Customer Development — Validating ideas that sell

I spoke with my friend Danny Schaffer last week about Sales for Startups and he alluded to how Customer Development should precede any work that leads to ramping up Sales and Marketing efforts.

So what is Customer Development and what does it involve?

It sounds quite simple in definition but most founders neglect to give enough attention to, or apply a more scientific approach to it; although it should be a cornerstone of your business model evaluation. It’s basically validating certain assumptions and hypothesis you had about a problem-solution-fit in the market.

But beyond the ideation phase, when you start thinking of building a company, have you considered:

How ‘big a deal’ is your hypothetical ‘problem’ to the current market? What are the alternatives? How much are people paying for it? Are they happy with the alternatives available? How much are they willing to pay for something better? How will I market & sell the product?

Mike Fishbein unpacks a list of questions in the different Customer Development phases such as Customer Segmentation, Problem Discovery, Problem Validation, Product Discovery, Product Validation etc. http://mfishbein.com/the-ultimate-list-of-customer-development-questions/ 
My favourite question, being Sales biased, is — ‘Do you know anyone else who might also have this problem that I could ask similar questions to?’ — referral Lead generation 101.

If it IS so important early on, and impacts not only Product Development but also your Sales and Marketing efforts directly… How do you get your Customer Development framework ready?

“Get out of the building and start having in-person conversations.”

People convey what they think of a product just as much through body language, facial expression and voice tone, as they do through actual words.

For some great practical and qualitative tips on Customer Discovery check out -https://s3.amazonaws.com/TalkingtoHumans/Talking+to+Humans.pdf

Brant Cooper also explains the different elements of Customer Development in his blog-http://market-by-numbers.com/customer-development/

Here’s an excerpt :

When building a business, the process is used to discover, test and validate the following your business assumptions:

  • A specific product solves a known problem for an identifiable group of users (Customer Discovery)
  • The market is saleable and large enough that a viable business might be built (Customer Validation)
  • The business is scalable through a repeatable sales and marketing roadmap (Company Creation)
  • Company departments and operational processes are created to support scale (Company Building)

If you have one of the above Customer Development frameworks ready…based on where you are in your business…How will you test it with your actual potential market without relying only on your relatives, friends, colleagues?

  • How will you reach out to them?
  1. Mail — Very low results
  2. Cold Call — Results may be too dependent on your Sales/ Founder
  3. In-person — Getting the Interview/Meeting is important
  4. Social — Difficult to validate a new product.
  • How will you engage? and on a scalable front?
  • Will they listen to the CTAs (Call to actions) that your messaging will request from them?
  • If you have a new/unique product or service offering, education may be required besides just awareness/interest creation- which means a longer sales cycles and a higher CAC.
  • How will your competitors react?
  • Will they click through from a webpage/mail/ Social page?
  • What details do they need to give in order to purchase?
  • Will they freely pay online?
  • How will renew their memberships?
  • Will they share their purchase and refer friends?

Product Market Fit

If you are in the pre-product market fit stage ie. you have a couple of clients , an MVP, or you are still busy building a product , or you have launched but haven’t gained any traction yet ,or you haven’t created a Sales and Marketing strategy, or getting any results, then maybe it’s time to take a step back and start doing some Customer Discovery and Validation.

A new alternative would be to outsource your Customer Development to a Growth agency to test your hypotheses, do interviews/calls, A/B test mailers, and do surveys on your behalf. Understanding your market better first is the only way to map your Buyers Journey that allows for a Sales & Marketing Strategy, to get verified results.

“Learn as many lessons as possible early on, or pay the price later.”

Ash Maurya gives a nice example of how most of the learning happens only after release, so why not start incorporating a model earlier rather than later.-https://leanstack.com/the-fallacy-of-customer-development/

Let me know what you think, or if you need help in with your Customer Development, Customer Mapping, Buyers Journey, or Marketing & Sales Strategy, you can send me a mail at andries@pixoen.com

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