Is there a prequel to your MVP?
How mastering customers’ problems can accelerate the time to get to product-market fit
Mastering customers’ problems is a prequel to MVPs
Before moving into solution territory, it’s important to identify the paradigm your customers operate in, how they make decisions, and most importantly why they choose one thing over another.
Important to remember new product development is a completely different beast than optimizing existing solutions to a well-understood problem. While the latter can be achieved by shipping quickly and iterating to success, the former requires a prequel of sorts — dedicated time upfront to understand customers’ problems.
To create new norms, you have to understand customers’ existing norms and motivation to change.
Meet Dory, the aquarium maker
Imagine you’re Dory, the owner of a small business that sells custom aquariums. Unfortunately, money is going out on a regular schedule, but it’s not coming in on a regular schedule — making it impossible to pay your staff on time each week.
Now imagine the chances of someone solving your cash flow problem in a room brainstorming, without ever having spoken to you about it. Now try to imagine that person coming back to you in 3 months with a product solution. How likely are you to recognize it as the solution to your specific problem?
Let’s work through why your intuition is probably saying “not very likely”.
Start with a heaping bowl of customer empathy
If teams skip the step of really understanding the customers’ problem, they risk building a product that customers don’t recognize as a solution. First, teams should understand every detail of their customers’ expectations for a solution to their complex problems.
Luckily, the source of intel about these problems is one phone call away. Customers are experts in their problem space. Sure, business owners like Dory, the aquarium maker, may not know the perfect solution to their problem, but they do know these three things: why they want to do something; how to get it done; and there’s probably a better way to do it
Tip: if they aren’t actively looking for that last bit, they often don’t have a problem worth solving.
How to identify and validate real customer problems?
It’s a three step process:
- Observe how customers solve the problem now
- Learn how customers solved the problem before
- Define the customers’ performance criteria — a set of criteria customers use to filter potential solutions to the problem
1. Observe how customers solve the problem now
Ideally you’re able to schedule some in-person customer visits or at the very least video calls. Start by asking some high-level questions until you’re able to narrow in on a specific problem.
Once you’ve identified a problem area, learn as much as you can about how they solve the problem today. The how is just to ease them into the conversation, what I’m really looking for is the why. I’m trying to get to the crux of why it’s even a problem to them.
Tip: try looking for examples where customers hack together products in ways for which they weren’t originally intended. In my experience, these improvisations represent the best opportunities for new product innovation.
2. Learn how customers solved the problem before
Here we must understand why customers like Dory chose one solution over another by revisiting their past purchase decisions. By asking how customers have solved it before, you’ll be able to dig deeper into their struggles and aspirations. Once you uncover the customers’ expectations leading up to a past purchase, you’ll have a clear idea of what they value, and what they don’t care about.
3. Define the customers’ performance criteria
The next step is to define what progress looks like through the eyes of the customer. How do they talk about their lives with the problem solved? What are the goals they are trying to achieve?
I’ve found the best way to transform abstract customer insights into tangible next steps is to define a set of performance criteria — a set of criteria customers use to filter potential solutions to the problem. This can act as a prioritized roadmap to build something your customers will actually use (and pay for).
A clearly defined problem contains its own solution within it
Now you’re a million times more likely to succeed because you’ll know what you need to build; you’ll build what the customer wishes they could build for themselves.
Performance criteria inform product requirements
Once you understand the customers struggle to make progress and how they imagine their lives being better when they have the right solution — you’ll be equipped with an objective set of high-level success criteria for your team to design and build around.
An example of performance criteria
Dory was often short on cash at the exact time she needed to make payroll. She was tired of nudging her clients to pay faster so she could pay employees on time and better maintain relationships. When Dory was looking for a solution to her cash flow problem, she filtered potential solutions based on two specific criteria: i) easy application process and ii) quick turn-around times for receiving funds in bank account. Contrary to popular belief, low interest fees were not part of Dory’s evaluation criteria. Dory chose an online lending product with real-time approvals over a traditional bank loan known for slow application and approval times
Performance criteria inform metrics
Customers’ performance criteria serve another important purpose in the product development lifecycle — measuring performance of a product or feature once you ship.
But here’s where things get a little bit radical. Instead of modeling your KPIs around business goals (new sign-ups, paid conversion, retention etc.), model your KPIs around how customers measure success. It shifts the KPIs from business financial-performance metrics to externally relevant customer-benefit metrics. Amazon focuses on when orders are delivered, not when they are shipped.
Since we know customers buy products to help them make progress or reach specific goals, then it’s reasonable to believe the evaluation period will continue well after they make a purchase. Customers measure the solution against expected outcomes over their entire lifecycle with a product. A product’s inability to stack-up against the customers’ expected outcomes is the source of churn.
Customer KPIs vs. Business KPIs
Sticking with the cash flow problem, the customer and business KPIs in a lending solution, might look something like this:
Since we know customers like Dory value easy applications and quick turn-around times, the best leading indicators of future performance should tie back to the customers’ performance criteria. Business KPIs, on the other hand, measure historical performance, but don’t answer why the product is performing the way it is. And the inability to understand the why behind something is the reason you should avoid solely relying on business KPIs.
For example, say revenue from a lending product decreased over the last month because the average number of loans taken per month declined, what would you do with that information? This data is lacking the necessary information to draw a conclusion. Now you’re operating in the black box of product management, tweaking a few dials, and hoping something sticks.
Next time you kick-off a project, take a few days to become intimately familiar with the problem you’re trying to solve. Don’t get too caught up in process, just focus on these three things:
- how customers solve the problem today
- learning how customers solved the problem before
- defining a set of criteria customers use to filter potential solutions.
The customers’ performance criteria (3) will inform your MVP. Now you can get to market fast with confidence you’re building features your customers will use.