🧭 Dojo Compass
Module: Strategy, Markets and Competitive Advantage
Focus Area: Product and Services Design
Key Article Point
“Find a customer pain point and solve it.”
This is among the most common pieces of entrepreneurial advice. It is also incomplete.
The difficult part is rarely identifying something that annoys a customer. Customers have thousands of frustrations. The difficult part is determining which frustrations represent economically attractive, recurring and defensible opportunities for a particular company.
A useful pain point must therefore be viewed through three lenses:
Customer demand × Market attractiveness × Company fit
This article provides a practical framework for moving from the vague idea of “solving customer pain” toward identifying pain points that can actually support a business.
🎯 Key Challenge
The word pain point is often used too loosely.
A customer may complain about something without being willing to pay to solve it.
A problem may be extremely serious but occur only once every ten years.
A problem may affect millions of people but be so difficult to solve that the required customer acquisition costs make the business uneconomic.
And a problem may be highly attractive commercially but already be surrounded by competitors.
The entrepreneur therefore needs to distinguish between:
“This is a problem.”
and
“This is a commercially attractive problem for us to solve.”
That distinction begins with understanding demand.
🥋 Dojo Solution
Think of Pain Points as Demand
Customer pain points are manifestations of demand.
One useful way to analyze demand is as a continuum between latent demand and manifest demand.
Latent Demand
The customer has not yet formed a strong intention to purchase a particular product or service.
They may have an underlying problem, frustration or unmet need, but they are not actively looking for a solution.
For example, a small business owner might spend hours every month manually compiling management reports.
They may dislike doing it.
They may recognize that it is inefficient.
But they may never have considered purchasing software or outsourcing the process.
The demand exists, but it is latent.
Manifest Demand
The customer has recognized a need and is actively looking for a solution—or is highly likely to do so.
For example, the same business owner may suddenly need to prepare financial information for a bank loan. The need has become urgent and explicit.
The customer is now much closer to making a purchase.
This creates a continuum:
Low Latent Demand → High Latent Demand → Emerging Manifest Demand → High Manifest Demand
The entrepreneur’s challenge is to identify where on this continuum the company can create the greatest value at an economically attractive cost.
The Pain Point Opportunity Equation
A useful pain point is not determined by customer frustration alone.
It can be evaluated through five dimensions:
1. Demand Intensity
How strongly does the customer want the problem solved?
2. Recurrence
How frequently does the problem occur?
3. Market Distribution
How many potential customers experience substantially the same problem?
4. Persistence
Is the problem likely to continue existing?
5. Company Fit
Can your company solve it economically and effectively?
This produces a much more useful question:
How large, urgent, recurring and persistent is the pain—and how well positioned are we to solve it?
🏗️ Putting It into Practice
Step 1. Identify the Pain
Begin with observation rather than solution design.
Talk to customers.
Observe workflows.
Review complaints.
Examine customer service inquiries.
Study failed transactions.
Look at workarounds customers have developed.
Ask:
- What repeatedly frustrates customers?
- What consumes unnecessary time?
- What creates financial loss?
- What creates uncertainty?
- What requires customers to use multiple providers?
- What do customers repeatedly complain about?
- What do customers currently solve manually?
Do not immediately ask:
“What product should we build?”
First ask:
“What problem repeatedly exists?”
Step 2. Determine Where the Demand Sits
Once a potential pain point has been identified, determine whether demand is latent or manifest.
For example:
Low latent demand:
“Businesses might benefit from better management reporting.”
High latent demand:
“Business owners regularly complain that they do not understand their financial performance.”
Emerging manifest demand:
“I need better financial reporting before I approach investors.”
High manifest demand:
“I am meeting investors next month and need someone to prepare the reporting.”
These may all relate to the same underlying problem.
But they are very different commercial opportunities.
Step 3. Decide Where You Want to Compete
The most manifest demand is not automatically the best target.
High manifest demand often attracts substantial competition.
Customers actively searching for a solution are valuable—but competitors know this too.
At the other end, latent demand may have less competition, but educating the market can require significant marketing and sales resources.
Therefore, the appropriate position depends on the company’s:
- resources;
- brand;
- sales capabilities;
- customer relationships;
- technical capabilities;
- tolerance for long sales cycles;
- competitive environment;
- DNA.
This is another application of the Dojo principle of the Optimum Competitive Zone.
A company should not simply ask:
“Where is the biggest pain?”
It should ask:
“Where on the demand continuum can we compete most effectively?”
Step 4. Test Market Distribution
A compelling problem experienced by one customer does not necessarily represent a business opportunity.
Suppose a consulting firm discovers that one client needs a highly specialized reporting system.
The problem may be worth solving for that client.
But before turning it into a product, the firm should ask:
How many other companies have this problem?
This is the difference between a customer problem and a market opportunity.
Conduct interviews with multiple customers.
Look for common patterns.
Segment the market.
Determine whether the pain point is:
- isolated;
- concentrated in a particular industry;
- common among a particular customer type;
- widespread across multiple industries.
The broader the distribution, the greater the potential market—although broader demand can also mean more competition.
Step 5. Measure Recurrence
Frequency matters enormously.
Consider two problems.
Problem A: A customer experiences a $50,000 problem once every ten years.
Problem B: A customer experiences a $500 problem every month.
Problem A may be more painful.
Problem B may be a better business.
Why?
Because recurring pain creates recurring demand.
This is particularly important when evaluating subscription, service and recurring-revenue models.
Ask:
How often does the customer experience this problem?
How often are they likely to pay to solve it?
Does solving it once eliminate the problem—or create an ongoing relationship?
Step 6. Examine Persistence
The entrepreneur should also ask whether the pain point is likely to survive.
Technology can eliminate problems.
But technology can also create them.
A process that requires significant manual work today may become automated tomorrow.
Conversely, new technology may create entirely new problems involving security, compliance, integration, training or governance.
Therefore:
Do not simply ask whether a pain point exists today. Ask what forces could make it disappear—or become substantially larger.
This is especially important in rapidly changing industries.
Step 7. Analyze the Competitive Landscape
A pain point can be attractive and still be difficult to monetize.
Map competitors across the demand continuum.
Ask:
- Who already solves this problem?
- At what price?
- For which customer segments?
- How quickly can they respond?
- What do customers like about their solutions?
- What do customers dislike?
- Where are competitors structurally constrained?
This last question is particularly important.
The opportunity may not be to solve the entire problem better.
It may be to solve the part competitors cannot easily solve.
Step 8. Test Company Fit
Finally, bring the analysis back to the company.
Ask:
Why us?
Do we have:
- specialized knowledge?
- customer relationships?
- technology?
- distribution?
- reputation?
- proprietary information?
- operational capabilities?
- cost advantages?
- speed?
- flexibility?
A pain point is particularly attractive when it sits at the intersection of:
Strong Customer Demand × Weak Competition × Strong Company Fit
That is where a pain point can become a genuine competitive opportunity.
📌 Key Takeaways
- A customer pain point is not automatically a business opportunity.
- Pain points should be understood as manifestations of demand.
- Demand exists along a continuum from latent to manifest.
- Higher manifest demand generally creates shorter sales cycles—but often greater competition.
- Latent demand can create attractive opportunities but may require greater customer education and acquisition investment.
- A pain point should be evaluated at the market level, not merely through one customer’s experience.
- Recurring problems often create stronger business models than one-time problems.
- Entrepreneurs should examine whether technology, regulation or other market forces could eliminate or amplify a pain point.
- Competitive analysis should examine how existing providers address the problem and where they are weak.
- The strongest opportunities generally occur where market demand, competitor weakness and company capability intersect.
- The right pain point is not necessarily the biggest pain. It is the pain point that the company can solve profitably, repeatedly and defensibly.
🌿 Reflection
Entrepreneurs are often encouraged to “solve problems.”
But every business solves a problem of some kind.
The deeper entrepreneurial skill is learning to distinguish between problems worth solving commercially and problems that merely happen to exist.
A customer can have a tremendous pain point and still not represent an attractive market.
They may lack the willingness to pay.
The problem may be too infrequent.
The market may be too small.
Competition may be overwhelming.
Or the company may simply lack the capabilities required to solve it.
This means that identifying customer pain is not fundamentally an exercise in brainstorming.
It is an exercise in market diagnosis.
The entrepreneur is trying to discover where four things come together:
The customer has a meaningful problem.
Enough customers have substantially the same problem.
The problem is likely to persist or recur.
Our company can solve it better than the alternatives.
When those conditions converge, a pain point begins to transform into something much more valuable:
a business opportunity.
There is also an important strategic lesson here.
The entrepreneur does not necessarily want to move toward the most obvious demand.
If everyone sees the same pain point and everyone is rushing to solve it, the resulting market may be highly competitive.
Sometimes the better opportunity lies slightly earlier in the demand cycle, where customers have an emerging need that competitors have not yet fully recognized.
The entrepreneur’s job is therefore not simply to find pain.
It is to find the right pain, in the right market, at the right point in the demand cycle, at the right time for the company to solve it.
⚔️ Dojo Mission
Build a Pain Point Opportunity Map.
Identify five recurring problems experienced by your target customers.
For each one, score it from 1–5 on:
| Dimension | Question |
|---|---|
| Demand | How strongly do customers want this solved? |
| Manifest Demand | How actively are they looking for a solution? |
| Market Distribution | How widely is the problem shared? |
| Recurrence | How frequently does it occur? |
| Persistence | How likely is it to remain relevant? |
| Competition | How difficult is the existing competitive landscape? |
| Company Fit | How well positioned are we to solve it? |
Then identify the highest-scoring opportunity.
But do not build the product yet.
First, interview at least five potential customers and ask them to describe the problem in their own words.
Your mission is to determine whether the pain point you identified on paper actually exists in the market.
The goal is not to find a problem.
The goal is to find a commercially attractive problem that your company is unusually well positioned to solve.
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