Doing Customer Development interviews for your startup venture.
You know that talking to prospective customers for your startup is important. But you’re probably doing it wrong.
I once had a student tell me “I’ve done market testing for my startup and 90% of people say they will buy my product when it’s available!”. I was impressed, so I asked him about his methodology. He said he had emailed 10 friends about his startup idea and 9 of them thought it was awesome.
So then I was much less impressed.
As this student demonstrated, most new entrepreneurs do customer interviews wrong because they are more interested in affirmation than insights. We all want to be told our startup idea is awesome (and that we’re handsome, too!). Humans crave affirmation. But if you approach the Customer Development interviews as a search for affirmation, your new venture is likely doomed from the start.
What is Customer Development, anyway?
Customer Development is a term coined by Steve Blank in his seminal book, The Four Steps to Epiphany. Steve suggests that early-stage startups mostly have a bunch of untested hypotheses about their business model (who the customers are, what features they want, how much they’ll pay, etc) and it’s a mistake to build a business around untested hypotheses. So get out there and talk to a bunch of customers before you start developing the product!²
It’s a simple enough concept, but as the student I mentioned proves, many entrepreneurs go through the Customer Development motions without actually uncovering any meaningful customer insights. Worse yet, they get false positives¹.
From my experience watching hundreds of entrepreneurs meander through the Customer Development process, these are the top ten mistakes that I’ve seen:
- Mistake #1: Thinking you’re pitching.
Entrepreneurs work hard on their startup pitch, and then they want to use it everywhere, including on Customer Development calls. But remember the point of these calls is learning about customers and discovering hidden insights. Once you go into pitch mode you’re not learning anything; you’re just telling them what the solution is before you even understand what their problems are.
- Mistake #2: Digging for compliments.
Again, deep down we’re all insecure people who crave compliments. But as the terrific book, The Mom Test³, puts it: “Compliments are the fool’s gold of this process: shiny, distracting, and worthless”. Digging for compliments isn’t going to give you any market insights, it’s just going to give you false positives¹.
- Mistake #3: Not asking why, why, why.
When you’re doing Customer Development interviews and the person says their biggest problem is X, always ask them why. And then when they tell you, ask why again. Keep peeling back the onion until you find the real underlying problems the customer has. In the consulting business, it’s axiomatic that the problem a client hires you to solve as always different from the problem the client actually has. The same is true with Customer Development interviews.
- Mistake #4: Staying comfortably inside the Echo Chamber.
Most of us surround ourselves with friends who think like we do. We all love our friends but they are the wrong people to interview in a Customer Development process, because you won’t learn much from people who think like you do. Get out of your Echo Chamber for your Customer Development — it’s less comfortable, but much more insightful.
- Mistake #5: Not asking who has purchase authority.
I once had a software startup which thought that Production Managers at advertising agencies would be our core customers. We talked to Production Managers at ad agencies all across the country until we were 100% confident that we were building a product that they would love. When we launched we discovered that they did love it — but they didn’t have the spending authority to buy it. There are many kinds of business where it’s important to understand how the money flows. Ask.
- Mistake #6: Talking more than listening.
The more you’re talking, the worse you’re doing. It’s certainly true for dating, and it’s just as true for Customer Development interviews.
- Mistake #7: Sending out a survey.
Many people put together a survey and send it out for their Customer Development process rather than having 1:1 calls. I am not a fan of this. Real insights happen during actual conversations between humans³. To me, sending out a survey is lazy, pre-defines the answer set, and is very unlikely to uncover hidden insights.
- Mistake #8: Not being clear with yourself about what you want to learn.
Again, I can’t tell you how many times I’ve seen entrepreneurs think this process is about pitching people and hearing them say “Wow, cool idea!”. They finish the call quite pleased with the affirmation but they’ve learned absolutely nothing. These calls are about uncovering insights, and learning about customers. Before the call, make a list of the things you’d like to understand about this customer so that you can steer the conversation in ways that uncover those things.
- Mistake #9: Asking “Would you pay $100 for my awesome product?”
Pricing is a very tricky thing, and everyone wants to find out about price sensitivity during a Customer Development call. But asking the question point-blank is the wrong way to do it. What you really want to know is how the customer is currently solving problems and how much they are currently spending on alternative ways to solve the problem your product solves. Those are the insights you are looking for.
- Mistake #10: Not ending with the right ask.
Many entrepreneurs end a customer development call with something like “Well, thanks, I’d love to stay in touch!” — which is really pretty meaningless and contains no commitment on the other person’s part. True commitment comes with time, reputation, or money. My favorite way to end a Customer Discovery call is to say “Thank you so much — is there anyone else you think I should talk to?”. You’ll get some great referrals, and someone making an introduction for you means that they are investing their reputation in helping you — that’s a powerful signal.
I am passionate about doing Customer Development interviews right because I did them wrong for a long time, and I lost a lot of investor money before I finally learned how to do them correctly. Ask good open-ended questions that may provide unexpected insights. Don’t pitch your solution — understand their problems. And don’t dig for compliments and affirmation. You can get those from your mom.
- The recent book Why Startups Fail, by Harvard Business School professor Tom Eisenmann, says that one of the leading causes of startup death is False Positives, meaning that the entrepreneur “tested” the market and got the affirmation he was looking for, only to later find out that the signals received were actually false positives.
- To be accurate, Steve Blank’s Customer Development process involves several components. Customer interviews are a subset of the process.
- I highly recommend this book: The Mom Test — How to talk to customers and learn if your business is a good idea when everyone is lying to you.
- I’ve written before about the importance of entrepreneurs taking people out for cups of coffee.