Customer Development
We never started Cameesa with customer development in mind but we should have. It would have saved us time from heading in the wrong direction.
What is customer development? Customer development is a set of principles that allow you take your business ideas and validate them before scaling by reaching out to your potential customers. Serial entrepreneur Steve Blank (who is now a professor at Berkley and Stanford) identified patters that allowed start-ups to succeed in his book the Four Steps to the Epiphany.
I wanted to highlight what I found to be the most helpful take aways from the methodology on a basic level:
- Get outside of the building.
- Minimal viable product.
- The pivot.
Even though I’m oversimplifying I think if these core items are kept top of mind you will have much more success than if they were not taken into consideration at all. Steve’s book does cover a lot of topics that would be applicable to larger venture backed startups but the principles can apply to a small team wanting to get something off the ground.
1. Get outside of the building.
This is the most important item in customer development as it presents a fundamental shift in the product development process. So what does getting outside of the building mean exactly? It means not staying behind your computer screen developing your product until you’ve at least gathered some insights from potential customers. It is recommended that you have face to face discussions with people. Your goal is two fold. The first is to validate the product idea, the second to is validate the model. An example is as follows:
Me: I am building an augmented reality real estate application for the iphone? You can point your phone at a property and get the listing details and pricing. Cool right? Is this something you’d find useful? You have a lot expertise when it comes to all things real estate so I value your opinion.
Potential Customer: I’m not sure if the general public would find it useful as they tend to make rental and home buying decisions once every few years. As a real estate broker I’d find it invaluable as I can see my own listings as compared to my competitors in real time when I’m in the area.
Me: Would you be willing to $10 to download the application?
Potential Customer: $10?! I’d pay $50 for it if it existed.
Me: That’s great! I will touch base when I have the initial prototype ready.
Keep in mind that a good portion of this can be done over social networks and email initially so you can get a large sample of responses as a start. It is highly recommended that you go out and speak to people face to face. This way you can observe their facial expressions, tone in voice and reactions to what you’re saying. This becomes more important if the business model involves direct payment from the consumer. They may wince when you discuss pricing which is great feedback. Feedback that you couldn’t have gotten from an email response.
2. Minimal viable product.
Minimal viable product means building only the key features and nothing more. Build only what you need. The question you should ask yourself is: What is the minimum you could produce in order to get something out the door that still satisfies the need? This concept is crucial in the early stages for the following reason. It reduces risk by preventing you from over investing in going in the wrong direction. It also sets the foundation for iterative/agile development. This will allow you to get feedback and tweak the product as you go along evolving it in a favourable direction. This is at the heart of Eric Ries concept of the lean startup. Pairing customer development with agile software development methodologies.
3. The pivot.
Once you have developed version 1.0 of your minimal viable product you can go out and solicit more feedback. As you keep iterating you will notice patterns in how people use the product and what they say about the product. This may present a greater opportunity. The product maybe not be used in the way initially intended but with the data you’ve gathered you may be able to create a new product that better reflects the consumer demand.
I will most likely write a blog post on pivots alone. As with any successful business, it’s not the 1st idea that made them successful but 2nd or 3rd idea.
Some other key things to note. If you are solving your own problem or have domain knowledge it also improves your chances of success. As does passion and persistence. You should also look at both your product and consumer feedback with a critical eye to preserve consistency.
Brant Cooper and Patrick Vlaskovits have done an excellent job of creating a cheat sheet to the Four Steps to Epiphany.
