How to approach customer development for new products

Conversation With Catherine Shyu, product manager at FullContact

In each entry in this “conversation” series I talk to a designer/product manager/engineer on a topic. I want to make basic practical skills education transparent and free.

Image Credite: Bram Naus

Today I’m talking to Catherine Shyu, who is a product manager at FullContact on how to do customer development. Catherine specializes in customer development for new products and has done that for both SendGrid and FullContact.

Tell us a little about your background in product management

My roles in FullContact and Sendgrid both required me to work on products for new markets in fairly established companies. These are new bets a company wants to take to see if they can add a line of revenue. These require you to explore the scope, talk to customers, test prototypes, iterate, figure out pricing, release and then iterate some more.

At Sendgrid I worked on the marketing campaigns product for marketers to easily create email campaigns in a UI editor. Before that, transactional emails were our bread and butter and customers were asking for this new product which is why we decided to invest more resources in it. It’s now a good source of revenue for Sendgrid. At FullContact I worked on a new product for teams to share contacts with each other.

How did you go about scoping the MVP for a new product?

Let’s take my current product in FullContact, called FullContact for Teams.

We work very well for professional services which may need to nurture relationships but at the same time don’t move them through a flow or have to report on ROIs for them. These are professional services firms, whose entire business is around contacts.

We started with just an idea. There was nothing else in the market to look at and we wanted to introduce the contact management space for people. Interviews with customers helped define the scope of the product we put out.

The process is something like this:

Initial prototype -> Customer interviews -> Iterate both questions and prototype -> Launch

How did you find the right people to interview?

We had an initial prototype we could get feedback on, and then I cast the net out wide to who would potentially find it interesting. I talked to people at big companies like account executives, business development, product management, customer support and more, by reaching out to them on Linkedin. I pretty much lived on LinkedIn for a couple of weeks looking up firms who would let me visit their offices in Denver.

Usually I could tell in two or three questions if the product was right for them at all. I would ask them if they were sharing contacts with their team and what they were currently using to solve the problem. I also asked them how painful the problem was on a scale of 1–10. If it was lower than 7, they probably wouldn’t pay for the product.

We knew it would be customer facing people but we didn’t know the exact job title / industries it would be useful for. Eventually when we talked to people in professional services like realtors, mortgage brokers, financial services — we knew we found a sweet spot.

Our right persona turned out to be what we call professional services: PR firms, architecture firms, brand agencies, design agencies etc. These are groups who work with clients closely and have to keep track of them. Or they could also have repeat business where the relationship doesn’t end when it switches to “closed won”.

Once you found the right persona what did you do?

I took the prototype out to beta test. After I had talked to 8–10 people I realized that some of the things in our prototype weren’t interesting to them at all so I decided that we could cut it out of v1. We then invested some time in designing and building out an official “beta” product .

I talked to 150 people over the course of six months. I would do one wave, learn a lot and then change up designs/ interview questions and then do another wave.

How do you really know if people are interested? No one really tells you to your face that they don’t care for your product.

I think it takes a lot of face reading to understand the emotions an interviewee is feeling. I would ask them questions and by looking at their face I could tell how much they actually cared about the problem. I would ask them about how they were currently sharing contacts with their team, how big that problem was to them, and to rank it on a scale 1–10. The ranking question was really helpful and that would tell me how much energy they would put into fixing it.

Their voice pitch also indicated how interested they were. Usually when a person gets passionate, their voice will change tone and their body becomes more animated.

How did you build the initial prototype?

We had gotten feedback over the years that professionals loved using our product for individuals, and wanted to use it with their team. The initial team prototype we built took advantage of elements already in our product for individuals.

A design prototype is fine but at some point you will have to code because there is only so much you can show with a design prototype. You also can’t see people use it in their natural environment, because you force them to focus on the prototypes when you’re interviewing them. Once you validate the original direction with some designs and what it could be, it’s important to build it and let people use it naturally.

I see the customer development process as a logarithmic curve. Your biggest learnings will come at the beginning, and learning will flatten to a point over time as the same answers come back over and over again. In order to speed up your learning again, you’ll need to change something up to restart the curve.

Image Credit: Catherine Shyu

How did you come up with the questions and revise them?

I had some background as a user researcher in my career which helped me in my methodology.

You ask the questions in a way so you are not leading the users. The method in which you interpret the questions is important. You have to be self aware enough so you know when you have accidentally led someone. The method of doing these interviews is hard to perfect so this is one area where I’d recommend PMs get some professional training.

The revision on the questions were quite a bit of pattern matching. I would notice after a few interviews that the answers to some questions were the same so his question wouldn’t bring me any more value if I kept asking it. So at that point i would switch it out to something else.

Version 1

The goal of this set was to figure out who the customer is, their workflow and if our product would solve their problem. By the end, I had learned that our sweet spot would be small professional services teams because contacts were core to their business and it was important to them to solve this problem.

Background of the interviewer:

• What responsibilities do you have?
• What does an average day look like for you?
• Main tools / software used for work?
• What is the biggest pain point of your job?
• How large is your team? Are you on multiple teams?
• How does your team split responsibilities? How much overlap is there?
• How / when do you collaborate with other members of your team?
• How do you share contacts with another person on your team?
• How do you share contacts with your whole team?
• Is most of your work inbound or outbound?
• How does your team pick the tools you use? What is that process like?

Customer Management Tool

• How does your team use it?
• How do you collaborate in it?
• How much information is shared from it, within your organization?
• What do you dislike about it?
• What do you like about it?

Version 2

This came at a later stage when I figured out who my target market was. At the end of this set of questions, I learned more about the upper / lower bounds of what our product should do for this market.

• How are you currently sharing contacts? Where are each of you storing them?
• What are your main needs?
• What activities do you do with a contact list? Export into email marketing? Pipeline?
• Have you tried any other solutions out for this in the past? What did / didn’t you like?
• How many contacts would you estimate you have?
• How many people does your team meet per week?
• Extra social or professional networks you pay attention to?
• How do you pick what apps to use?

Why didn’t you do surveys and when should companies use surveys?

Customer development happens early on when you are still validating the problem. I would let them lead me where they wanted to go and no one interview really had the same questions. I had a couple basic questions, but 1:1 interviews gave me the freedom to dig deeper into answers.

In user research and surveys we use more specific questions and get structured answers. I do surveys when most of our foundation is already validated and the scope of what I’m trying to learn is smaller.

How did you go about deciding pricing?

I look at all B2B SAAS companies and how they price their products. If it’s a subscription service, I even look at Netflix and Spotify because people in their head compare the value of the product to ones they use naturally on a daily basis.

I look at the unit at which they price on (per seat, per project, flat fee per month etc) and the price per unit. For us we went with pricing per peat.

The actual price can be a huge range — we knew it had to be somewhere $5–$20 per person. We did a little hack and put up a beta wait list, put customers on a two week trial and then said at the end of the trial they had to talk to us to let us know how much it will cost. Then our sales person would pitch different prices and then after 50–60 teams we could see where the sweet spot in pricing was.

Finally we settled at $12.99 per seat.

How does customer development change after you launch the product?

After the product is launched, customer development can slow down because it is best suited for problems with major unknowns. Once the incremental learning gains are smaller, teams can utilize user research interviews, usability tests, surveys and more to find answers to their questions. Companies should always talk to their customers in some form or another, but the method depends on what the team is trying to learn.

The most common time I see customer development started up again on established products is when the company is considering adding a new feature and needs to mitigate the risk involved before investing resources into it.

Hopefully this article has been useful for you. Please click on the heart button if you like it and leave a comment with any further questions!

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