I want to preface this by saying I’m no expert when it comes to the customer development model. I am quite the avid reader of great startup leaders such as Eric Ries and Steve Blank, and what I’ve attempted to do in this post is gather their ideas and thoughts in to a short and concise guide. This is so that readers who haven’t had much exposure to these ideas can gain a basic understand of this methodology. Then, it is up to them whether they want to pursue further knowledge by looking into more in-depth resources.
Anyone who is even slightly involved in the startup world has, no doubt, heard this term thrown around sometime or another. It is the tried and tested way to develop a startup from the ground up, but what does it even mean?
The Customer Development Model was only recently given a “name”, but it’s fundamental concept is timeless: don’t hypothesize everything about your business/product on your own, talk to prospective customers and develop an approach that they are interested in.
The ‘traditional’ way to approaching business is the “Product Development Model”. It starts with a product idea followed by months of building to deliver it to the public. Every feature is planned to a tee within the company’s own building, the launch date has been set on the calendar, and shipping the product on this date is the most important goal. Customer feedback is cool—but it is not the main focus.
The problem with this traditional approach is that it assumes your original hypothesis and business model is completely sound. It assumes that once it is built, the people will come. But do they even want your product?
“Build and they will come’ is not a strategy, it’s a prayer.” – Steve Blank
Often times startup founders work tirelessly to build their product only to realize that people really aren’t interested. Their original hypothesis was wrong—and now they are stuck with loss of time, money, and an undesirable product.
Following the customer development model ensures that this doesn’t happen. It is a model that was developed to prevent founders from wasting time building an undesirable product or service, and to instead test hypotheses often until a “winner” is found.
“Startups don’t fail because they lack a product; they fail because they lack customers and a profitable business model.”
– Steve Blank
Now that you understand what the customer development model is, it is important to learn the process behind discovering a product . Steve Blank breaks down the model in to four steps:
1. Customer Discovery
2. Customer Validation
3. Customer Creation
4. Company Building
In a nutshell:
Customer Discovery is finding people who will pay you to solve a problem for them. This process involves narrowing your focus to a target audience, finding your target audience’s top problems, and understanding how much they would be willing to pay for a solution to it.
Customer Validation is experimenting different products with your customers. This part will take the longest and often goes back and forth with the Customer Discovery step. Try new products, try them on new customers, ship early, and ship often. Don’t get too attached to one vision, simply keep building until you find a repeatable sales process.
Customer Creation naturally comes after “Customer Valdiation”. Once you’ve found a product/service that there is a demand for and has proof of sales, you grow the few customers you currently have and make many. This is when you narrow your vision and stick to a product.
Company Building is pretty self-explanatory. Basically, you bring your product to the mainstream and making a company last in the long run.
When it all comes down to it, my take away from the Customer Development Model is: get your business out of your head! Talk about your ideas with prospective customers, friends, anyone who can offer good, quality insight. Then test it out multiple times! Don’t contain everything in your head, because many times, the one hypothesis that you planned out to the very minute detail may not be as big of a hit as you once though it would. You want to find that out early.
“Customer Development starts by testing your hypotheses outside the building. Not in planning meetings, not in writing multiple pages of nicely formatted Marketing Requirements Documents, but by getting laughed at, ignored, thrown out and educated by potential customers as you listen to their needs and test the fundamental hypotheses of your business.” -another Steve Blank quote
In the next installment, I will talk about my own experiences using the Customer Development Model with my previous startup ventures. Also, to get a more in-depth look at the Customer Development Model from a true expert, I encourage you to check out Steve Blank’s book: The Four Steps to the Epiphany
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