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published 5 May 2015 5 minutes 58 seconds to read

How to do customer development the right way

There are several reasons why startups fail too often, and one of them might be the neglect of their target group. So you’d better work out what matters to your customers instead of complaining about them. And customer development comes to the rescue here!

How to Web

About the author
Irina Scarlat is passionate about communication, startups, and technology, and does the marketing magic for How to Web and TechHub Bucharest. Entrepreneur at heart, she is also the cofounder of Akcees, organization that fuels the entrepreneurial spark of young people, and, before joining forces with the How to Web power team, she had her own communication agency offering specialised services for startups and tech events (Prove PR). In her spare time she loves riding horses, reading good books and spending valuable time with people that matter.

While we explored the metrics to optimise your product development last week, we will have a look on the improving your customer communication in this week's HowTo. First things first, you may wonder what customer development is all about. Customer Development is a four-step framework used for: 

  1. Customer Discovery: Discovering and validating the right market for your idea
  2. Customer Validation: Building the right product features that solve customers’ needs
  3. Customer Creation: Testing the correct model and tactics for acquiring and converting customers
  4. Company Building: Deploying the right organization and resources to scale the business 

When talking about Customer Development, the biggest challenge for your early stage tech startups is to do the customer discovery and validation right in order to help you get through the three consecutive stages towards a successful business: 

  • Problem – Solution Fit: Finding the problem that is important for your customers, as well as the best solution for it 
  • Product – Market Fit: Turning your solution into a product in accordance with the market you find fit for it 
  • Business Model Fit: Choosing the business model that will turn your product into a viable business

The golden rules for customer development 

Customer development isn’t sales! You don’t have to pitch your product [or] explain why it is great.

And of course the key to doing it right lies in communication: talk to your customers, understand their needs and wants and make product decisions in accordance with the results you find along the way. Unfortunately, this is easier said then done, so here are some rules you should consider. 

1. Listen and respect the point of view of your customers 

Customer development isn’t sales! You don’t have to pitch your product, explain why it is great and how it will solve all the problems in the world. Instead, listen to what your customers have to say and be flexible in meeting their needs. This might help you build a better product, find a better angle for your pitch, or a better explanation of the true problem your customers are facing.

2. Understand first, verify later

Assumption is the mother of all failures! As important as it may be to verify all your assumptions, the first thing to do is to ask questions that allow you to understand your customers’ behaviour, instead of looking to verify what you think about it. 

3. Use the Mom Test

How much of what you believe about your customers is wrong? Generally, pretty much, and we’ve got some more bad news here: people are going to tell you what you want to hear, especially if you want to hear it. This is why you have to shape the conversation such that you ask questions so good, that even your mom will not be able to lie to you. So what should you ask your customers about in order to pass the mom test?

  • Ask about the past – because nobody can predict the future. “How much did you pay to solve this problem before” instead of “How much would you pay for x”
  • Ask about facts – because opinions do change. “How did you solve this problem?” instead of “How would you solve this?”
  • Ask about specifics – because generalities hide the truth

And finally, remember that the burden of truth is on the observer so it’s up to you to get the information straight. We recommend you to check out The Mom Test, a book written by Rob Fitzpatrick, if you want to learn more on the topic.

4. Avoid talking about your product

This is extremely useful, especially in the early interviews. Pre-product conversations are very valuable, so try to postpone talking about the product for as much as you can. If potential customers are genuinely curious, you can attempt to turn them into beta testers later in the process.

5. Listen to the signals

Conversation is a skill, rather than a process, and you’ll become better at it as time goes by. 

Conversation is a skill, rather than a process, and you’ll become better at it as time goes by. Listen to the signals your customers give you in order to identify potential opportunities and always pay attention to:

  • The obstacles they talk about. Problems and frictions indicate areas where you can be of help;
  • Their goals. These tell you where you fit into the bigger picture of their life;
  • Their actions. These give you a sense of whether they care enough to do something and, if they do, what their options are.

When identifying these signals, use anchor questions to go into specifics and get them to talk more about it. These are questions and remarks such as “Interesting… tell me more about that” or “Can you help me better understand?”

6. Make informed decisions with your team

The trick to making decisions as a team is to share insights and decide together. You should talk about things, build common knowledge, and discuss what’s not clear. This will not only help you make informed and assumed decisions, but it might also bring some extra questions that need to get answered in your next interviews.

7. Use the Product / Market Prism 

Last but not least, consider the six points below when making product decisions:

  • Time: when do customers need your product
  • Money: how much money are they able to spend for it
  • Different buying triggers: when do they generally buy stuff
  • Context: the setting where they generally decide to buy stuff
  • The general standards they look for in a product
  • General measurements they take into account

Doing it right

In the end, you don’t get to tell your customers what their needs are, but they don’t get to tell you what your product is. What’s important here is to shape your product and design your entire business around customer behaviour. And if you’re approaching this with a mindset of a learner trying to understand your customer, then you’re doing it right!

Salim Virani, Founder of Decision Hacks and Founder Centric, kindly shared these insights with the MVP Academy Class of 2015 in a workshop that was organised as part of the pre-accelerator program. Inventures.eu is closely following the evolution of the teams and will get back to you soon with more valuable insights & news from Bucharest.

 

This article is brought to you in cooperation with HowToWeb. Inventures.eu is a mediapartner.

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