Last week, I was asked to speak to an entrepreneurship class about customer development. These are the nine insights I shared, from my own experience. The presentation slides are available here.
1. Customers Don’t Care About Your Product. Really.
As an entrepreneur, it’s really easy to get jazzed about our business and product ideas. We get inspired, have a vision, and are excited to share it with the world. It’s a real rush. Here’s the thing, though. Most customers don’t care about our products, visions, or ambitions.
No, what they care about is their problems. They care about getting their job done, getting a raise, not getting fired, spending time with their families, etc., etc. And all of those things are more important than our product ideas. Unless, our product helps them to accomplish one of those other goals more effectively than they are able to do so now.
When pursuing customer development, focus on solving a customer’s problem. Not selling them on your product.
2. Seek Painkillers. Not Vitamins.
Of the problems I listed above, some are more important than others. The more pressing, urgent, or important the problem, the more likely your approach to solving the customer’s problem will be considered. Your goal during customer development, after identifying a problem, is to gauge how significant the problem is. If you focus on the problems that hurt – the ones that cause your customer to lose sleep at night – you’re much more likely to be successful.
Businesses and Consumers have different problems.
It’s important to recognize that businesses and consumers approach problems differently. Businesses generally have multiple stakeholders, clearer goals (grow revenue, cut costs), clearer titles, and longer sales cycles. But, they also spend money to solve problems.
When targeting consumers, <a href=”http://startuplansing.org/wp-content/uploads/2014/02/Maslow”s_hierarchy_of_needs”>Maslow’s Hierarchy of Needs provides a good way to understand consumer priorities. The closer you are to the bottom of the pyramid, the more likely you’ll get wide adoption. The closer you are to the top, the more likely you’re looking at finer segmentation and (potentially) lower priority purchases.
When pursuing customer development, try to focus on the most pressing, urgent, or important problem facing your customer.
3. Customers Will Fund Product Development.
Crowdfunding sites like kickstarter have made this even clearer to most. On these sites, you pitch an idea for a project you’d like funded and then the community votes with their dollars to fund (or not) the product. It’s a great way to test your value propositions and the attractiveness of the product without much upfront investment. If you get traction, then you have customer revenue already booked before you start production. It’s a good investment.
Businesses, too, will fund product development, if it’s important enough. Need proof? Flextronics just funded $44 Million worth of product development for a company that’s bringing increased visibility to the supply chain. As one of the largest manufacturers in the world, this is a huge pain point for Flextronics. So, they invested in it.
If you’re solving an important enough problem, your customers will fund your product.
4. Customer Should Pay for Your Product.
Pricing is one of the most difficult decisions we make as entrepreneurs. On the one hand, we want to make money, but, on the other, we don’t want to be rejected out of hand. Forget that.
If we’re solving an important problem or providing an important service, it is inherently worth something to the customer. Pricing reflects the exchange of value between our good/service and the relative importance of solving their problem. If we’re doing something valuable, we should aim to capture that value.
Charge customers. If you’re doing something important, they’ll pay.
5. Your Idea is Wrong. Guaranteed.
I’ve never started a business (or met any other entrepreneur who has) and had it right in the first iteration. I might have the wrong product, the wrong vision, the wrong vocabulary, or be focused on the wrong problem. I’m willing to bet the same is true for you, too. You have to be comfortable with this.
One way to mitigate against this is to have a series of hypotheses about the nine areas successful businesses get right and then test those hypotheses until you can prove you’ve got all nine facets right.
Your idea will be wrong. Use this fact to learn how to make your idea right.
6. Test, Test, Test. And Plan Your Tests.
Because it’s likely your idea is wrong, it’s important to record your hypotheses and test them with customer discovery. You can do this in a variety of ways, including: observation, landing page testing/tracking, and talking to potential customers.
Before running a test, it’s important to plan the test. You can do this by articulating a hypotheses, then trying to decide what output validates or invalidates the hypothesis. For example, the other day, I was doing a series of experiments with my 3-year old daughter. We were learning what kinds of things floated. We gathered a series of items: raisins, goldfish crackers, coins, etc, then I asked her what she thought would happen if we put them in a beaker full of water. Having guessed what would happen allowed learning to take place as she discovered she was wrong more often than not. But, her guesses got better as we tested more items.
The same methods work for testing customer segments. The output will be different (unless you’re testing whether customers float) – it’s more likely to be that they convert at a certain rate or sign up for an early access program (or not), etc.
Have a clear hypothesis that you can test. Make sure you have an idea for what kind of output (in)validates the test.
7. Two Heads are Better than One.
Customer development, especially customer interviews, should be done with two people. This allows one person to focus on executing the test and another to record what happens, as well as pick up any subtle clues that the interviewer might miss. Calibrating perspectives also reduces the likelihood that we allow our own assumptions and biases to drive the questions or assessment of the tests.
Do customer development with another person.
8. Interviewing Takes Practice.
Interviewing potential customers is hard. It’s easy to ask leading questions (‘wouldn’t it be cool if…’, ‘do you like…’) that increase the likelihood we’ll hear what we want to hear. While that might make us feel good, it doesn’t improve the likelihood of developing customers.
When interviewing customers for customer development, the principles that apply to interviewing customers for great UX are just as important here: ask open questions, use empirical evidence to inform questions, test a diverse set of users, etc.
Interviewing customers is hard. Practice.
9. Shut up, Listen, and Observe.
I’ve made this sound difficult and, in a lot of ways, it can be. But, customers will almost always tell you what their problems are and give you the right language needed to communicate your value proposition effectively. If you ask good questions and focus more on listening than sharing your product, customers will tell you what you need to know.
You have two ears and one mouth for a reason. Listen twice as much as you speak.
10. (bonus) It Should Be Fun.
Building a business is challenging. It requires initiative, perseverance, resourcefulness, and tenacity (to say the least). But, it’s also a lot of fun. Using these guidelines increases the probability you find product/market fit faster, get to start developing a good product faster, and grow faster. Good luck.
Questions? Comments? Have your own story to share? Do so in the comments!
