Customer development is the formal process of identifying potential customers and figuring out how to meet their needs. It can help startups to build an end-to-end solution and eventually scale up into a large corporation.
Let’s take a look at how Customer Development works.
Idea – It all starts with an idea of a service or products that will revolutionize the lives of people who use it. However, most ideas fizzle out because the team focused only on the product/service but did nothing to understand the target audience and their needs better.
Focusing on solving the most important problems of the target customers is essential for all businesses (small/big), but small businesses have a lot at stake to lose. A successful startup needs to create a business plan that satisfies their target market and establishes themselves as useful and unique in the marketplace.
What does the Customer Development process look like?
The Customer Development Method consists largely of four steps:
Customer Discovery
Identify target customers and understand their needs which you may be able to satisfy.
- You should start with identifying the customer need you’re trying to satisfy. Even in situations where you’ve started with a solution (product or service), you should figure out the customer need your solution caters to.
Customer Validation
This tests whether you have a product or service that will satisfy your customer’s needs.
- Once you’ve identified the need you’re trying to satisfy, you’ll start coming up with potential solutions that would work.
- Identify the assumptions you’ve made, that are critical for the success of your solution (product or service).
- Design an experiment to validate your assumptions and solutions with your customers in a scrappy way. E.g. Paper-Prototype, Fake-o-Test, Concierge Test.
- A good experiment should be scrappy and should not take >48 hours to run.
Customer Creation
It is the start of execution. You will focus on building an end-to-end solution, which satisfies several needs of your target customers.
- Start small by delivering a minimal viable product and get constant feedback from your customers on whether the solution meets their needs.
- Try and start expanding the solution (product or service) based on regular feedback to become the go-to product/service for your target customers.
Company Building
This transitions the organization from a startup to a company focused on executing a validated model.
- You’ll grow your organization to cater to the growing demands of your customers.
Several teams don’t use customer development because they believe it hampers the speed of product development or doesn’t aid development in “stealth mode”. They continue to focus on the solution and making it better (from their perspective) without talking to a customer.
It is very easy to fall in love with your solution without understanding the problem space – if you do so, you might realize eventually that you might end up with a product/service which has a much smaller market (if not none) than you anticipated. Customer development helps you ensure that you are strongly focused on solving the customer problems and needs instead of shoving the solution down your customers’ throats.
When it comes to the future of your business, consider joining the Intuit Circles community. A strategic startup ecosystem engagement initiative by Intuit, the community facilitates business growth and knowledge for startups through smart-tech. It aims at powering prosperity for startups by providing for some of their biggest needs.
This edition of the Founders’ Guide to Thrive was guest-authored by Sowmya Murthy. She looks after product management of QuickBooks Desktop Payroll for US and UK serving ~1M customers, at Intuit. She also leads all acquisition, FTU and Compliance initiatives for Payroll attach. You can reach out to Sowmya on Twitter at @sowmyamurthy1.
Thank you so much for sticking around, we’ll see you next week as we talk about launching a product during a crisis. Meanwhile, check out Gaurav Kumbhat, Product Manager, Intuit India talking about Product Market Fit here!