Customer development is one of the first and most integral steps that entrepreneurs have to take when they go about launching a startup. Yet, many first-time entrepreneurs don't really know how to do it well.
In a talk from Barcelona Founder Institute, Justin Wilcox, Founder of Customer Dev Labs shares his knowledge about customer development, and the do's and don'ts of this process.
In this post, we've listed the insights that Justin Wilcox shared during his talk.
The No. 1 Rule of Customers
The number 1 rule of customers is that customers don’t buy products. Customers buy solutions to problems. No one cares about your product, they care about the problems you can solve for them. Customer development is hence a search for problems you can solve and discovering which customers your solution is for.
How do you find problems? You ask customers. But how do you ask customers?
The first way people tend to do so is through surveys. The benefits of surveys are that surveys are fast, easy and quantitative.
However, surveys have numerous downsides. Firstly, surveys can be useless, and at the early stage, often do more harm than good. Surveys are like rose-colored glasses, as they can provide false positives and can rationale some idea that you have via data.
Take this survey for example:
- How far do you walk to/from work?
- Would you like to spend less time commuting?
- How much would you pay to cut your commute in half?
Your possible findings could be this:
- Commuters walk on average 1.3 km
- 87% would like shorter commute times
- 67% would pay $5/day for a shorter commute
Thus, you might end up building a segway. Yet very few of us own these things. The segway may be an awesome product but that’s about it.
It is hardly ever the case that founders can put together a solid survey because it is so hard to do right. More often than not, they will lead you in the wrong direction. You think you are building something the world needs, when you are actually not.
Secondly, another detriment of surveys is that there’s no plan B. If respondents answer no, you do not know why it is not going to work. There is no exit strategy in your survey.
Thirdly, people don’t care about your surveys. Everyone often skims right through surveys and rushes to finish them, resulting in inaccurate answers.
In summary, while surveys are a start to customer development. try to use other methods to get a better understanding of your potential market.
While interviews can provide more reliable data than surveys, they are not without their drawbacks. For example,
- They are hard.
- They take time because you need 1 on 1 conversations with people.
- They are qualitative, not quantitative.
The Advantages of Interviews
1) Find problems
You do not have to guess about these 3 questions:
- Are you solving a problem?
- Do customers care?
- Is this worth your time?
You will actually know, and more than that, you will feel whether this is the right product for you.
2) Find Answers
You will find out the answers about these aspects.
- Will customers pay?
- Where are your customers ?
- Marketing copy?
3) Find options
You will find out about
- Plan B
- Plan C
- Plan D
How do you interview?
Rule #1 Don’t talk about your idea.
If you do that, you will not be able to discover your customer's’ problems. The discussion will narrow down to being just about your idea, when that may actually not be the real big problem that your customer is facing, and there may be other better solutions that you miss out on.
Rule #2 Never ask about the future.
Any question that has the word “would” is bad. Your customer is just as bad about predicting the future as you are, so do not ask them about it. Examples of such questions include “Would you use…?” “How much would you pay?" Customers may say yes to that right now, but that is no indication of whether they will actually mean what they say in the future.
Here’s a template you can follow to get you started on your customer interviews.
1. What’s the hardest part about _____?
2. Tell me about the last time that happened.
3. Why was that hard?
4. Have you looked for a solution?
5. Why is that solution not ideal?
Bonus Questions (optional)
1. Where do you find out about new products for _____ online?
2. How much are you paying to solve this problem now?
3. How often does this problem happen?
Remember to ask open ended questions instead of yes-or-no questions because that allows your customers to express more of what they are facing.
Customer development is definitely not an easy process because you need to take time to have conversations with many different people and really listen to what their hidden needs are and figure out how you can provide something that appeals to them. However, doing it right through the use of interviews with useful, revealing questions can make all the difference in determining whether you actually solve real problems that customers face. Hopefully, through the process you will be able to make a product which customers will want to buy, and be on your way to developing a profitable business!
Image credits: WiseHunch.com