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Customer Discovery Basics

There is no one-size-fits-all solution for customer discovery. This cycle of testing and verification is a continuous process with many iterations, and while it requires a lot of hands-on work, it is the first (and arguably most critical step) in achieving a sustainable business model at which point a startup officially crosses over to becoming a company.

 

There’s never a perfect time to start a startup but if you are planning on it, understanding the basics of the customer discovery process is crucial.

Startup gurus Eric Ries and Steve Blank are both proponents of getting customers involved in the product development process from the very beginning. The adoption of the customer development model in parallel to the product development process has had a seismic effect on startups and their evolution.

In the past, startups would begin coding and development based on their perception of market opportunity, blindly pumping money and time into developing a product that potentially had no market need. This is a path littered with failed startups.

Get Out of the Building

Today, “getting out of the building” and discovering customer wants and needs, a practice known as customer discovery, is aggressively being taught at accelerators nationwide. Startup accelerator Y Combinator puts it best with its mantra: “Make something that people want.”

The concept is deceptively simple: form hypotheses around the problem that your product solves, and around the product itself, test these hypotheses with those who could be your potential customers to verify, iterate or exit. This discovery process is part of the larger customer development model where the minimally viable product resulting from customer discovery undergoes validation testing among customers.

Customer validation testing verifies or refutes the product’s value proposition, its sales roadmap, business model, etc. This cohesive framework takes into account market factors to shape and form the revenue models while allowing customers to be kept in mind at all stages of business development and growth in a process that never ends even; after a product has been built. In short, the customer is along for the ride.

Customer Discovery Tips

1) Formulate a hypothesis for your product. Sample hypothesis statements:

My product solves <insert problem> by <insert benefit>.
<Insert users> will adopt my product because <insert the “why”>.
<Insert user group 1> will adopt my product first because <insert “why”>.

2) Develop a list of questions to ask yourself about your product, and a list of questions to ask customers.

Note: questions are intended to profile, focus, and narrow down your customers, uncover how you intend to solve their problems, and to help you understand what your customers are thinking. These are the clues that will help solve the overall mystery of your target customer segment. Sample questions:

  •  Where are these customers located?
  •  What do they do for a living? What do they do for recreation? Where do they like to go?
  •  What channels of communication do they use (Email, Twitter, Facebook), and how do they access them (Mobile, Desktop, Tablet)?
  •  Does your product’s reason for being resonate with the intended customer(s)?
  •  What are they currently using that would be replaced with your offering? Do these customers agree that your product can solve these problems better than a competitor?
  •  How much are they willing to pay for this solution, and in what value (time, money, something else)?
  •  Who are some of the primary influencers in their purchasing decisions? Do these outside influences change as they are further along in the purchasing process? How mature is this product market, and where do you fit?

Keep questions open-ended. Let your interview subject speak a least 3x as much as you do.

3) Create a sample size of at least 100 people, and meet them in person.

Meet strangers. Friends lie to be supportive. They are also most likely not the target market you are seeking.

Meet people in person if at all possible. Get off the computer. Get off the phone. Get out of the office. Talk to people and meet them in person. By visiting them in their stomping grounds where they are comfortable, you will become a more focused and attentive listener, as well as being able to pick up on nonverbal cues that can’t be extracted over emails or phone calls.

Listen without being selective or defensive. Learn from the customer, and adapt your product to the overall input gained from these insights.

There is no one-size-fits-all solution for customer discovery. This cycle of testing and verification is a continuous process with many iterations, and while it requires a lot of hands-on work, it is the first (and arguably most critical step) in achieving a sustainable business model at which point a startup officially crosses over to becoming a company.


“Customer Discovery Basics” was originally published March 7, 2016 on Venture Atlanta.