The hardest part of starting a business isn’t the workload.
It’s not the hours, the foresight, or the innovation required. It’s not thinking of a good idea, coming up with an innovative solution, or even building out the first iteration of the product. No, it’s much simpler than that. The hardest part of starting a business is getting somebody to pay you.
The truth is, you don’t have a business until you have a customer willing to give you money for your product — and getting there is arguably the most arduous step of starting a company. So how do you go from zero to one? There are many roads and strategies, but customer development is one of the most effective and important for early-stage startups.
You Have to See the Target Before You Can Hit It
Customer development is grounded in a simple understanding: people are different, and no matter how “universal” you believe your product to be, you can’t attack the entire market at once. Even if you do have a “universally useful” product, different customers will adopt it at different times. To cross the chasm of finding your first customers, you’ll need to understand who will be willing to try — and pay for — your product first. These are your early adopters, and they’re one of the most valuable things in the world.
In the digital product space, early adopters are the ones willing to try your product for its intrinsic benefits. They’re experiencing a problem — a pressing one, at that — and if they believe your product solves it, they’re willing to try it before you’ve even finished polishing it up. Often, early adopters are also willing to provide feedback because they want to help you succeed. They want to be the ones to say “I was there first” once your business starts to grow. This makes them incredibly valuable to you, but they’re only valuable if you can find them.
This is where customer development comes in.
Finding the Bullseye
To find your early adopters, start by asking questions about them.
- First off, what problem does your product solve?
- Who has that problem, and for whom is it the most pressing?
- Who is going to seek out a solution to this problem first, and who will be most willing to try a solution if one comes along?
- Finally, of this group, whom could you feasibly reach within the next two weeks and how do you reach them?
Notice what we’re doing with these questions: each one is more specific than the next. By asking and answering these questions, we’re actually segmenting the market for your product. We’re starting with a rough interpretation of the total addressable market (who has the problem?), then progressively narrowing down until we reach the early adopters (for whom is the problem most pressing?) that you can actually get into contact with (whom can you reach?).
As an early-stage startup trying to validate your business concept, this last group is your target market: early adopters that you can feasibly get your product in front of using the channels available to you right now.
Brace for Impact
“In a startup, no business plan survives first contact with customers” — Steve Blank
Once we’ve identified the initial target market for your product, it’s time for the hard part: trying to get them to pay you for it. This is an arduous process, and one that will probably take multiple attempts. To do it, we’ll need an MVP, or Minimum Viable Product.
The term “MVP” has different definitions according to different people. Steve Blank calls it “the smallest feature set customers will pay for in the first release,” while Eric Reis defines it as the “version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.” In general, the MVP is some version of your product that communicates the key value proposition to users and helps you gather more information to iterate your product.
The MVP may be as simple as the “Buy Now” button on a landing page or as comprehensive as a clickable prototype, but the key is that it lets you get in contact with customers for the first time. Creating an MVP will look different for every business — the most appropriate approach will depend on your product offering and your initial target market. The important thing is to just get something you can put in front of a customer and get feedback on.
Take Your Medicine
Once you do have your MVP and get feedback on it from customers, there’s one more step — you actually have to listen to the feedback. The truth is that up to now, everything has been an assumption. The problem, your solution, the customer set, the business model — all of these have been assumptions. Assumptions you’ve put a lot of thought into, but assumptions nonetheless.
First contact between a customer and your MVP is the first time you get to actually test your assumptions, and for most entrepreneurs, the results won’t be pretty. More likely than not, your assumptions — or at least a good portion of them — are mostly or partially wrong, and your customer feedback will tell you as much. So does that mean we give up and go home?
Of course not! Negative feedback from customers is one of the best things you can get because it puts you that much closer to a successful business. The next step is to use the feedback you get from customers to adjust your product offering, feature set, business model, and MVP.
This adjustment may be a small tweak to the feature set or a full pivot to a completely renovated product. The truth is, it doesn’t matter: the customer decides whether you live or die, so no matter how harsh their feedback, you must listen to it. Fail to do so and you’ll spend years working on a product no one really wants.
Rinse & Repeat
After you’ve made these adjustments, put your MVP back in front of customers and repeat the process. Eventually, you’ll have a product early adopters are excited about enough to use and actively share — and that’s a very good sign. Ultimately, this process of feedback and iteration never ends, but getting something people are willing to pay for and share is the first step.
Once you reach this step, you have an early indicator of product-market fit and a green light to keep moving. If you keep moving with these principles at heart — test, iterate, repeat — then you’re well on your way to building a successful product and business.
Dive Deeper to Master Customer Development
These strategies will get you part of the way there, but we’ve only just scratched the surface of customer development. If you’re ready to dive deeper and see the techniques we’ve used to help startups earn some $500 million in aggregate funding, check out our brand new Customer Development Course. We’ll teach you how the pros go about building a new business from conception to millions in revenue.
