpgIn the early part of the 21st century, Intuit was already a multi-billion company with a bevy of blockbuster titles, such as Quicken, QuickBooks, and TurboTax under its belt. It would be hard to argue that Intuit’s products hadn’t effectively nailed the solution to the customer pain they had observed long ago. But then managers at Intuit conducted some research that revealed a disturbing fact: although QuickBooks was number one in market share and number one in name recognition for small-business accounting software, over 50% of American businesses didn’t use accounting software. Instead, these entrepreneurs still kept their books with spreadsheets or even paper and pencil. Realizing that they may not have nailed the solution as well as they thought, a research team set out in 2004 to try and understand the problem. The team, led by Terry Hicks, visited over forty homes and offices, only to be quickly rebuffed. Not only did small businesses feel that traditional accounting had little to do with good small-business management, most business owners were actively hostile towards accounting software.

Despite the outward hostility toward accounting software, the Intuit team did see a customer pain within that market that was being poorly solved, even if it was their own product that had overshot the mark. Because the reaction from small business owners was so hostile, the team decided to build a series of rapid, inexpensive prototypes rather than following the traditional model of defining product specifications and building a new product. In the first prototype, Hicks and the team stripped down the existing QuickBooks software to make it simpler and then took it out to test with another round of customers in their homes and businesses. Once again, the reaction was negative, but the experience provided a catalyzing experience that helped the team see what had been blinding them. For one, the team realized that their definition of simple was much different than that of their customers - even the stripped-down prototype had 125 screens to set up the program. Moreover, the prototype still used standard accounting language, which was off-putting to the customers and piqued their distrust. According to Hicks, “It wasn’t until we tried and failed with a prototype that the entire team was like, ‘Okay, now I get it.’” In response, the team made a series of dramatic revisions to the prototype and through a number of iterations removed the accounting language and reduced the startup process from 125 to 3 screens. After a few final cycles of iteration, the product was named QuickBooks: Simple Start Edition, and launched in September 2004.

The process the team used to define this new solution produced dramatic results - in the first year the Simple Start Edition outsold all other accounting software in the United States with the exception of Quickbooks itself. By the end of 2005, revenue at the multi-billion dollar company rose 20% and the stock price rose over 30%, most of which was due to the success of Simple Start Edition. Although Intuit had long been a proponent of listening to customers, what the Simple Start team rediscovered was the power in nailing the solution for a specific customer pain.