Let’s say you have a new idea to start a business or start some kind of new product or service.
Your idea is:
Hey, I think X people will buy and use Y product/service.
It sounds like a really good idea in your head, and maybe you tell a friend or two and start building it.
The problem is you don’t know if your idea is the next great thing or just a really dumb idea.
“Most likely” you won’t know until you put yourself out there and talk to your customer base, and see if they’re excited or not about your idea.
Most likely. Not always. But most likely.
Regardless, customer development is a great way to gauge if potential customers give a damn. It’s also a smart thing to do because most new products fail.
I personally made the mistake of not really validating my ideas a couple of years ago for a mobile app e-commerce service I was running, and it was pretty painful because there were barely any serious buyers.
I wish I had followed the procedures and techniques outlined in Lean Customer Development by Cindy Alvarez. She does a really good job of explaining in detail how to answer the question “Will people buy my product/service?”
Chapter 1 - Why You Need Customer Development?
- Customer development is answering the question “Will they buy my product/service?”
- Customer development is validating your hypothesis about how customers will gravitate to your product
- Formula to customer development: Learn what your customers need, and use that knowledge to build exactly what they are willing to pay for.
- Ruthless pursuit of learning - It’s uncomfortable to ask questions that might prove you wrong. It’s also essential to success.
- Comfort with uncertainty - Customer development isn’t predictable as you don’t know what you will learn until you start. You need the ability to think on your feet and adapt as you uncover new information
- Customer development is a hypothesis-driven approach to understanding:
- who your customers are
- what problems and needs they have
- how they’re behaving
- which solutions customers will give you
- how to provide solutions in a way that works with how your customers decide, procure, buy, and use.
- 5 Steps of lean customer development:
- Forming a hypothesis
- Finding potential customers to talk to
- Asking the right questions
- Making sense of the answers
- Figuring out what to build to keep learning
- Your goal w/customer development is to invalidate your assumptions about what customers want, so you can focus on what they’ll actually buy.
Chapter 2 - Where Should I Start?
(She goes really into depth on the following steps in her book)
Step 1: Write down assumptions
Step 2: Write the hypothesis
Step 3: Customer profile
- Defining a narrow focus for your customers is wayyyy better than having a general market because it allows you to learn faster than a generic thing
- You want to make each learning cycle as rapid as possible.
Filling out a full-target customer profile:
- What does this person worry about the most?
- What successes or rewards does this person find the most motivating?
- What is this person’s job title or function?
- What’s the social identity of this person?
Chapter 3: Who Should I Be Talking To?
- Conducting a 20-minute customer development interview is easy or painless when it solves a problem the customer has.
- Earlyvangelists (people who are willing to take a risk on your unproven, unfinished product) are awesome because they are happy to talk to you because you are solving a severe problem that they have. Early adopters aren’t as useful because they just want the latest and greatest gadget.
- In the beginning, the most enthusiastic potential customers are people who are the most motivated to solve their problems.
- Earlyvangelists will give you all the details about their problem, needs, and environment. They’ll recommend you to everyone they know.
- If you’re reaching out to people who would consider it a burden to talk with you, you’re approaching the wrong people.
- What you should be offering is a way for people to benefit their own self-interest by telling what they know.
- General human psychology tip - people are usually motivated by 3 things:
- Desire to help people
- Desire to sound smart
- Desire to fix things
- No matter the customer you’re targeting, you can ask yourself what they are already doing.
- What products or services are they already buying?
- What websites are they already using?
- Where do they spend their time?
- When they have a large purchase to make, how do they research it and who do they ask for advice?
- Don’t pay people for customer development interviews
- You are practicing customer development because you need to validate that people who take this problem seriously do in fact exist.
- Before you invest time and money in developing a solution, you need a high degree of confidence that you’ll have buyers.
- Only follow up twice in reaching out to land an interview.
- What if you’ve gotten feedback on your message, improved it, and then sent 10 or more requests that still haven’t netted any responses?
- Well consider that your 1st hypothesis in validation. Either you’re reaching out to the wrong people or your topic isn’t interesting.
Chapter 4: What Should I Be Learning?
- The hard part about figuring out what customers want is figuring out that you need to figure it out. - Paul Graham
- Ask yourself:
- Why should your customer buy your product?
- How does your product fit into the rest of his world?
- What influences his opinion of the product’s value?
- What is your product displacing all products - all products displace something - and why should your customers risk making that switch?
Your biggest risk in making a product comes from these 2 common errors:
- You failed to solve a problem your customer has
- You failed to make the solution attractive enough for your customer to choose it
Basic Customer Dev Questions
- Tell me about how you do ______ today?
- Do you use any [tools/products/apps/tricks] to help you get ____ done?
- If you could wave a magic wand and be able to do anything that you can’t do today, what would it be? Don’t worry about whether it’s a possibility just anything?
- The last time you did _____, what were you doing right before you got started? Once you finished, what did you do afterward?
- Is there anything else about ____ that I should have asked?
Open-Ended Trigger Questions:
- Can you tell me more about how that process goes?
- Who is involved in making that decision?
- Last time you did ____ how long did it take?
- Where did you most recently go to buy ___?
- May I ask, why did you come to that conclusion?
- Customers may not know what they want, but they can’t hide what they need.
What should you be listening for?
- How are your customers behaving today? (Which predicts how they’ll behave tomorrow).
- The constraints that affect the choices and actions that your customers take?
- What frustrates or motivates your customers?
- How your customers make decisions, spend money, and determine value.
MAKE SURE YOU ACTUALLY INTERVIEW AND SHUT UP AND LISTEN
What your customers are doing day to day tells you:
- What they are capable of doing?
- What they are comfortable with doing (and why)?
- Which decisions they are making?
You can learn about how customers are behaving today by prompting with:
- Tell me about how you do ______” or
- Walk me through how you use ____
- If you’re thinking of solving a specific problem, try to move up one level of abstraction and ask the customer about the problem one step up from that.
- If you ask someone “In the future you would you do X?”.
- You’ll get an inaccurate answer⇒ Great sales question though
- To get the most accurate answers from your customers, frame your questions to ask about specific events or decisions, and focus on the past or recent past.
- When we see customers with problems that they haven’t been able to solve, we think that the reason is either lack of access or lack of motivation
- You need customers to realize that they have a problem so that they can critique possible solutions. One way to do this is to make them think more deeply about behaviors that have become routine.
- It’s not easy to get customers to think outside the realm of what they know is possible, but it can be done.
- Magic Wand Problem: Forget about what is possible. If you could wave a magic wand and solve anything - What would you do?
- Of course, most customers face some sort of resource constraints. It’s critical to understand which resources are scarce.
- Try asking the customer to envision herself fixing the problem, and watch for body language or changes in her tone of voice?
- As your potential customers describe what they’re doing today, listen carefully for hints of what frustrates them and motivates them.
- You’ll also want to figure out what makes your customer feel successful?
- by seeing visible progress
- or by performing a task better than his peers?
Chapter 5 - Get Out Of The Building
- You need the most detail when the person you are interviewing says
- Something that validates your hypothesis
- Something that invalidates your hypothesis
- Anything that takes you by surprise
- Anything full of emotion
- In the 1st minute of your convo, you must do three things:
- Make interviewee feel confident she will be helpful
- Explicitly say that you want her to do the talking
- Get interviewee talking
Great. First of all, I’d like to thank you for talking with me today. It’s incredibly valuable for me to get to listen to you talk me through your personal experience and how things work (and don’t work) in your world, so I’ll mostly be listening.
Could you start by telling me a little bit about how you ________ currently?
- After your first question: shut up and listen!
- Any time interviewee says something interesting repeat in your own words.
- Use the 5 Whys which is a technique for drilling post-surface answers to the root cause of a problem?
- If interviewee brings up a topic, it’s probably because it’s important to him:
- It could signal that it represents a problem you should be solving instead.
- It could be a necessary precondition, something he needs to worry about before he can think about your idea.
- Ignore what clients say they want, you need to learn how customers behave and what they need.
- When a person talks about feature ideas or specific solutions redirect the convo.
- Customers usually ask for what they know they are constrained by and it is often is not the best solution.
Magic Wand Option
- “If you could wave a magic wand and change anything - doesn’t matter if it’s possible or not -> what would it be?”
- Magic wand question allows people to talk about larger, complicated pain points. Adds up to more attractive problems for you to solve.
- Don’t show product demo or product specifics until the very end of a conversation.
- If the interviewee wants to see the product first, you can explain that you’d like to hear about experiences and frustrations first so they’re not influenced by what already exists.
- Don’t call interviewee a customer because they potentially get into negotiating mindset.
Chapter 6 - What Does A Validated Hypothesis Look Like?
- Make sure they aren’t telling you what you want to hear
- Figure out the differences between want and will.
- If a person brings up a pain point or subject unprompted -> gold nugget
- The best predictor of future behavior is current behavior.
- Customer dev insights should turn into action items and decisions.
Components of validated hypothesis:
- Customers confirm that there is definitely a problem or pain point
- Customer believes that the problem can and should be resolved.
- Customer has actively invested time, effort, money (learning curve) in trying to solve problem.
- Customer doesn’t have circumstances beyond his control that prevent from trying to fix problem or pain point.
After the interview you should be able to answer:
- If I had a product today that completely solved this customer’s problem, do I see any obstacles that would prevent her from buying or using it?
- How would she use it and fit into her day-to-day activities?
- What would it replace?
- If she would not buy my solution, what are specific reasons why or why not?
Within 1st 5 interviews, you’ll encounter at least 1 person who is really excited about your idea.
If you haven’t then you’re talking to wrong people, and your problem isn’t really a problem.
- Be skeptical about validating your hypothesis
- you’re done when you stop hearing things that surprise you.
Chapter 7 - What Kind Of Minimum Viable Product Should I Build?
- The goal of a MVP is to maximize learning while minimizing risk and investment.
- MVPs are a means of validating your biggest assumptions and minimizing your biggest risks, and those will be different for every company and product.
- Minimum means you are focusing on how to learn with the smallest investment of time and resources.
- Providing enough of an experience to show value to your customers and providing enough info to prove or disprove a hypothesis.
- A pre-order MVP is where you describe the intended solution and solicit potential customers to sign up and order before, it’s available. It’s about gouging commitment, not interest.
- Kickstarter is pre-order MVP
- Pre-order MVP works well for:
- Solutions that require a critical mass of customers in order to be sustainable or profitable.
- Audience building MVP involves building up a customer base in advance of building your product.
- Audience building MVP doesn’t validate whether people are willing to spend money on your solution. You can measure customer retention and participation.
- Audience MVPs work well for:
- Consulting businesses looking to extend into more scalable products or services.
- Concierge MVPs is when manual effort is used to solve customers problem. Customer knows you are manually doing this and in exchange they agree to provide extensive feedback.
- Concierge MVP allows you to offer experience of using the product to customers before you actually build it
- Concierge MVP isn’t scalable but they allow you to validate demand for a product as well as challenge assumptions on logistics and needed features.
- It works well for:
- Audiences that are offline or not technologically savvy.
- Solutions where logistics are difficult to predict
- Solutions where it will be capital intensive to scale up operational times
- Products or services where personalized customer satisfaction is competitive differentiation.
Wizard of OZ MVP
- You provide a product that appears to be fully functional, but is actually powered by manual human effort.
Single-Use Case MVP
- Writing a product or piece of technology that focuses on a single problem or task. Allows you to validate a single hypothesis.
- Single-use forces you to focus on a single solution for lower perceived friction in typing a new product or solution that does one thing.
- Single-Use Case MVP works well for:
- Existing products and companies that need to validate a change in direction or a spin-off product.
- Trying to enter a market dominated by a larger, more complicated, more expensive product.
- Validating how your product can create the most value for your customers.
Chapter 8 - How Does Customer Development Work When You Already Have Customers?
- Ask customers to show how they use your product
- Tripadvisor CMO Barbara Messing measured user interest in a travel package by posting banner ads offering it and if enough people clicked on the link if it was enough validation.
“The ability to learn faster than your competitors may be the only sustainable competitive advantage”
- Complaining is a sign of interest. It shows that the customer values the experience enough that she wants it to improve so that she can continue to use it.
- Once you have a product and customers, it’s critical to reassess your most valuable and passionate customers are
- Which customers are comfortable with change? Which ones engage us frequently (even if they’re often complaining).
- Customers don’t talk about features they talk about benefits, they’re getting, the feeling they get from the product
Three great questions to ask current customers:
- How likely would you be to recommend us?
- Who would you recommend us to?
- Imagine you’re speaking to them, how would you describe us to them?
Questions to ask current customers:
- How frequently are customers using your product?
- What your customer does immediately after using your product?
- How does your product align with your customer’s workflow?
- How much of your feature set is unused?
- New opportunities for you to provide value
- Replaceability is an important qualitative metric to pursue.