Customer Development, Education, entrepreneurship, Lean Startup, startup

Customer Development Resources for Startups

First rule of Customer Development Club: No selling! Ever!

First rule of Customer Development Club: No selling! Ever!

A first time founder of a very early-stage startup asked me recently about how to do customer interviews (aka doing the Customer Development part of the methodologies collectively known as The Lean Startup) properly.

I get asked this question a lot. Because doing customer interviews is for many like Justin Wilcox puts it, “a special kind of torture”.

At the end of this article, you’ll find a bunch of resources to help you conduct customer interviews like a boss. But first, let’s take a look at what this Customer Development thing is, why it is so important and how to avoid the usual mistakes.

Now, the book by Eric Ries that popularized the Lean Startup methodologies is great on agile engineering, but arguably only mentions Customer Development in passing as an integral part of The Lean Startup. So here’s a list of resources for more in-depth information that you need to know in addition to that book.

In short, Customer Development is basically a simple methodology for getting out of the building and talking to potential customers, the market — before you start building anything. Because inside of the building, there are only your fantasies. Outside in the market is where the facts are — and it is your job as a startup founder to start testing your fantasies, your guesses about the market, as soon as possible. Because you want to find out today — not tomorrow or in a year from now — when you’ve wasted a lot of time and resources, a lot of sweat and tears, on building the wrong things for the wrong people.

And you have to go out of the building at least twice.

Iterate or Pivot?

Iterate or Pivot?

So you have an idea about a solution? Great! But let’s take a minute to find out if we should actually build it first. In this first phase, we are trying to find out if our hypothetical solution, our product yet not built, will solve an actual problem for customers, if potential customers actually feel and recognizes the problem or need.

Yes, that’s right. We are in fact not even talking about our hypothetical product in this phase. We’re not showing or selling anything. We’re just listening to people explaining how they dealt with similar situations, solved similar problems in the past and today. The point of this “customer discovery” phase is to actually test if there is a need in the market before building anything. Further more, is it the types of people (customer segments) that we believe have the problem or could it be that someone else actually needs it more?

We keep at it, interviewing customers until we can either:

  1. Find significant signal, say e.g. that 40% of a 100 interviews actually confirms there is a felt need or problem,
  2. Can’t find significant signal
  3. Find another problem or need during the interview process that is more interesting to pursue.

In the second phase, after actually finding confirmation of a real and felt problem or need, we get out of the building again to test our hypothetical solution.

We want to not only confirm that we understand the problem or need — we also need to confirm that our interpretation of a solution is actually one that the customers would use to solve it. So we get out of the building to talk to the people who indicated they actually have and feel the need or problem a second time.

And no, we don’t test for the viability of our proposed solution by selling it to them. We are not trying to convince them why they should use it in the solution interviews. This is not the time. And no, we don’t start building elaborate solutions before we first go out to test our hypothetical solution. Sketches and mockups are what we start testing with. Click Dummies and PowerPoints are more than enough at this stage.

Again we look for significant signal and we iterate (small incremental change) or pivot (big change that affects your business model) using the feedback we are getting and go out of the building again to show the changed hypothetical solution.

If, and only if, we can find significant signal we start to build it. This is when we start with building an MVP — Our first Minimum Viable Product. And it is at this stage in our journey the “Lean Startup” book by Eric Ries becomes a very useful guide.

So we see Customer Development is never about selling. No selling is allowed. Not when testing for the problem and not when testing for the solution. Not ever. Of course, this is hard to do for startup founders — we all want to bend the world to our will — so we need to practice holding back the sales pitch. Why is no selling allowed? Simply because you will then be coloring the feedback you’re about to get and you as a startup founder don’t scale — Once you’re out of the room, you’ll never know if they would buy it (and what they’d say about your potentially crappy solution). And no, a survey is not a customer interview — it has to be in-person so you can actually feel the emotions of the interviewees as they talk about the problem and your proposed solution.

You can also think of Customer Development as an unfair advantage, a super fast and cheap way to becoming a domain expert in your potential customer’s pains, gains and jobs to be done. And if you’re doing it right, it will also work as your secret marketing weapon as the customers are going to literally hand you the best sales arguments, your perfect sales copy on a platter in the interviews. Further more, if you’ve been doing this right, you now also have your first customers — and that even before you built the product!

Customer Development Resources:

To learn more, first of all you should take this free course with Steve Blank, the father of Customer Development and the Lean Startup. It’s more or less the Stanford curriculum called Lean Launchpad — but for free. It will teach you everything you need to know about building a startup (at the early stages):
Take the course on Udacity for free

For more in-depth information on Customer Development, read the book “The Four Steps to Epiphany” that started the whole Lean Startup movement.

Read these presentations from the entertaining and actionable Rob Fitzpatrick on how to actually do customer interviews:
Summary
Rob’s own presentation on SlideShare
(And you also might want to pick up his book, The Mom Test)

These videos with Steve Blank on customer discovery and customer interviews you can use as a checklist and fallback reference on how-to conduct interviews:
Resources Page 1
Resources Page 2
Resources Page 3

And check out Justin Wilcox — He’s a great resource on practical tricks and tips like how to select your customer segments to interview and b2b and b2c interview scripts:
http://customerdevlabs.com/

And if you’re still hungry for more, get the biblically sized The Startup Owner’s Manual for everything in one single book. (Auch jetzt auf deutsch als “Das Handbuch für Startups” erhältlich.)

Now get the hell out of the building!

This article was originally published on LinkedIn. Header image by Dave Fayram / Ninjacam. Some rights reserved.

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