Customer Development

In April of 2009, Steve Blank and Eric Ries gave a presentation on Customer Development at a Startup2Startup Conference in Palo Alto, California. They called it The Customer Development Model, which stated that, “More startups fail from a lack of customers than from a failure of product development”.

But it’s not just startups, more companies fail from a lack of customers than from a lack of a great product, yet most of the time a company forms around a product and then tries to go out and find customers for that product. What if there was a way you could find the customers first, build a product for those customers, and then create a company? There is and it’s called Customer Development.

Customer Development is a rigorous methodology developed by Steve Blank to bring the scientific method to the typically chaotic, seemingly disorganized startup process. Blank’s first book, The Four Steps to the Epiphany, detailed the Customer Development process and his second book, The Startup Owner’s Manual, is a step-by-step guide to building a successful startup, offering practical advice for any startup founder, entrepreneur, investor or educator.

According to Steve Blank, Customer Development involves four steps:

  1. Customer Discovery – Create a hypotheses about who your customer might be and then ask those customers what they want, how they work, what they hate, and what they want more of.
  2. Customer Validation – Develop a repeatable and scalable sales process. Only “earlyvangelists” are crazy enough to buy.
  3. Customer Creation – After proof of sales, creation is where you “cross the chasm”. It is a strategy, not a tactic.
  4. Company Building – (Re)build your company’s organization and management. Re-look at your mission.
Credit: Steve Blank and Eric Ries

But what if you’ve already started your company and you already have products? You can still use these same methods to find out who your target customer is, what they want, and how they talk in order to create custom marketing directly to them.

Steve Blank says, that “Customer Development is about testing the founder’s hypothesis about what constitutes product/market fit with the minimum feature set.” What is product/market fit? I would define product/market fit as the moment when the iterations of your product match the desires and needs of a market in a way that the customer would actually be mad at you if you didn’t let them have the product. Once you’ve achieved this state, it’s time to “fuel the engine” as Eric Ries says, and build it fast. This is the moment you’ll want to attract funding and start adding as many customers as possible (Customer Creation) in order to build a company. In this way, the entire company is built around the customer, not the [by]product.

Customer Discovery

Customer Discovery involves “getting out of the building” and doing Customer and Solution Interviews. Part of the Lean Startup methodology, which combines Customer Development and Agile Development to create a business model that values learning, these interviews are the best way to find out your customers wants and needs – so that you can solve them. Like Agile methodology, Lean methodology uses iterative processes and the Scientific Method to hypothesize, test, and learn in order to create a product that customers actually want before building it. Once they have this “product/market fit” they built it as fast as possible.

What are your customer’s pain points? What are they complaining about? Where do they hang out? What words do they use? It’s only when you know the answers to these questions that you can then determine if they are both able and willing to pay for the solution. The first part of that question is called a Customer Interview.

Here’s an example of a customer interview:

You “get out of the building” and meet with a potential customer in your market and ask them what sort of problems they run into on a daily basis. The business owner tells you about having too much spam in their email.

Now that you know the customer has a problem with too much spam, you create a hypothesis about what product might solve this problem for the customer and set up a second meeting called a Solution Interview to determine what the customer thinks of the solution, if they are willing to pay, and if they are able to pay for it.

Here’s an example of a solution interview:

You meet with the customer, present the solution to them, and ask if they would be willing to pay to have their spam reduced.

Write down any feedback you get because the point is not to sell the product at this point, the point is to learn as much as you can so you can go back and refine the product to create product/market fit. Even if you can’t change the product, you can still iterate your approach or how you you’re using the product to solve that problem. It could be that your product is a better answer to another problem or that a new product is needed.

Applying Customer Development and Lean Methodologies to Content Marketing

Joseph Dager, Lean Marketing consultant and author of Lean Marketing House, says that “Lean Sales and Marketing is about applying Customer Value to the Demand side of your business.”

If you’re solving clients problems you won’t have to do much marketing at all – the customers will seek you out. If they aren’t seeking you out, you might not be solving their problems. But how do you identify what your customers pain points are? The simplest answer is to ask your target client or existing client base what things are bothering them most and when you start to see a trend, you can start to ask if they’d be willing to pay for it to get fixed.

Content/Market Fit

We believe that content marketing is the best way to attract customers when marketing online.

We’ve adapted the customer development process for content marketing and developed a way to create content that achieves a product/market fit that we call content/market fit. We spend more time on content development so that our client’s customers find them. Why? Because the content we develop content that solves a problem for our client’s customers. Whenever they search for the problem they’re having, our client’s solutions are displayed as the answer. In this way, you’re working more in sync with Google’s goals of wanting to deliver the most relevant content to users seeking out answers to their problems.

We help business bloggers write content that answers their customer’s problems.

By spending more time finding out what problems your customers are having, you’ll spend less time in the customer creation process and more time making money in the company building process. How can Erich Stauffer help you build your company? Contact us for one hour of free consultation. Just mention this code: CMF.