What is Customer Discovery? A 4 Step Guide to Building the Right Product for the Right Customers

By Ethan Adams

If you’ve been around entrepreneurial circles for a little while, you’ve probably heard the phrase “customer discovery” thrown around from time to time. It’s one piece of startup jargon that doesn’t make a whole lot of sense if you haven’t heard it before. Is customer discovery the process of walking around city streets asking people if they will be your customer?

Actually, it is–in a way.

It’s All About Staying Lean

The phrase “customer discovery” traces its roots back to two serial entrepreneurs: Steve Blank and Eric Ries. These two men are most widely known for their contribution to the “Lean Startup” methodology (Ries is the author of The Lean Startup (2010); Blank wrote “Why the Lean Startup Changes Everything” as the cover story for the Harvard Business Review in 2013). At the heart of the Lean Startup is the process of utilizing customers very early on in the business development process–and that is precisely the theory behind customer discovery.

Brant Cooper puts it simply: Customer discovery “is all about questioning your core business assumptions.” Performed correctly, customer discovery is a customer-centric, scientific process that puts evidence behind an assumed product-market fit.

You Become the Scientist

In customer discovery, you (the founder) take on the role of a scientist or detective, trying to let evidence lead you to a solution without letting any of your own bias get in the way. In fact, customer discovery ordinarily involves a process that closely follows the traditional scientific method:

  1. Observing and defining a phenomenon (problem or market need)
  2. Developing a hypothesis about a solution to the problem (business idea)
  3. Conducting an experiment to test the hypothesis (getting “out of the building”)

Following a scientific approach is essential in this very early stage of a startup, because there will be lots of opportunity to allow bias to color your impression of the market. In many instances, the only “science” employed by inexperienced entrepreneurs comes from asking around about others’ opinions of their idea before continuing. Whether this involves asking friends, family, or even teachers, the answers will be far from trustworthy.

For that reason, customer discovery requires a specific type of research method that eliminates as much bias as possible. You will still end up “asking around,” but your answers will end up far more reliable. Here is a simple guide to performing customer discovery for your startup or idea.

Customer Discovery in 4 Steps

Step One: Define a Hypothesis

The first step is to form a hypothesis that defines both the problem and the solution you are proposing. A simple way to frame this is to fill in the following sentence:

My idea solves [insert problem] by [insert solution].

A word of warning: pay very close attention to your assessment of your problem. Be as specific as possible. A good hypothesis addresses a single problem with a single solution. For example: Instead of saying, “My idea solves people’s need to do laundry by offering a laundry delivery service,” a better idea hypothesis might be, “My idea solves the inconvenience and large time commitment of maintaining clean laundry by offering a 24-hour convenient laundry delivery service.” The first addresses a vague problem that does not match the solution (a laundry service doesn’t solve the need for clean laundry), while the second directly addresses the heart of the issue and matches it with a corresponding solution.

Your idea hypothesis will be tested in the next steps.

Step Two: Define Your Assumptions

In detailing your hypothesis, you will be forced to make some assumptions about your idea. These will include assumptions that:

  • The problem you addressed is actually a problem
  • The solution you propose will actually solve the problem
  • The market you plan to target has this problem
  • The market you plan to target will be willing to pay for your solution

A good way to lay out a number of these assumptions is to create a hypothetical customer persona (that is, a profile of who you think is the ideal customer for your business). Be specific–give this person a name, an age, a career, hobbies, interests, perspectives, and even quotes regarding your industry. See a good example of a customer persona below.

Source: xtensio.com

Step Three: Ask (Good) Questions

The next step is to “get out of the building” and ask some questions. You’re going to start by targeting people who you believe could be potential customers. If you’re running a college laundry business, you should not be asking your parents or professors questions. They are not going to be your customers. Ask the people that you anticipate asking to buy your product in the future. They hold the answers.

Next, you’re going to ask “detective” questions. This isn’t just “asking around” for people’s thoughts on your idea, though. In fact, you really shouldn’t mention your idea at all. This is because customer discovery allows you to let your customers build your product for you. That’s right. You thought you were in the driver’s seat, but you actually get to sit back and relax while your product gets built before your eyes (so to speak).

This is because customer discovery questions are open-ended and nonspecific about your idea. By letting the customer lead the conversation, you will end up letting them tell you about their ideal solution (instead of the other way around). Example questions might include:

  • Tell me how you currently do _____________________.
  • How is that process working for you?
  • If you could do anything to improve your experience with ___________________, what would it be?
  • What’s the hardest part about ______________?
  • What do you like/dislike about ______________?

In asking these questions, you allow the customer to tell you their exact opinions (or lack of opinion) about your topic of interest. If they feel extremely strongly about the problem, you’ll see pretty quickly by their body language and tone of voice. If they don’t see much of a problem, they may seem confused or complacent. Or, there might be some completely different problem that you hadn’t realized is more pressing than the one you originally wanted to solve. In either case, as you get more and more responses from potential customers, your product will start to either make more sense or less sense. Now is the time to check your bias at the door–because it could very well prevent you from uncovering the real potential behind your idea.

Step Four: Evaluate and Refine

If you perform the customer discovery process correctly, chances are you’ll discover some things that you had not originally considered. At this point, you have the opportunity to return to the drawing board (Step One), incorporate what you’ve learned, and repeat the process. Once your customers’ responses match your hypothesis, then you can move on confidently, knowing that you are about to build something that your customers will actually want.

It may seem frustrating to have to go back and revise your original idea, but think about this: it is far better (and cheaper) to revise your idea now–at the beginning–than after you have already spent significant time and money building a product or service around false (or partially false) assumptions.

This gives you a distinct advantage over everyone else in the market. Someone else may be building the fastest product, but you will end up building the best product.

Always Question Your Assumptions

The core of customer discovery–questioning your assumptions–is actually a practice that can and should follow throughout every stage of your business’s growth. Remember–you are a scientist trying to uncover evidence. Any scientist that assumes something is true without first proving it is a pretty bad scientist. Similarly, any entrepreneur that assumes certain traits about a problem or market segment without proof is asking for trouble.

It may be hard to restrain yourself from jumping right into the process of building your idea, but remember–laying a proper foundation upfront will make sure your idea lasts for years to come.

Ethan Adams is Manager of Startup Development at Future Founders. Read more posts like this here.