Customer Development, Part 2

by Aug 11, 2021

In part 1 on customer development, we talked about the importance of building a human-centered startup. When you focus on understanding and solving customers’ problems, your idea will find product market fit much faster. So how do you learn what customers need and create a solution they are willing to buy, at a price that will support growth? You constantly test your idea with customers, in iterative cycles.

Every venture is a set of testable assumptions. You’re testing whether your business is desirable to customers, feasible to build, and financially viable.

  • Desirability—Does your idea provide value to the customer? Find out! Test desirability by uncovering insights, sharing prototypes, and collecting feedback from your customers to make the product better.
  • Feasibility – What constraints will you face bringing your idea to market? Find out! Test feasibility by creating a working product or service.
  • Viability – Will your business make a profit, given its cost structure? Find out! Test viability by putting together a high-level business plan, then adjust it based on what you learn as you build prototype and get feedback.

The Product Testing Cycle

Ideally, your product testing with customers follows an iterative cycle.

  1. Start with desirability. If no one wants your product, then nothing else matters.
  2. Then test feasibility. Modify your plans based on what you learn.
  3. Re-test desirability. Is your product still desirable after those feasibility adjustments?
  4. Check viability. Shift your business model as needed to create sufficient revenue.
  5. Return to desirability. Make sure the product and business model still meet customer needs.

Following this cycle is how startups build product market fit!

During this process, you’ll be talking a lot with customers about their needs. “Needs” refers to what customers want or value. And here’s the thing about that: customers aren’t really great at articulating their needs, especially in the abstract. They won’t say, “I need xyz features in this solution you’re developing.” They’re much better at responding to an actual product prototype and telling you what they like and don’t like about it.

You will have to read between the lines. You’ll have to ask follow-up questions and dig deep to uncover their unspoken needs. And then you’ll need to translate those needs into changes to your product design and business plan.

The bottom line? Your people skills are very, very important. We’ll talk about how to become an expert at interviewing, probing, and listening to customers in an upcoming post.