Sunday, March 24, 2019

What is customer development?

Customer development is the process of discovering problems experienced by potential customers and solving them. If this process is implemented correctly, products will create value for customers due to the exhaustive research and testing and go on to be successful.

Brilliant entrepreneurs don't really start out with concrete goals, but they constantly assess how to get their vision into peoples hands and reacting creatively.
It's the age where advanced technology is "easily" accessible to most organizations, only the ones that learn to quickly adapt to change survive. Doesn't matter if it's a startup or a well established enterprise.

Products should not get developed or launched until they're assured to have a customer base ready and waiting. The entrepreneur's role is not to lead customers to the problem. The less leading while hearing your problem getting mentioned, the more validation you get.

The customer development model has 4 parts:

Customer discovery
Customer validation
Customer creation
Company building

The goal is not to simply understand customer behavior, but to change it and build a sustainable business around that change. People usually try to guess what’s good for the user and they’re mostly wrong, no matter how good they are. Entrepreneurs should learn what their customers really need, and use that knowledge to build what they’re willing to pay for.

While it’s very uncomfortable to ask questions that prove your assumptions wrong, it’s essential for success. Regarding what I said earlier, if you’re initial assumptions are proven wrong you have to adapt and change your mind and roadmap. Always remember that you’re not Steve Jobs. Nobody is. And most likely you’re not building computers, but software. You won’t be able to predict customer development and you have no idea what you’re going to learn until you start. The ability to adapt as you uncover new information is priceless.

Most likely your business model is loaded with opinions, assumptions and guesses (along with hope and vision), that’s why you need to get out of the building as validate each of those guesses in the model. I cannot stress this enough.

From your first customer interview, you will learn that the context of the problem you’re trying to solve is much broader than you and your team imagined. Customers make the product successful. If your solution will solve their problem so well, they will become your sales team. If the thought of not being able to use your solution will make them very disappointed (>40%), the you have product-market fit.

Customer development is a way to reduce your business risk by challenging assumptions about who the customers are, what they need, and why/how they buy. The risk of not doing customer development is building something no one wants to buy. Everything in customer development is about testing hypotheses. Think about it this way: if you’re wrong, you want to find out fast, right? If you can’t find customers or they contradict your guesses, you pivot the product or the market (more nicely put - you modify your hypotheses).

Customer development really brings you a deeper picture of your customer and the competition, the opportunity to uncover new ways for differentiation and you’ll definitely reduce the amount of product you need to build.

It’s easy to start. Just take your current assumptions and a customer segment and go have a conversation. It’s not really important if you’re right. Each time you’re wrong, it will help you make better guesses next time. Have narrow hypotheses to focus and progress faster. If the scope is broad, you end up doing a lot of interviews with no actionable data. Demographics aren’t customers.
In the beginning you should look for the most enthusiastic and passionate potential customers. If you don’t find them now, how were you planning on finding them after you built the product?

Steve Blank calls them “early evangelists” - people who are willing to take a risk on your unproven and unfinished product.

I’ll detail each of the steps in future posts, but what you should remember is to start with:
  1. Identify a need
  2. Think of potential solutions
  3. Validate assumptions
  4. Deliver an MVP
  5. Repeat (constantly reevaluate your solution)

You need to make it clear to your team, stakeholders or cofounders:
  1. Who your customers are
  2. What problems and pains they have
  3. What is their current behavior
  4. What are they willing to pay for
  5. How to build a solution that works with how your customer buys and uses

And lastly, customer development is not product development. Product development is the process of building a new product or service and bring it to market. Product development equals delivery. Customer development is finding the truth on what to build and for whom.

Contact us: for customer development

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