If you read The Four Steps to the Epiphany by Steve Blank, you’re probably familiar with his idea of customer development. It’s entirely different from traditional product development approach used for decades — instead of building a product and seeing if it fits the market or not he proposed getting out of the building and learning what customers want and are willing to pay for.
By using the customer development process to discover the market, locate customers, testing ideas and growing the company, you can eliminate the guesswork from early stages of your business and build it on a firm foundation.
I learned about customer development too late. If I knew that when I was starting my online tv or e-commerce startups, I could save years spent trying to guess what the market wants. When I started using this approach with my current business the result was astonishing — my customers told me how I could help them, and it helped me to grow revenue to seven figures in just a few years.
What is customer development
I like the definition of customer development from the book “Entrepreneur’s guide to customer development” by Brant Cooper and Patrick Vlaskovitz.
Customer development is a four-step framework to discover and validate that you have identified the market for your product, built the right product features that solve customer’s needs, tested the correct methods for acquiring and converting customers, and deployed the right resources to scale the business.
In this post, I want to focus on two aspects of customer development — customer discovery and customer validation. Two other elements — customer creation and company building is beyond the scope of my writing because I focus on building the product. Those steps are equally important, and I highly suggest you reading the original books to learn about them.
Creating the hypothesis
The best thing about this framework is that it’s a scientific method of learning about your customers. It’s an iterative process that is very common in the software development world. In my opinion, it’s the only way to complete tasks that have a high level of uncertainty. You can’t control the customers or the market, the only thing we can and should control is our actions and how we react to the outside world. By creating, testing and refining your initial hypothesis, you’ll be able to gain an in-depth understanding of the market and the customer.
Start by identifying your assumptions about the customer and the product. What problems customers have? What pains and gains are associated with the product? What is your ideal customer’s profile? How much time and money you can spend to create the product? How many customers do you think you will need to make the product viable? Don’t worry if you’re right or not. The goal is to write down all assumptions you have to test them later.
The “Entrepreneur’s guide to customer development” book has a concept of one-sentence C-P-S hypothesis, where you define who are your customers, what problem they have and how you are going to solve it. You can organize your assumption by converting them to this C-P-S hypothesis so that you can test it. Here’s an example for a todo app:
Customer: I think that my customers are project managers
Problem: Too many tasks, easy lose track of what’s important
Solution: Todo app for a mobile phone with an AI-powered algorithm to highlight the next task to do.
Finding the people to talk to
Once you’ve defined your initial hypothesis, it’s time to find people to talk to. Completing this step will validate or invalidate your hypothesis even before you start actual interviews — if you can’t find people to talk to then probably there’s no market to sell your product to, and you need to get back to the drawing board.
You need to look for people who have the problem you think you need to solve. However, how do you reach them? Unfortunately, there’s no single answer to this question. The path you should take highly depends on your market and resources available to you.
As Paul Graham wrote in this post, you need to do things that don’t scale. The best way to find your customers is to go where they usually hang out, introduce yourself and ask them if they have time to talk to you. For example, let's say you’re building a tool for project managers. Find online forums where they hang out. Alternatively, you can go to a meetup for project managers and meet people there. Tap into your network, maybe you know five people you can talk to. Be warned though — don’t interview friends and family, because they will want you to feel good and their answers will be skewed. Try to talk to different people and use different ways of finding them.
Performing the interview
There are a couple ways you can structure customer interviews. I always try to find something new and experiment with different approaches, but so far these two yielded the best results.
Steve Blank way
In The Four Steps of the Epiphany, Steve blank proposes a specific way to present your hypothesis. He suggests that you need to create three columns on a sheet of paper:
- the problem you think your customers have
- definition of the current solution you believe your customers are using
- your proposed solution
You have to discuss each of the statements with customers. By revealing one column at a time and tracking interviewee’s reactions to them, you can learn what their thoughts are. Try to understand their perspective, the urgency of the problem and how comfortable they are with the current solution. Maybe they know a ‘right’ way to solve their problem but use a workaround — in that case, you need to learn why they do that and what is that workaround. You will quickly notice that we, humans, are not logical creatures you thought we are. Instead, we are driven by emotion and often make quite unpredictable choices.
Jobs to be done way
There’s another excellent approach to interviewing customers, taught by Chris Spiek and Bob Moesta. They propose talking to customers about the moment when they switch from one product to another, asking about the context of the switch and why they did it.
For example, if you are building a todo-app for project managers, you can be pretty sure that your customers are already using some app to track their tasks. Ask them when was the last time when they made a switch. You will probably hear a lot of valuable details about why that happened. Maybe they wanted to sync their tasks between different devices and their previous tool did not support that. Or perhaps they’ve been promoted and the number of tasks they need to track increased dramatically because now they need to supervise of their subordinates.
These types of interviews allow you to learn why people ‘hire and fire’ products, as Chris and Bob say, to do certain jobs. A piece of knowledge like that makes product development much easier and allows you to make confident decisions.
Be skeptical about your assumptions. Challenge them by getting out of the building and talking to people. It's the only way to learn and understand what you need to build. Customer discovery and validation makes chaotic environment we all have to work in easier to navigate. Think of it as of a compass, that will show you the direction in which you should make your next step. There is no map, unfortunately.