The Basics of Customer Development for New Entrepreneurs

So you have an idea, a product, or a vision — you may even have some users or customers, and you have committed to making your idea come to life.

That officially makes you an entrepreneur, which means your day to day life just got both easier and harder.

The easy part is that you suddenly have access to feedback (data) from real, live people — your audience. They are right there, ready to give you feedback, and even inspiration. The complicated part is that there can be an overwhelming amount of information, and it’s not always easy to know what to make of it.

At the heart of this challenge is something that great product managers do, they bridge the gap between internal teams and the market out there that wants (or might want) what you’re building.

Which leads us to something called customer development — many entrepreneurs and product managers put their own spin on it, but the bottom line is that it’s about developing a relationship with customers and in the process creating a continuous loop of feedback to help inform how the product or company grows.

The basics include putting together a strategy to get customer feedback, both qualitative and quantitative (stories! analytics!), a framework to analyze and interpret that information, and and a process for regularly taking action so your idea can go from a cool thing to a complete product.

Here are a few key ways to get that customer development loop started…

  1. Prepare yourself for feedback (negative and positive)
  2. Finding the right customers
  3. Reaching out to potential customers
  4. Once you find customers, collect data
  5. Analyzing and using information

Prepare Yourself For Feedback (Negative and Positive)

One of the very first things that a new business has to learn to do is watch their customers closely, and without judgment.

Ryan Carson, the CEO of Treehouse, an online technology education platform, wrote a post a few years ago about just how painful it can be to get face-to-face feedback from a customer. He watched in-person as one of his customers attempted to sign onto their website. It was a brutal experience because in the process he realized that his own website’s onboarding process was extremely difficult, which was a significant problem for a company that actually teaches web development skills.

If you get the chance to “watch” your customers (whether that’s looking at how people drop off during an online signup, or in-person) you need to be prepared for similarly painful experiences. Never take it personally — this sort of feedback is golden — it will help you improve your product more quickly than just about anything else can, and experienced founders welcome it with open arms.

Finding the Right Customers

Every business is different, so there isn’t one “place” you can go look to find the right customers.

At the very beginning don’t worry about the perfect fit — instead, start by finding any customers to begin the process. Most entrepreneurs start with their friends and family — the people who know them best and are willing to give honest feedback. Most importantly, don’t be afraid to get detailed, in-depth feedback from a variety of customers and potential customers.

Once you work through that process you can then begin to build a customer profile so that you understand what type of people need / want your product. Focus more on interests and psychographics (people who see themselves as DIYers, early technology adopters) and less on demographics like age and gender.

By understanding your customer profile you’ll have a better idea where they spend time online and in real life, and have an easier time reaching them. That does not mean that you should create such a tight profile that you overlook other customer-types. Keep your eyes and ears open at all time as you search for the right customers. Often, the challenge is to simply start getting information that you can sift through, and then actually start thinking about and developing multiple profiles for people using your product (you might hear some entrepreneurs or companies refer to this as “separating people into buckets”).

Reaching Out To Potential Customers

Whatever you do, don’t fall for the idea that you can use the one channel of “social selling” to reach your potential customers. It is much more easy to ignore, or not even see, a message or post on social media than it is an email or, even better, and old fashioned cold call. It’s important to be conscious of what channels you are using to reach people, and how you are measuring what works and what doesn’t.

Again, prepare yourself for rejection because that is part of sales. But you won’t find any customers unless you reach out to a lot of people and are willing to do the hard work to understand what they need and want. Trust that information above all else, because what people are willing to pay for (in money or significant time/attention) is what you’ll be be building your company on.

Once you find new customers, don’t be afraid to ask for referrals to people they think will like your product. Word of mouth is the strongest method of gaining new business, especially for a start up.

Once You Find Customers, Collect Data

Now that you have customers, you can build your feedback loop. The foundation of this loop is listening to them. Of course you will have to ask them the right questions; one example is asking why they are your customer? What pain point is your product solving for them? How could it be better? What pain point does it not solve that they wish it would?

You can ask these questions via the phone, online surveys, or email — using whatever medium they are most comfortable with will yield the best results. Second, once you have a significant amount of users / customers, or traffic to your primary site, start correlating analytics to the information you get via direct contact. Are people saying they want what you’re providing, but dropping out during the signup process or when learning to use a new tool / product? That’s critical information that you need to balance.

Analyzing and Using Information

Any entrepreneur who’s built a company from scratch will tell you that the moment of data overload comes very quickly.

No matter how much information you have, it is worthless without knowing how to analyze it. In the early stages of building a company you’ll want to read everything — every single comment and compliment, and every bit of Google Analytics or whatever you are using to understand quantitative data. Categorize the comments, and, if necessary, subcategorize them. You’ll need to look for trends and chart them so that you can watch them over time.

Feedback is a continuous loop, not a one time project with a completion date. And because of that you’ll also want to look at key metrics that focus on the growth of your product. Increases in total revenue or user signups are often less helpful than looking at the underlying reasons for growth.

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